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Software Technology Parks of India (STPI) – Objectives

The Indian Business environment has been undergoing a massive transformation as it has become a more tech-friendly network. In the last few years, there have been several advancements in the Indian IT industry in fields such as fintech, Blockchain, artificial intelligence, cybersecurity, gaming, animation, machine learning, medical electronics, and software designing. As well as promoting exports of tech-oriented startups, the government has been proactively supporting them. In this post, we assess the advantages of setting up your IT business in a software technology Park.

About STPI

The Software Technology Parks of India (STPI) is an organization under the Ministry of Electronics and Information Technology (MeitY) in India. It was established in 1991 with the objective of promoting the IT/ITES industry, innovation, research and development, startups, and product/IP creation in emerging technologies. STPI plays a crucial role in encouraging and boosting software exports from India. It acts as a single-window service provider for software exporters, offering various services and incentives

Objectives of STPI

The objectives of STPI include:

  • Promotion of Software Exports: STPI aims to promote the development of software products within India and increase the amount of domestic software production and exports.
  • Provision of Export Incentives: STPI provides export incentives for technology and research and development (R&D) activities.
  • Provision of Support to Startups: STPI supports startups in the field of emerging technologies, such as Internet of Things (IoT), Blockchain, Artificial Intelligence (AI), Machine Learning (ML), and more.
  • Facilitation of Innovation and R&D: STPI encourages innovation and research and development activities in the IT sector. 
  • Provision of Services to Software Exporters: STPI acts as a single-window service provider, offering various services to software exporters

What’s Special about Software Technology Parks?

  • Superior communication and technology services – Every Software Technology Park holds a category A internet service provider license – thereby giving superior network services. These spaces are also equipped with state of the art high-speed data networks. This is especially helpful for consultancy services and offshore collaborations. 
  • Incubation services – While entrepreneurs in the tech space may have the necessary know-how about their product or service, they are often clueless about setting up a company. With incubation support, access to funding, labs, tools, mentoring, and marketing is available to entrepreneurs. 
  • Business Process Outsourcing – As part of the Digital India initiative, the Software Technology Parks is the nodal agency for creating BPO services in India. 
  • Electropreneur parks – Software Technology Parks of India has also established two specific centres for excellence in Bhubaneswar and Delhi for creating a holistic Ecosystem providing research and development, innovation, entrepreneurship for breakthrough innovations in the electronic system design and manufacturing industry. 

STPI Centres

STPI (Software Technology Parks of India) Centres play a crucial role in the development of the software technology park industry in India. Currently, there are 62 operational STPI centres and sub-centres throughout the country, with 54 of them located in Tier II and Tier III cities. These centres serve as hubs for IT and software companies. They also offer state-of-the-art infrastructure facilities to foster growth and innovation in the sector.

STPI centres collaborate closely with State Governments and local authorities to expand their presence and create more space for the software industry. This expansion effort aims to provide a conducive environment for software companies to thrive, increase their exports and ultimately contribute to the growth of the Indian IT sector.

Software Technology Parks in the time of CoVid

Recently, the government of India announced a four months rental waiver to information technology companies operating in Software Technology Parks. Thus, technology startups and MSMEs facing a cash crunch are encouraged to utilise their precious funds internally for business development and supporting their IT staff.

Significance of STPI

The Software Technology Parks of India (STPI) holds significant importance in the IT industry in India. Some of the key significance of STPI are:

  1. Boosting Software Exports: STPI plays a crucial role in boosting software exports from India. It provides support and incentives to software exporters, which has led to significant growth in software exports over the years.
  2. Promoting Innovation and R&D: STPI encourages innovation and research and development activities in the IT sector. This has contributed to the growth of the IT industry in India and has helped in the development of emerging technologies.
  3. Supporting Startups: STPI supports startups in the field of emerging technologies. This support has helped in the growth of the startup ecosystem in India and has fostered innovation and entrepreneurship.
  4. Job Creation: The growth of the IT industry, supported by STPI, has led to the creation of a large number of job opportunities in India. The IT industry has been a major contributor to employment generation in the country.
  5. Contribution to the Economy: The software exports facilitated by STPI have contributed significantly to the Indian economy. The revenue generated from software exports has had a positive impact on the country’s GDP.

STPI Services

The Software Technology Parks of India (STPI) provides various services to software exporters and startups. Some of the services offered by STPI include:

  1. Infrastructure Support: STPI provides state-of-the-art infrastructure facilities to software exporters, including office spaces, data centers, and high-speed internet connectivity.
  2. Incubation Services: STPI offers incubation services to startups, providing them with the necessary support and resources to nurture their ideas and turn them into successful businesses.
  3. Export Facilitation: STPI assists software exporters in obtaining necessary clearances and licenses for exporting software products and services.
  4. Technical Support: STPI provides technical support to software exporters, helping them resolve technical issues and challenges.
  5. Training and Skill Development: STPI organizes training programs and workshops to enhance the skills and capabilities of software professionals.
  6. Incentives and Benefits: STPI offers various incentives and benefits to software exporters, including tax benefits, duty exemptions, and financial assistance.

Overall, the Software Technology Parks of India (STPI) plays a crucial role in promoting the IT industry, supporting startups, fostering innovation and research, and boosting software exports in India. Its services and initiatives have contributed significantly to the growth and success of the IT sector in the country.

What are the Financial Advantages of Setting up a Unit in a Software Technology Park?

To facilitate exports, the  Software Technology Parks provides tax incentives, duty-free import, duty-free indigenous procurement, and deemed exports.

Here are the financial incentives that a unit in the Software Technology Park can draw:

  • 100% Income Tax holiday

Under Section 10A of the Income Tax Act, an assessee entitles to claim a deduction of such profits derived by the unit from the exports outside India of computer software as well as IT-enabled products and services. Thus, the deduction of export earnings is available to units in a Software Technology Park. 

  • Duty-free Import

All imports by a unit inside a Software Technology Park are given 100% customs duty exemption on imports. 

  • Excise Duty Exemption on Purchases from within India

In addition to duty-free imports, even indigenous purchases from within the country is in a 100% excise duty exemption. 

  • Capital Goods

Since the IT Industry relies heavily on capital goods such as technical machinery, computers, etc, 100% depreciation on Capital Goods over five years is provided. 

  • Green Card

A green card is a novel initiative of the Software Technology Parks. For projects, less than or equal to ₹100 million, that do not have any equity participation – the Jurisdictional Director issued a Green Card. This helps the unit to get one-stop priority access to telephone lines, electricity, licenses, and other ancillary services from government agencies. 

  • Capital Invested by Foreign Partners

100% foreign equity is permissible. Moreover, payments for royalty, fees, dividends, interest, etc., can freely be repatriated after payment of Income Tax in India. 

  • Export Promotion

The Software Technology Parks often collaborates with overseas markets and promotional offices in other countries. It provides advisory and consultancy services, organises fairs, export promotional seminars, conferences, and enables companies to come together. 

  • Office Spaces

To relieve entrepreneurs of the struggle of arranging appropriate infrastructure, the  Software Technology Parks provide ready to move office spaces and associated services such as conference rooms, back office, and support services. 

Frequently Asked Questions

1. Can a unit established in a Software Technology Park do domestic sales?

Since units in the Software Technology Parks are primarily for export promotion, domestic sales of only up to 50% of foreign currency earnings that concludes. Further, prior permission of the Software Technology Parks of India may have requirements.

2. What are the prerequisites for applying for setting up in a Software Technology Park?

The following documents must be furnished alongside your application – Permanent Account Number from the Income Tax Office Importer Exporter Code from DGFT Company profile, capital structuring, and expertise area Memorandum of Association / Partnership Deed Bank certificate RBI permission, in case of foreign equity Project report delineating financial arrangements predicted exports, marketing tie-ups, brochures of products, the export performance of the last three years, the feasibility of the set-up, and demonstration of expertise in software development, and IT-enabled services.

3. What are the charges for setting up a unit in a Software Technology Park?

There exists an application processing fee of ₹2950 (₹2500 + GST), in addition to an annual service charge. This service charge progressively varies based on the export turnover of the unit and needs to be deposited three years in advance. The state government publishes the rate of annual service charges. While it is ₹8000 for exports under ₹25 lacs, it can increase to around ₹8 lacs for turnover over ₹100,000 lacs.

What are the benefits of software technology park?

The benefits of the Software Technology Park Scheme include exemption on customs duty in full on imports, exemption on central excise duty in full on indigenous procurement, and Central Sales Tax Reimbursement on indigenous purchases.

What is a software technology park Class 10?

There is no specific interrelation between the software technology park and Class 10.

What is meant by software technology park?

A software technology park is a specialized space providing an export-oriented setup for software services, which constitute a major segment of India's overall exports.

What are the major software technology parks?

The Software Technology Parks of India (STPI) is the major software technology park in India

Which is the 1st Software Technology Park of India?

The first Software Technology Park of India was established in Pune in 1990.

What is the key to success of IT industry in India?

The key to the success of the IT industry in India is the availability of a large pool of skilled and educated professionals, a favourable business environment, and government support in the form of policies and incentives.

What do you mean by IT parks?

IT parks are specialized spaces that provide an export-oriented setup for the IT industry. They offer state-of-the-art infrastructure, skilling, and incubation facilities to promote R&D, innovation, product, and IPR creation.

What is an example of technology park in India?

The Software Technology Parks of India (STPI) is an example of a technology park in India.

What is an example of a technological park?

Silicon Valley in California is an example of a technological park.

Conclusion

Please feel free to comment below if you require additional information regarding your concern; however, if you need further assistance, we are happy to assist.

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