In this article, Rajesh Tandon pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses who can become an STP unit and how.

Introduction

Information technology and information technology enabled industries have contributed phenomenally to the growth of Indian economy, GDP, foreign exchange earnings and employment generation. A large part of this growth is dependent on India’s outsourcing/shoring provided by Indian IT companies.

Software Technology Parks (STPs) are export oriented projects catering to the needs of software development for exports. STPs can be set up by the Central Government, State Government, Public or Private Sector Undertakings or any combination thereof. An STP may be an individual unit by itself or it may be one of such units located in an area designated as STP Complex by the Ministry of Information Technology. Software exporters are served by software technology Parks of India i.e STPI through single window clearance. In addition, a number of IT enabled services are provided under STP I which encourages entrepreneurs to enter an IT arena. The software technology Parks coupled with hardware technology and high speed data communication have played a seminal role in the IT growth in India.

A Software technology Park provides the resources for consulting, training and implementation services. Services cover Network Design, System Integration, Installation, Operations and maintenance of application networks and facilities in varied areas.

Software technology parks have played an important role in development of the software export industry. Under STP Scheme, a software development unit can be set up for the purpose of development of software, data entry and conversion, data processing, data analysis and control data management or call centre services for exports.

The STP has got excellent infrastructure and a statutory support for furthering the growth of information technology industry in the country.

STPI

Software Technology Parks of India (STPI) is an autonomous body owned under Ministry of Electronics and Information Technology, Government of India and  was set-up in 1991, with an objective of promoting the Software Exports from the country and has played a seminal role in this regard having promotional role viz. implementation of STP/EHTP (Electronic Hardware Technology Park) scheme, set-up and manage infrastructure facilities and to provide other service like technology assessment and professional training. STPI offers leased line services to premium segment, where quality is of utmost concern.

STPI has a presence in many of the major cities of India including the cities ofBangalore, Chennai, Hyderabad, Kanpur, Kolkata, Mumbai, Nagpur, Lucknow, Pune and Surat.

STPI provides physical hosting for theNational Internet Exchange of India.Besides regulating the STP scheme, STPI centers also provide a variety of services including high-speed data communication, incubation facilities, consultancy, network monitoring, data centers and data hosting.

The tax benefits under the Income Tax Act Section 10A applicable to STP units has expired since March 2011. While the Government has chosen not to extend the Sec 10A benefits against the demand by the IT units, most of the STP registered SME units shall be affected, who now will have to pay Income Tax on profits earned from exports.

Aim of STPI.

• To provide statutory and other promotional services to the exporters by implementing Software Technology Parks (S.T.P)/ Electronics and Hardware Technology Parks (E.H.T.P) Schemes and other such schemes which may be formulated and entrusted by the Government from time to time.
• To promote micro, small and medium entrepreneurs by creating conducive environment for entrepreneurship in the field of IT/ITES.
• To provide data communication services including value added services to IT / IT enabled Services (I.T.E.S) related industries.
• To promote the development and export of software and software services including Information Technology (I.T) enabled services/ Bio- IT.

Discharge of necessary functions for achievement of the aim by STPI. 

The  STPI in order to achieve its aim discharge is following functions:-

• Establishes software technology Park/centres at various locations in the country and in doing so it further carries out following actions :-
• Establishes Infrastructural resources such as integrated infrastructure including International communication / Data center / Incubating facilities etc. for 100% export oriented units.
• Promotes secondary and tertiary locations by establishing S.T.P.I presence to promote S.T.P/E.H.T.P Scheme, and promotional schemes announced by Government.
• Promotes entrepreneurship through incubation programmes / seed funds / IP development and other awareness programmes.
• Works closely with respective State Government and act as an  interface between Industry and Government.
• Promotes quality and security standards in the I.T industries.
• Works jointly with venture capitalists for providing financial assistance to the I.T industries.
• Promotes entrepreneurship through incubation programmes / seed funds / IP development and other awareness programmes.
• Assist State Governments in formulating I.T policies and liaison for promoting the I.T industries in respective states to achieve an exponential growth of exports.
• Provide Project Management and Consultancy services both at national and international level in the areas of expertise of S.T.P.I.

Perform financial management functions which comprise of the following activities.

These are as under :-

• Maintaining of a fund for crediting of the following:-
• All fees and other charges received by the S.T.P.I.
• All money received by the S.T.P.I  by way of grants,  gifts, donations,  benefactions, bequests or transfers.
• All money provided by the Central Government, State Governments,    Corporations, Universities etc
• All money received by the S.T.P.I in any other manner or from any other source.
• Obtain or accept grants, subscription, donations, gifts, bequests from Government, Corporations, Trusts, Organizations or any person for fulfilling the objectives of the S.T.P.I.
• Deposit all money credited to the Fund in Scheduled Banks / Nationalized Banks or to invest for the benefit of the S.T.P.I  as may be prescribed. At least 60% of the funds shall be placed with the Public Sector Banks or in such a manner as may be prescribed by the Government from time to time.
• Draws, makes, accepts, endorse sand discounts cheques, notes or other negotiable instruments and for this purpose, to sign, execute and deliver such assurance and deeds as may be necessary for the purposes of the S.T.P.I.
• Acquires, holds and disposes of the property in any manner whatsoever for the purposes of the S.T.P.I, with the prior approval of Governing Council as per the procedure laid down by Government.
• Paying out of the funds maintained by S.T.P.I  or part thereof, the expenses incurred by the S.T.P.I  from time to time including all expenses incidental to the formation and reorganization of the STPI and management and administration of any of the foregoing activities including all rents, rates, taxes, outgoings and the salaries of the employees.

Quality Policy and Quality objective of STPI.

STPI has got a quality policy and quality objective which is achieved as under :-

• By having state of art data communication services as per acceptable standards.
• By having comprehensive service including project approvals, import attestation, oftware export certification in a time bound manner.
• Technology upgradation to meet customer requirement in ever-changing market.
• Achieving customer satisfaction through combined efforts of planning and execution of the projects through dedicated workforce.

STP Scheme

The scheme integrates the government concept of 100 percent Export Oriented Units (EOUs) and Export Processing Zones (EPZs) and the concept of Science Parks/Technology Parks. The salient features of this STP scheme are as under :-

• Approvals given under single window clearance scheme.
• 100% foreign equity permitted.
• All the imports of Hardware & Software in the S.T.P units are completely duty free, import of second hand capital goods also permitted.
• Re-Export of capital goods is also permitted.
• The sales in the Domestic Tariff Area (D.T.A) shall be permissible up to 50% of the export in value terms.
• A company can set up S.T.P unit anywhere in India
• The capital goods purchased from the Domestic Tariff Area (D.T.A) are entitled for benefits like exemption of excise Duty & reimbursement of Central Sales Tax (C.S.T).
• Capital invested by Foreign Entrepreneurs, Know-How Fees, Royalty, Dividend etc., can be freely repatriated after payment of Income Taxes due on them, if any.

The items like computers and computers peripherals can be donated to recognized non-commercial educational institutions, registered charitable hospitals, public libraries, public funded research and development establishments, organizations of Govt. of India, or Govt of a State or Union Territory without payment of any duties after two years of their import.

• 100% Income Tax Holiday as per section 10A of the IT Act. (Foreign Currency Earnings).
• 100% Customs duty exemption on imports.
• 100% excise duty exemption on indigenous procurement.
• Central Sales Tax reimbursement on indigenous purchases.
• Green card enabling priority treatment for Government clearances.

Who can become an STP unit?

STPs can be set up by following:-

1. The Central Government,
2. State Government, Public or
3. Private Sector Undertakings or any combination thereof.
4. An STP may be an individual unit by itself or it may be one of such units located in an area designated as STP Complex by the Ministry of Information Technology.

The mechanism for setting an STP.

Following actions need to be undertaken to become a STP :-

• Obtain Permanent Account Number (PAN) of your company from the income tax office.
• Obtain Importer-Exporter Code (IEC) fromdirector general of foreign trade.
• Getting RBI permission in case of foreign equity.
• Legal agreement with STPI
• Prepare a project report in a specified format to include the following :-
• Background of company and promoters.
• Area of expertise in software development and IT-enabled services.
• Profiles of key personnel in the organization
• Strengths and achievements of the company like potential market for software products, projects developed by the company and in-house expertise in the area of specialization.
• Financial arrangements of the proposed setup
• Export performance for last three years in cases of existing firms & last years Balance Sheet
• Space Requirement / Built up Land.
• Brochures of the software products / company or Annual Report for the previous year.
• Having a set of start-up approvals as under :-
• Approval to start a STP under SEZ
• Approval to start a STP under STPI
• Attestation of list of capital goods to be imported/purchased duty-free.
• Issue of leased line/shared Internet connection.
• Execution of various agreements/undertaking at the time of STP registration.
• Having a day-to-day compliances and approval as under :-
• Filing and Registration of contracts/purchase orders,
• Completing various formalities for the export of Software-manual or electronic.
• Filing of Softex Forms.
• Re-imbursement of Central Sales tax from STP
• Filing of Monthly Progress Report, Annual Progress Report, periodical forms, returns and statements with STP authorities.
• Obtaining Approvals from STPI authorities as under :-
• Purchase of Excise Duty Free Local equipments/goods.
• Import of second hand capital goods, import of goods for replacement, and import of goods repaired abroad.
• The enhancement/modification of imported goods limit.
• Inter-unit transfer and temporary removal of goods for repair/testing
• re-export of duty exempted capital goods.

Conclusion

Software technology Parks have made a major contribution in the country. It creates incubation space in most of the centres with Plug & Play facilities for start-up companies. These incubation services enable small and medium enterprises to set up operations at minimal fixed costs with low start-up investment, thereby encouraging entrepreneurship and creating jobs. The services offered covers network design, system integration, operation and maintenance of application networks and facilities. The end result is that these software technology Parks have given a phenomenal quantum jump to the country technologically.

BIBLIOGRAPHY

https://www.stpi.in/l1010l2020S301880l40222

https://en.wikipedia.org/wiki/Software_Technology_Parks_of_India

http://www.doitpunjab.gov.in/pdfs/projects/STPI.pdf

http://egov.eletsonline.com/2013/07/software-technology-parks-of-india/

https://www.youtube.com/watch?v=0qach-F3Xvw

http://www.letscomply.com/SEZ-and-STPI-Compliances.php

http://www.powershow.com/view1/d254f-ZDc1Z/Software_Technology_Parks_Of_India_powerpoint_ppt_presentation

Goa Chamber of commerce and Industry.

Information Technology department,Government of Meghalaya.