SOFTWARE TECHNOLOGY PARKS SCHEME

[SO 388(E), DATED 30-4-1995]

1.0  Attention is invited to the Ministry of Commerce Notification No. 33/(RE)/  92-97, dated 22nd March, 1994, notifying the above Scheme. In exercise  of the powers conferred in sub-section (1) of section 3 of the Foreign  Trade (Development and Regulation) Act, 1992, the Central Government  hereby notifies the following amended Software Technology Park (STP)  Scheme.

2.0 Software Technology Parks (STP) Scheme : 

2.1 The Software Technology Park (STP) Scheme is a 100 per cent. Export Oriented Scheme for undertaking software development for export using  data communication link or in the form of physical exports including export of  professional services.

2.2 A Software Technology Park (STP) may be set up by the Central Government, State Governments,    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 Department of Electronics. 

2.3 The scheme is administered by the Department of Electronics, Government of India, through Directors of respective Software Technology Parks  which form part of the Software Technology Parks of India, a society established by the Department of Electronics, Government of India and registered  under the Societies Registration Act, 1860. An application in the prescribed  format for establishing a Software Technology Park unit may be submitted to  the Chief Executive of the Software Technology Park Complex along with the  details of the software project. Such application will be considered by an Inter Ministerial Standing Committee (IMSC) constituted under the Chairmanship of  the Secretary, Department of Electronics, Government of India, notified, vide Gazette No. 294 [G.S.R. No. 526(E)], dated August 13, 1991, published in sub-section (i) of section 3 of Part II of the Extraordinary Gazette of India and  reconstituted by the Notification No. S.O. 177(E), dated February 22, 1993,  published in Part II, section 3, sub-section (ii) of the Extraordinary Gazette of  India.

2.4 An STP unit may import, free of duty, all types of goods, including capital  goods, required by it for manufacture, production or processing provided  they are not prohibited items in the Negative List of imports. The Software  Technology Parks of India (STPI), may also import, free of duty, all types of  goods, for creating the central facility for use by software development units  in the STP Complex. STP units shall also be permitted to import capital goods  on loan from clients for specified periods for executing specified projects. 

2.5 The STP unit will be a duty-free custom-bonded area. The normal procedure applicable for custom     bonding will be followed.

2.6 The entire software (including consultancy fees, software services and sale  of software) developed by the STP unit shall be exported except the sales in the  Domestic Tariff Area (DTA). The sales in the DTA shall be permissible up to 25  per cent of the production in value terms made by the STP unit. 

2.7 The following supplies shall be counted towards the fulfilment of the  export obligation of the STP unit :

2.7.1 Supplies specified in para 121 of the EXIM Policy ;

2.7.2 Supplies effected in DTA against payment in foreign exchange. 

2.8   The STP unit shall be eligible for the following benefits.

2.8.1 Tax holiday :

The STP will be exempted from payment of corporate income-tax for a block of five years in the first eight years of its operation. 

2.8.2  100 per cent foreign equity :

Foreign equity up to 100 per cent is permissible in the case of STP units.

2.9 Supplies made from DTA to an STP unit will be regarded as deemed  exports and will be eligible for the benefit specified in paragraphs 106 and  122 of the Export and Import Policy (1992-97). Such benefits shall be available  provided the goods supplied to the STP unit are manufactured in the country.

2.10 The provisions of paragraphs 96,104,109,110 and 112 to 117 of Chapter  IX of the Export and Import Policy (1992-97) applicable to export oriented units  (EOUs) and units in Export Processing Zones (EPZs) shall also apply to the STP  units subject to the following modifications :

(a) The word STP shall be substituted for the word EOU/EPZ EOU or  EPZs, wherever they occur, in the paragraphs,

(b) The words Development Commissioner wherever they occur shall be  substituted by the words Chief Executive of the STP Society.

(c) The word BOA wherever it occurs, shall be substituted by the word IMSC.

2.11 The export obligation of an STP unit in net foreign exchange terms shall be as follows :

            Export obligation                     = 1.5 X (CIF value of the hardware imported) + 1.5 X

(wage bill).

NOTES  :

(i)   The obligation on the hardware part will be fulfilled over a period of four years.

(ii)  The obligation on wage bill will be on annual basis.

(iii) Net foreign exchange for this purpose will be foreign exchange inflows as  a result of software exports less foreign exchange outflows on account of  all expenditure whatsoever other than hardware.

 (iv) If any capital goods imported duty free are leased from a domestic leasing  company, the CIF value of the capital goods shall be included in the value  of the hardware imported. 

2.12 Use of computer system in STP for training purpose will also be allowed  subject to the condition that no computer terminal will be installed  outside the STP for this purpose.

3.0 The provisions of the STP Scheme contained in this notification shall not be  applicable to the software units established in accordance with the EHTP  Scheme, to an EOU or software units established in an EPZ. 

This notification is issued in public interest.