1.0Attention is invited to the Ministry of Commerce Notification No. 33/(RE)/92-97, dated 22nd March, 1994, notifying the above Scheme. In exerciseof the powers conferred in sub-section (1) of section 3 of the ForeignTrade (Development and Regulation) Act, 1992, the Central Governmenthereby notifies the following amended Software Technology Park (STP)Scheme.
2.0 Software Technology Parks (STP) Scheme :
2.1 The SoftwareTechnologyPark (STP) Scheme is a 100 per cent. Export Oriented Scheme for undertaking software development for export usingdata communication link or in the form of physical exports including export ofprofessional services.
2.2 A SoftwareTechnologyPark (STP) may be set up by the Central Government, State Governments, public or private sector undertakings or anycombination thereof. An STP may be an individual unit by itself or it may be oneof 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 Parkswhich form part of the Software Technology Parks of India, a society established by the Department of Electronics, Government of India and registeredunder the Societies Registration Act, 1860. An application in the prescribedformat for establishing a SoftwareTechnologyPark unit may be submitted tothe Chief Executive of the Software Technology Park Complex along with thedetails of the software project. Such application will be considered by an Inter Ministerial Standing Committee (IMSC) constituted under the Chairmanship ofthe 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 andreconstituted 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 ofIndia.
2.4 An STP unit may import, free of duty, all types of goods, including capitalgoods, required by it for manufacture, production or processing providedthey are not prohibited items in the Negative List of imports. The SoftwareTechnology Parks of India (STPI), may also import, free of duty, all types ofgoods, for creating the central facility for use by software development unitsin the STP Complex. STP units shall also be permitted to import capital goodson 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 saleof software) developed by the STP unit shall be exported except the sales in theDomestic Tariff Area (DTA). The sales in the DTA shall be permissible up to 25per cent of the production in value terms made by the STP unit.
2.7 The following supplies shall be counted towards the fulfilment of theexport 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.
2.8The 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.
2.8.2100 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 deemedexports and will be eligible for the benefit specified in paragraphs 106 and122 of the Export and Import Policy (1992-97). Such benefits shall be availableprovided 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 ChapterIX 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 STPunits subject to the following modifications :
(a) The word STP shall be substituted for the word EOU/EPZ EOU orEPZs, wherever they occur, in the paragraphs,
(b) The words Development Commissioner wherever they occur shall besubstituted 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
(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 asa result of software exports less foreign exchange outflows on account ofall expenditure whatsoever other than hardware.
(iv) If any capital goods imported duty free are leased from a domestic leasingcompany, the CIF value of the capital goods shall be included in the valueof the hardware imported.
2.12 Use of computer system in STP for training purpose will also be allowedsubject to the condition that no computer terminal will be installedoutside the STP for this purpose.
3.0 The provisions of the STP Scheme contained in this notification shall not beapplicable to the software units established in accordance with the EHTPScheme, to an EOU or software units established in an EPZ.