Software Technology parks (STP) scheme - 33/(RE)) / 92-97 - Foreign Trade Policy

MINISTRY OF COMMERCE NOTIFICATION NO:- 33/(RE)) / 92-97 New Delhi, the 22 nd March, 1994 Subject:- Software Technology parks (STP) scheme S.O. (243)- In exercise of the power conferred in sub- section (1) of section 3 of the Foreign Trade (Development and Regulation) Act, 1992, the Central Government hereby notifies the following scheme, which is a sequal to the resolution No. 17 (38)/ comp/84 (Part) dated December 18,1986 of Deptt. Of Electronics announcing the policy on computer software development and Training and also resolution No. 17 (38)/ comp/93 dated February 22, 1993 of Deptt. of Electronics for software exports. 2.0 Software Technology Park (STP) scheme. 2.1 The software Technology park (STP) scheme is a 100 percent Export Oriented Scheme for undertaking of 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 Government, public or private sector undertaking or any combination thereof. A STP may be an individual unit by itself or it may be one of such units located in an area designed 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 Society Registration Act, 1860. An application in the prescribed format for establishing a software Technology Park unit is to be submitted to the Chief Executive of Software Technology Park complex alongwith the details of the Software project. Such application will be considered by an inter- Ministerial Standing committee (IMSC) constituted under the chairmanship of secretary, Department of Electronics, Government of India notified vide Gazette Notification No. 294 dated August 13,1991 published in Sub- section-1 of section 3 of Part II of Extra Ordinary Gazette of India and reconstituted by the Notification of Ministry of Industries vide Gazette Notification No. S.O 77 (E) dated February 22, 1993 published in Part II section 3 sub- section (ii) of Extraordinary Gazette of India 2.4 An STP unit may import free of duty all types of goods including capital goods. The duty exemption shall also apply to goods imported by the Software Technology Parks of India society for creating the Central facility for use by software Development units in the STP complex. The Capital goods imported on loan from their client for specified period executing the specific project shall also be followed to the STP units. 2.5 An STP will be a duty free and bonded area under section 25 of the Custom Act, 1962. The Custom Duty exemption will be applicable as per custom notifications No. 138, 139, 140 and 141- Customs /91 dated October 22, 1991 as amended time to time. 2.6 The entire software developed by STP unit shall be exported except the sales in the Domestic Tariff Areas (DTA). The sales in the DTA shall be permissible upto 25 percent of the Production in value terms made by the STP unit. 2.7 The following supplies shall be counted towards the fulfillment of the export obligation of the unit:- 2.7.1 Supplies effected in DTA under global tender conditions: 2.7.2 Supplies effected in DTA area against payment in foreign exchange; 2.7.3 Supplies against Advance Licences and other import licences; 2.7.4 Supplies made to other STP units; 2.8 The STP unit shall be eligible for the following benefits: 2.8.1 TAX HOLIDAY The STP will be exempted for payment of corporate income tax for a block of five years in the first eight years of its operation. 2.8.2 100% FOREIGN EQUITY Foreign equity upto 100% is permissible in the case of STP units subject to approval of the FIPB. 2.9 Supplies made from DTA to a STP unit may be eligible for such benefits as may be notified separately. 2.10 The provisions of paragraph 111 to 117 of Chapter IX of the Export and Import Policy (1992-97) applicable to export oriented units (EOUs) and units in Export Processing Zone (EPZs) shall also apply mutatis mutandis to STP scheme subject to the following modification: (a) The words Development Commissioner wherever it occur shall be substituted by the word Chief Executive of STP society (b) The letters BOA wherever it occurs shall be substituted by the letters IMSC . 2.11 Export obligation on the STP unit on net foreign exchange terms in US dollar value will 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 will be on annual basis. iii) Net foreign exchange for this purpose will be defined as below Net Foreign Exchange earned for this purpose is defined as foreign exchange inflow as a result of Software Export less foreign exchange outflows on account of all expenditure whatsoever other than initial hardware . 2.12 Use of Computer System in STP for training purpose is also allowed subject to the condition that no computer terminal will be installed outside the STP for this purpose. 3.0 This Scheme is separate from the EOU/EPZ scheme incorporated in Chapter IX of the Export and Import Policy (1992-97). The provisions of STP Scheme contained in this notification shall not be applicable to the Software units established in accordance with the EHTP scheme notified vide Notification No. 42 (N-8)/ 92-97 dated 14 th September 1992 and software units established in an EPZ or as an EOU. This Issues in public interest. (File No. 3/195/93- IPC-II) P. VENKATESAN, Dy. Director General of Foreign Trade