INFO-TECH

 
UP TO SET UP FIVE MORE INFOTECH PARKS

The Uttar Pradesh government is planning to establish five Software Technology Parks (STPs). To be set up in collaboration with private sector promoters, the parks are to come up in Lucknow, Agra, Dehradun, Varanasi, Allahabad. The state already has two software technology parks in Noida and Kanpur. 

ROLE OF CONVERGENCE AND BROADCASTING IN EMERGING TRENDS

At a conference hosted by the CII on the role of convergence and broadcasting in emerging trends, Shri Arun Jaitely, Minister for Information and Broadcasting and Disinvestment, said, “A single medium of communciation as a result of convergence would definitely benefit the society at large as it would reduce costs. The government needs to think out appropriate legislation for convergence. For instance, if telephony, Internet and television is all available on a mobile handset due to convergence, then one needs to think about how legislation will be formulated in terms of tariff structure licences and regulatory bodies. Should it be one flat tariff or should it have different tariff structure depending on the usage”. CII President, Arun Bharat Ram said, ‘The Government should come up with forward looking policies so that emerging economies can look at India as a model to follow”.

TCL Holding Ltd. (China) Chairman and President Li Dongsheng said that since India and China have almost one third of the world’s population, it is the responsibility of the two countries to jointly promote the benefits arising out of convergence to other countries. 

INCENTIVES TO IT SECTOR 

Considering the growth profile of the IT segment, the government has announced a series of undernoted policy initiatives to give the necessary momentum to this vital segment :- 

  • Export Promotion Capital Goods scheme (EPCG) has been rationalised and extended uniformly to all sectors without any threshold limit on payment of 5% duty. Units in electronics and software sectors have option to apply for EPCG Licence to the competent authority on the basis of self-declaration regarding the nexus between the CG to be imported with the items to be exported. 
  • Foreign investment of upto 100% is permitted in units set up solely for exports on automatic  route. Various incentives are available for export-oriented units, which include duty free imports of capital goods, raw-materials, components and other inputs, tax holidays against export and acces to the domestic market. Such units can be set up under any of the schemes, viz. Electronics Hardware Technology Park (EHTP), Software Technology Park (STP), Export Processing Zone (EPZ)  and  100%  Export Oriented Units (EOU). The EHTP scheme has been designed to meet the specific requirement of a globally-oriented electronics sector. Software Technology Park Scheme is an export-oriented  scheme for the development and export of computer software using data communication links or in the form  of physical  media, including export of professional services. EHTP and STP schemes are implemented under the aegis of the Ministry of Information Technology through a single window mechanism of the Inter-Ministerial Standing Committee (IMSC). 
  • As per Exim Policy, 1997-2002 (incorporating amendments made upto 31.3.2000) Special Economic Zones shall be set up enabling hassle-free manufacturing and trading for export purposes. The units in these zones shall be treated as being outside the customs territory of the country. The units in these Zones shall not be subjected to any pre-determined value addition, export obligation, input output/wastage norms. Sale in Domestic Tariff Area by the units in these Zones will be permitted only on payment of full Customs Duty. 
  • Import of second hand capital goods which are less than 10 years old will be allowed to be imported without obtaining any licence, on surrender of SIL. 
  • A special stock option scheme for Indian Software Companies linked with ADR/GDR offerings by these companies, as an instrument to enable these companies to provide incentives to retain their highly skilled professionals, has been notified vide Reserve Bank of India (KBI) A.D. (M.A.) Circular No. 25 dated 7.8.98. 
  • RBI has framed Guidelines dated 8.8.98 for sanction of working capital finance to information technology and software industry. 
  • A National Venture Fund for Software and IT Industry (NFSIT) has been set up with a corpus of Rs. 100 crores, out of which MIT shall contribute Rs. 30 crores. 
  • Provision for issue of Sweat Equity by companies has been introduced in the Companies (Amendment) Act, 1999. 
  • Accelerated depreciation normal for computers and computer peripherals for electronic units under Export Oriented schemes (EOU/EPZ/STP/EHTP) enhanced in the Exim Policy applicable w.e.f 1.4.2000. These shall stand depreciated to overall limit of 90% over a period of 3 years instead of around 5 years earlier. 
  • DTA access upto 50% of the FOB value of export is permitted for electronics hardware units under EOU/EPZ/EHTP schemes and the software units under EOU/EPZ/STP schemes. Broadbanding is permitted in the DTA sales of hardware items covered in the Letter of Permission. 
  • The procedures for operation of the units in the EHTP/EOU/EPZ/ STP schemes have been simplified considerably and a number of operations have been permitted on the basis of self certification,: as per Chapter 9 of Ministry of Commerce Handbook of Procedures (Vol. 1), 1997-2002 (incorporating amendments made upto 31.3.2000). 
  • Manufacturers - importers of Electronics goods having investment of Rs. 3 crores and above and units in EPZs/EHTP and STP are eligible for fast-track clearance of goods imported by them vide Ministry of Finance (CBEC) Circular No. 56/98 dated 3.8.98. 
  • Post-export duty free replenishment licence scheme for enabling import of inputs on the basis of input-output norms introduced in the Exim policy applicable w.e.f 1.4.2000. The Scheme would be available for more than 5000 such items where input output norms exist and on the basis of uniform value addition of 33%. 
  • Value addition norms for Rupee exports to Russia reduced ‘from 100% to 33% under Advance Licensing Scheme, as per Para 7.10 of the EXIM Policy, 1997-2002 (incorporating amendments made upto 31.3.99). The Depreciation on Computers has been allowed @ 60%. 
  • In the 2000-01 Budget, Customs duty  on  Computers  and Peripherals has been reduced from 20% to 15%. The Customs duty on all storage devices, integrated circuits, microprocessors, data display tubes and deflection components of colour monitors has been reduced to NIL rate. 
  • Information Technology Software is exempted from Customs Duty. 
  • EOU/EPZ/STP/EHTP units set up upto 31.3.2000 are exempted from payment of Corporate Income Tax for 10 years.
  • Definition of Computer Software, as in Section 80 HHE of the Income Tax Act has been widened to include transmission of data. 
  • Benefit of Section 80 HHE is available to supporting software developers. 
  • Exemption of withholding tax on interest on External Commercial Borrowings (ECBs) has been extended to the IT sector. 
  • Computer systems are freely importable. 
  • The donation of computers, imported duty free by EOU/EPZ/ STP/EHTP units to recognised non-commercial educational institutions, registered charitable hospitals, public libraries, public funded research and development  establishments, etc., two years after their use by the said units has been permitted vide  Ministry  of Finance Notification No. 47/98-Customs dated 16.7.98. 
  • The second-hand computers and computer peripherals donated by an outside donor to Government schools have been exempted from customs duties, vide Ministry of Finance Notification No. 18/99-Cus. dated 11.2.99. 
  • Income by way of dividends or long-term capital gains of a Venture Capital Fund or Venture Capital company from investment made by way of equity shares in a Venture Capital Undertaking, which has been expanded to include the Software and IT sectors, will henceforth not be included in computing the total income. 
  • To give thrust to Venture Capital finance, SEBl has been made the single point nodal agency for registration and regulation of both domestic and overseas venture capital funds. 
  • Under policy on portfolio investment. Foreign Institutional Investors (Flls) are permitted to invest in a company upto an aggregate of 24% of equity shares, extendable upto 30% subject to approvals. This limit has been raised from 30% to 40% in the Budget 2000-01. 
  • Under the Employee Stock option Scheme, income tax payable on income from GDRs purchased in foreign currency by a resident employee of IT software and service companies, shall be at a concessional rate of 10%. 
  • To induce more investment for R&D activities, a weighted deduction of 125% on the sums paid to any university, college or an institution or a Scientific research association for the purposes of scientific, social or statistical research has been provided.