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.
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”.
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.
TO IT SECTOR
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 :-
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.
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.
issue of Sweat Equity by companies has been introduced in the Companies
(Amendment) Act, 1999.
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.
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).
- 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.
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
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
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.
Software is exempted from Customs Duty.
units set up upto 31.3.2000 are exempted from payment of Corporate Income
Tax for 10 years.
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.
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.
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
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.