July 2013

Software Technology Parks of India

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Dr Omkar Rai, Director General, Software Technology Parks of India (STPI)

Software Technology Parks of India (STPI) was established and registered as an Autonomous Society under the Societies Registration Act 1860, under the then Department of Electronics, Government of India on 5th June 1991 with an objective to implement the STP / EHTP Scheme, set-up and manage infrastructure facilities and provide other services like technology assessment and professional training.

Contributions to software industry
Software Technology Park of India (STPI) had made a major contribution towards the country carving a niche for itself in the global IT arena. STPI, through administration of STP or the Electronic Hardware Technology Park (EHTP) scheme and provisioning of High Speed Data Communication to the software exporters, has played a seminal role in the phenomenal growth of IT & ITES sector in India. When STPI was established in 1991, the sector’s export was a mere `52 Crore in 1992-93 but it is around `231285 Crore in 2012-13.In 2012-13, IT software and services added about 1,88,310 jobs, taking the direct employment number to three million, whereas the indirect employment attributed to the sector is nearly 9.5 million. The spectacular growth performance in the IT-BPO industry in the last decade has helped the industry contribute substantially to India’s GDP. In 2012-13, the IT-BPO industry’s contribution to GDP was eight percent as compared to 7.5 percent in 2011-12.
After supporting development of IT/ITES and ESDM industry in major cities, STPI centres have been established in Tier II and Tier III locations. For achieving a balanced growth of the IT Sector, STPI with 53 centres has now reached to every part of the country. Out of these centres, 46 centres fall in the Tier 2 and Tier 3 cities. Apart from the statutory,promotional and datacom services, STPI has been providing incubation facilities to SMEs and start-up units. STPI has created incubation space in most of the centres with Plug & Play facilities for start-up companies. These incubation services enable small and medium enterprises to set up operations at minimal fixed costs with low start-up investment, thereby encouraging entrepreneurship and creating jobs. STPI has also helped in proliferation of private IT parks across the country which in turn has contributed to the growth of the IT industry.

Functions of STPI

Infrastructure & Support Services
STPI establishes and manages infrastructural resources such as communication facilities, core computers, buildings and amenities etc. in the Software Technology Parks and provides various services (data link, statutory services etc.) to users who undertake software development for export purposes. Similar services are also extended to users who cater to the domestic market.

Promotional Activities
STPI promotes secondary and tertiary locations in the country by establishing STP facilities in such places in order to extend the coverage of the STP / EHTP Scheme. STPI undertakes other promotional activities such as technology assessments, market analysis, market segmentation, organization of IT events/conferences etc. It works closely with various State Governments and acts as an
interface between Industries and the Government.

Training & Entrepreneurship Development
The activities of STPI in the above regard include the following:

(a) To organise advanced training in the field of software technology for skill development;
(b) To encourage entrepreneurship, by regularly organising Entrepreneur Development Programs;
(c) To assist State Governments in formulating IT policies and liaison for promoting IT industries in the respective states to achieve higher cumulative growth of exports from all parts of the country;
(d) To enhance quality and security standards in the IT industries; and STPI also intends to create incubation with plug and play facilities with low operation cost in order to promote small and medium entrepreneurs.


IT/ITES and ESDM Sector is
 Critical
Information Technology sector has been one of the key drivers for faster and inclusive growth in the Eleventh Five Year Plan period. It has contributed immensely to the development of Indian economy. India has become a global power house in Information Technology sector. Over the years various initiatives have been taken in the Information Technology sector to foster innovation, improve delivery of e-Services to citizens and bring about profound change in the way business is conducted and the way Government works. Information Technology has tremendous potential for the future of India.
In view of the overall priorities of the Government in the 12th Five Year Plan, a focused and coordinated push of the IT sector during 12th Plan period will help India achieve faster, sustainable and more inclusive growth. Since, the IT industry in the country has matured enough to venture into R&D and IPR development. A need is also being felt to disperse the IT industry to smaller towns for balance regional growth and also to create huge employment opportunity in the country. In this regard, Government of India, Ministry of Communications and IT has come up with Triad of policies for IT, Electronics and Telecom which envisage accelerating the pace of the growth in these sectors.
The IT / ITES sector is critical for India not only because it has become one of the key segments for the Indian economy but the sector has a multiplier effect on many sectors in the country. The sector is responsible for creating significant employment opportunities in the economy. IT services exports [including Engineering Research and Design (ER&D) and software products] continue to be the largest employer within the industry The sector is responsible for enabling employment to an additional 8.9 million people in various associated sectors – catering, security,transportation, housekeeping, etc. Many of the persons thus employed belong to rural areas/small towns of India.
The growth of the IT/ITES and ESDM sector in India has positively contributed to the social growth of the country, empowering women professionals, improving employment prospects of educated youth and serving as a role model to the youth, who might have become frustrated otherwise. IT/ITES and ESDM units have contributed to the growth of several cities of the country. Its capabilities have helped the delivery of public services in sectors like health, education, literacy, water supply and sanitation etc. The growth of the IT/ITES and ESDM units has boosted India’s image in the global arena. Above all, it has served to help the inclusive socio-economic growth of the country.
This sector especially MSMEs has been facing multiple challenges, ranging from macro to micro and with the withdrawal of the Income Tax benefit available under section 10A of the Income Tax Act for the STP units, IT/ ITeS Sector have to pay higher taxes and surcharge, which may adversely impact their growth. In order to mitigate the impact of withdrawal of the fiscal benefit of Income Tax exemption (10A) and to support IT/ITeS industry in effectively meeting the above challenges, DeitY, in consultation with STPI, is formulating a new set of incentive schemes for the sector.

STPI services in J&K
Since its inception in J&K, STPI has been playing a great role in promoting the SMEs in the state in the field of IT and ITeS. STPI has been providing single window facility to IT/ITeS industry, High Speed Internet Connectivity and Incubation facilities to start-up units in J&K. To nurture and promote MSMEs/Start-ups, STPI has conducted various training programs at STPI Srinagar throughout the year. STPI has also been providing consultancy services to state government for various e-governance projects.

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