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Export Promotion Schemes

After the economic reforms of 1991-92, liberalization of external trade, elimination of duties on imports of information technology products, relaxation of controls on both inward and outward investments and foreign exchange and the fiscal measures taken by the Government of India and the individual State Governments specifically for IT and ITeS have been major contributory factors for the sector to flourish in India and for the country to be able to acquire a dominant position in offshore services in the world. The major fiscal incentives provided by the Government of India have been for the Export Oriented Units (EOU), Software Technology Parks (STP), and Special Economic Zones (SEZ).

Software Technology Parks (STPs)

For the promotion of Software exports from the country, the Software Technology Parks of India was set up in 1991 as an Autonomous Society under the Ministry of Electronics and Information Technology. The services rendered by STPI for the Software exporting community have been statutory services, data communications servers, incubation facilities, training and value added services. STPI has played a key developmental role in the promotion of software exports with a special focus on SMEs and start up units. The STP Scheme which is a 100% export oriented scheme has been successful in fostering the growth of the software industry. The exports made by STP Units have grown over the years.

The STP scheme allows software companies to set up operations in convenient and inexpensive locations and plan their investment and growth driven by business needs. More than 4000 units are registered with STPI.

Benefits under STP Scheme:

1. Customs Duty Exemption in full on imports.

2. Central Excise Duty Exemption in full on indigenous procurement.

3. All relevant equipment / goods including second hand equipment can be imported (except prohibited items).

4. Equipment can also be imported on loan basis/lease.

5. 100% FDI is permitted through automatic route.

6. Sales in the DTA up to 50% of the FOB value of exports permissible.

7. Use of computer imported for training permissible subject to certain conditions.

8. Depreciation on computers at accelerated rates up to 100% over 5 years is permissible.

Click here to visit STPI website -http://www.stpi.in/

Special Economic Zones (SEZ) Scheme

In 2005, the Department of Commerce, Ministry of Commerce & Industry, Government of India has enacted the Special Economic Zone (SEZ) Act, with an objective of providing an internationally competitive and hassle free environment for exports. A SEZ is defined as a "specifically demarked duty-free enclave and shall deemed to be foreign territory (out of Customs jurisdiction) for the purpose of trade operations and duties and tariffs". The SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006.

It provides drastic simplification of procedures and a single window clearance policy on matters relating to central and state governments. The scheme is ideal for bigger Industries and has a significant impact on future Exports and employment.

The SEZ policy aims at creating competitive, convenient and integrated Zones offering World class infrastructure, utilities and services for globally oriented businesses. The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and creation of related infrastructure.

Salient features of SEZ scheme are as under:

1. Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units

2. 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

3. Exemption from Central Sales Tax, Exemption from Service Tax and Exemption from State sales tax. These have now subsumed into GST and supplies to SEZs are zero rated under IGST Act, 2017.

4. Other levies as imposed by the respective State Governments

5. Single window clearance for Central and State level approvals.

6. This scheme has a significant impact on future exports & employment. About 230 IT-ITeS specific SEZs have been notified by the DOC.

Click here to visit the website - http://www.sezindia.nic.in/