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The Ministry of Electronics and Information Technology (MeitY) has released a draft paper on the National Policy for Software Products (pdf), aimed at promoting and stimulating the software products ecosystem. To execute the suggestions in the draft paper, MeitY will launch a ‘National Software Product Mission’ with participants from the industry. The agency is accepting comments/views on the paper at ajaik@meity.gov.in and sanjeevk.gupta@meity.gov.in, till the 2nd of December. MeitY has updated its deadline and is now accepting comments till the 9th of December.

According to MeitY, the IT industry can contribute up to $350 billion to the GDP, and generate 30 million jobs by 2020. However, the Ministry mentions that various bottlenecks like low employability of existing talent, lack of infrastructure development, competition from other low cost countries etc., need to be addressed to promote growth in the sector. The agency said that currently, the total revenue of software products industry in India is around $6.1 billion out of the total $143 billion generated by the Indian IT industry, with the major contribution coming from the IT services industry.

Setting up an Inter-Ministerial Coordination Group:

MeitY asks for setting up an Inter-Ministerial Coordination Group to address concerns that are specific to the software product industries, including ensuring the ease of doing business in the country. A consultation process under this group will also define parameters like what are software products, digital products/goods and software products company.

The agency will also enable incorporation of software products companies through a fully online process, create an online closure process for companies & startups through STPI (Software Technology Parks of India) in line with the recommendations of the inter-ministerial coordination group and look to simplify rules and regulations for establishing, operating, financing and exit and closure of a business.

Funding & incubation:

MeitY suggests allocating a defined portion of the Rs 100,000 crore Electronic Development Fund, with a support of Rs 100 crore by MeitY, under the PPP (public private partnership) model, for funding software startups. Additionally, it intends to set up an Innovation Fund by the Ministry of Finance, promoted by Indian residents, for domestic software development and providing fiscal and other incentives to software product startups with a revenue over Rs 25 crore and direct employment of over 25 people. Other than this, the paper suggests enabling easy employee stock options for software product companies.

The agency also suggests establishing 30 dedicated entrepreneur parks across Tier 2 and Tier 3 cities which will provide support for technical software and other infrastructure to develop software products, other than providing fiscal incentives for startups in Tier 2 & 3 cities. In addition to this, it suggests setting up challenge grants for software in education, healthcare, sanitation, agriculture and other sectors in collaboration with NASSCOM, iSPIRT, STPI and other institutions.

Taxation:

The agency will look to promote easy, fair, neutral and transparent tax regime favourable to Indian software products, in addition to demarcating tax for software products from software services. It mentions there is a need to provide a level playing field for Indian software products traded through the Internet, with respect to indirect taxes.

Domestic adoption:

The agency mentions there is a need to develop a framework for inclusion of Indian software products in Government procurement, as well as a cloud based infrastructure with a database of Indian software that has application in e-Governance. It suggests promoting the usage of Indian software in government sectors like defence, space, atomic energy etc., and in emerging sectors like smart cities, healthcare, e-learning etc. It also suggests the use of open APIs and Open Data for e-government services.

Special incentives will also be provided to software products companies that develop solutions for achieving actions under the Digital India programme, like bridging the digital divide, empowering the less privileged citizens and differently abled etc. Additionally, the paper identifies a need to increase the access to domestic software in the MSME segment.

Trade:

MeitY will look to promote Indian software products in India’s foreign aid program and develop trade promotion agreements with other product making nations. It will also look to enable electronic payment infrastructure to enable digital transactions, nationally and internationally.

Employment, education & promotion:

MeitY will encourage Indian SaaS, enterprise, cloud infrastructure, data analytics, IoT and mobile products through various market access initiatives, and will have a special focus on promoting cloud computing, usage of ecommerce, information security, etc.

The National Skills Mission will be used to train skilled IT professionals and various initiatives for encouraging entry level IT professionals to pick up industry relevant tech through short term courses, workshops, hackathons, competitions etc. will be executed. It will also invest in research by creating a Software Product Industry Research Program (SPIRP), that will focus on developing technologies at IISc/IITs/IIITs that can be used by multiple startups, developing a relationship between publicly funded research centers and product companies.

Overall, MeitY expects to create 3.5 million direct and indirect jobs by 2025 through various initiatives of the proposed software product policy.