The government of Telangana has released a draft blockchain policy, which proposes the creation of India’s first ‘Blockchain District’ to house companies working in the field, and with companies operating in the district receiving government subsidies. Here is a summary of what the policy suggests/recommends:

Focus areas of the state

  1. The state will focus on “high-potential sectors” first: banking, financial services and insurance; pharmaceuticals and healthcare; government departments and institutions; and logistics and supply chain.
  2. The state will work closely with stakeholders in the chosen sectors with a four-point agenda:
    a. Forming a focus group and consortium to bring together industry players
    b. Shaping up a conducive regulatory framework
    c. Encouraging developers, researchers and start-up community to work closely on sector-specific solutions and use cases to bring down the costs while expediting its adoption. Supporting the creation of a local talent pool in keeping with unique demands of the sector.
  3. It will support representation of the industry consortium at various national and international forums.
  4. Having piloted or implemented various use cases in securing certificates, land records and microfinance, the state will identify new use cases in areas such as voting, financial transactions between government agencies and citizens or contractors, supply chain visibility in agriculture, and citizen registration.

Incentives for enterprises

  1. 25% subsidy on lease rentals up to Rs 5 lakh per year for the first 3 years of operations
  2. 50% subsidy on the exhibition rentals for SMEs operating out of Telangana participating in national or international exhibitions, limited to 9 square metres of space.
  3. A tailor-made incentive package for mega blockchain projects or marquee blockchain companies.
  4. Land at subsidised rates for blockchain companies from Telangana State Industrial Infrastructure Corporation Limited. The guidelines specified for regular ICT companies in terms of annual revenue, investment promises, and employment creation promises will be partially relaxed for blockchain firms.
  5. For all the research projects that companies sponsor at technical universities, the government will make an equal investment of up to Rs 5 lakh a year for three years.

Incentives for start-ups

  1. 100% reimbursement of State Goods and Services Tax (SGST) for three years to start-ups with revenues less than Rs 5 crore
  2. 75% reimbursement for travel and ticket costs for selected blockchain conferences around the world for selected start-ups, subject to a maximum of Rs 2 lakh a year per start-up, in the first 2 years of operations
  3. R&D grant up to 10% of the R&D expenses or up to 2% of the annual turnover, whichever is lower
  4. One-time start-up grant of Rs 10 lakh to a maximum of 10 blockchain start-ups per year for the next three years
  5. The selected start-ups will be mentored by industry partners of the Blockchain District
  6. Patent Filing: Reimbursement of 50% of the cost of filing patents, subject to a maximum of Rs 5 lakh
  7. Quality Certification: 50% subsidy on expenses incurred for quality certification, subject to a maximum of Rs 5 lakh
  8. 25% reimbursement of internet charges up to a maximum of Rs 2.5 lakh a year for the first 3 years

Incentives for other entities

  1. Any organisation conducting a blockchain-related event can approach the government for sponsorship support. It will offer a sponsorship of Rs 1 lakh to 25 lakh based on the scale, quality, and uniqueness of the event.
  2. All blockchain-related communities in Hyderabad will be provided venues for meetups, gatherings, and small-scale events for free or at a subsidised cost.

Non-financial incentives

  1. Blockchain product firms will be exempt from the Pollution Control Act, except in respect of IT Parks / IT SEZ campuses with built-up areas of more than 20,000 sq metres.
  2. Firms will be exempt from inspections under the following Acts and the Rules, barring inspections arising out of complaints:
    a. The factories Act 1948
    b. The Maternity Benefit Act 1961
    c. The Telangana Shops and Establishment Act 1988
    d. The Contract Labour Act (Regulation & Abolition) Act 1970
    e. The Payment of Wages Act 1936
    f. The Minimum Wages Act 1948
    g. The Employee Exchanges (Compulsory Notification of Vacancies) Act 19593.
  3. General permission will be given for three shift operations with women working in the night as these firms provide services to global customers.
  4. Firms’ services will be declared as essential services under Telangana State Essential Services Maintenance Act.

Supporting infrastructure

  1. The government will provide office, co-working and incubation spaces to all blockchain start-ups at highly subsidised prices
  2. It will create a sandbox for prominent blockchain protocols, which will provide a safe environment for businesses to test and develop blockchain products and services.
  3. The state will set up an international liaison office for the blockchain district to collaborate with international players and bring in investments.
  4. IT infrastructure for cloud-hosted computing and storage through T-Cloud at subsidised rates.

Developing the talent pool

To grow the blockchain talent pool in Telangana, the government will:

  1. Offer blockchain courses to engineering students through the Telangana Academy for Skill and Knowledge (TASK).
  2. Partner with industry to establish a training and certification agency to re-skill and up-skill the existing workforce to meet future demand.
  3. Design an elite certification program for a select few techies with stringent screening tests. It will be run in collaboration with industry players.
  4. Encourage industry partners to offer internships to students, who may secure a pre-placement offer at the end of the internship.
  5. Encourage technology institutions to add blockchain to their curriculum and give students the option of taking up certificate programs in blockchain technology from TSBor.
  6. Encourage its employees or professionals to undergo workshops in blockchain technology to facilitate better adoption within government.
  7. Partner with blockchain players to facilitate workshops and conferences to provide specific insights, and foster innovation through hackathons, national challenges, boot camps and accelerators.

Promoting research and innovation

  1. The Blockchain District will provide a platform for institutions and industry to give students hands-on experience through internships.
  2. The state will encourage immigration of talent by through a research fellowship for conducting blockchain research in Telangana. The international liaison office will encourage international firms to open offices in the state.
  3. It will promote research, innovation and prototype development for solutions in blockchain design and to develop Cryptographic Algorithms and Security Protocols.
  4. The government will facilitate partnerships between industry players and the Blockchain District to set-up incubators or accelerators. It will support select incubators and accelerators with specific packages.
  5. The state will set up research chairs in select institutes and fund scholars working in the domain.
  6. Researchers in Telangana who are recognised for their work internationally will be felicitated at an annual blockchain event. They will also have the chance to win an all-expenses-paid trip to one of the major academic conferences on blockchain.

Enabling collaboration and building community

  1. Since cryptocurrencies are more popular than blockchain, many people still tend to confuse between the two. The government will run awareness programs to tackle this challenge.
  2. It will give blockchain communities the necessary infrastructure and sponsorship for gatherings and events. It will also support new and upcoming blockchain communities.
  3. It will partner with blockchain companies to showcase success stories from the state at global conferences.
  4. It will organise an annual event with the aim of making it the most sought-after blockchain gathering in the world.
  5. It will launch a virtual community for all stakeholders – industry, governments, start-ups, investors, developers and academia. Companies will be able to post requirements and job openings on the platform, which will allow developers and start-ups to connect directly.
  6. The state will pursue memberships with industry organisations and blockchain consortiums at the national and international level.
  7. It will host seminars, workshops and lectures by industry leaders and technologists.