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Summary: National Policy on Software Products (NPSP)

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On 28 February 2019, the cabinet approved the National Policy on Software Products. Currently, the Indian IT/ITeS (Information Technology and Information Technology Enabled Services) account for 8% of Indian GDP at $16,800 crore, and account for nearly 14 million direct and indirect jobs. It is expected to contribute $3,500 crore to the economy by 2025.

Despite this, India remains an importer of software products, not an exporter. The software services are largely service-oriented, or ancillary to what is produced outside India. If software products are developed in India, it will engender a pool of intellectual property that will reverse the flow of investment and business into the country. As a result, the primary focus of this policy is to promote indigenous innovation, and a pool of intellectual property that enables the growth of IT industry at large, and bolsters employment in the sector.

Adopting a three-pronged approach to its mission, the policy aims to:

  • To create intellectual property driven sustainable Indian software product industry à 10x increase in global software product market share by 2025
  • To create a talent pool for the software product industry
  • To build a cluster-based innovation driven ecosystem National Software Products Mission to be set up with participation from government, academia, industry

Here are the main takeaways from the policy’s strategies:

Create a robust software products business ecosystem

This will include:

  • Creation of an Indian Software Product Registry
  • Creation of a single window platform for the software industry to fast-track legal and regulatory issues regarding import/export and opening/shutting software product enterprises
  • Classification of software products using a model HS (harmonized system) code which will help in tracking, exports, and promotions
  • Tax incentives in the form of tax-deductible R&D expenditure on indigenous software products

Promote entrepreneurship and innovation

Since the aim is to promote native intellectual property production, this will include:

  • Incubating 10,000 software product start-ups to create employment for a million people; 10%, or 1,000 of these start-ups, will be in Tier-II and Tier-III cities
  • Software Product Development Fund (SPDF) with a corpus of ₹1,000 crore; this will also have a corpus of ₹5,000 crore will be dedicated to finally having at least 100 Indian software product companies with valuation of ₹500 crore, or employing 200 people
  • Create a pool of intellectual property using a budgetary outlay of ₹500 crore to support research and innovation on software products in institutes of higher learning; a Centre of Excellence to promote design and development of software products
  • Programme to organise 20 dedicated challenge grants to solve societal challenges using software product solutions
  • Create 20 sector-specific Indian software product clusters around existing sectors

Human resource development

  • FutureSkills programme that upskills/re-skills 3 million IT professionals in emerging technologies; special emphasis on modules related to software products will be added to create 1 million IT professionals who can create IP-driven software products
  • Talent Accelerator programme to target 100,000 school and college students
  • Talent pool of 10,000 software product leaders; will also be interlinked with mentor pool for incubators and clusters

Improving access to domestic market and cross-border trade promotion

The primary focus of this is to decrease the public sector’s reliance on foreign produced software. As a result, the Indian Software Product Registry will be integrated with Government e-market (GeM). Furthermore, framework to preferentially include Indian software products in government procurement will be developed, in line with Public Procurement (Preference to Make in India), Order 2017.

Since the aim is to create a commons of Indian software products, open APIs will be promoted in both public and private sector to promote collaboration and exchange of information.

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To implement this policy, the government will establish National Software Product Mission (NSPM) in MeitY under a Joint Secretary. Its primary objective is to design strategy to develop software product industry and establish India as global software product hub. The NSPM will monitor initiatives taken under this policy and create 3.5 million employment opportunities and boost software products revenue by 10x by 2025.

You can find the National Policy on Software Products here.

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*Update (February 26): This post has been updated to represent the final version of the Rules that were notified on Thursday evening.  The government...

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