Political data:

(investment policy; infrastructure and tax benefits by govt of India)

Policy and Promotion

(Source: http://www.investindia.gov.in/ http://finmin.nic.in/ ) IT and ITeS has played a major role in the overall growth and development of India. In the electronics and IT sector, 100% FDI is permitted under the automatic route. The major fiscal incentives provided by the Government of India in this sector have been for export-oriented units (EOU), software technology parks (STP) and special economic zones (SEZ). Software Technology Parks (STPs) were set up as autonomous societies under the Department of Electronics and Information Technology in 1991 to promote software exports from the country. There are about 51 STP centers that have been set up since the start of the programme. STPs enjoy a number of benefits that include exemptions from service tax, excise duty and rebate for payment of Central sales tax. The most important incentive available is 100% exemption from income tax of export profits; the STPs have been instrumental in boosting Indias IT and ITeS exports. The Special Economic Zones (SEZ) scheme was enacted by the Government of India in 2005 with an objective of providing an internationally competitive and hassle-free environment for exports. It provides drastic simplification of procedures and a single-window clearance policy on matters relating to Central and state governments. Under the scheme, the exemption from income tax is tapered down over 15 years from the date of commencement of manufacture. There is 100% exemption of export profits from income tax for the first five years, 50% for the next five years and 50% for next five years subject to transfer of profits to special reserves. According to the SEZ Approval Board of India, the maximum number of SEZs has been approved for the IT-ITeS sector. Overall for the IT, ITeS, electronic hardware and semiconductor sectors, the government has given formal approval to 354 SEZs and the number of notified SEZs in these sectors was 236 until 2010. Information Technology Investment Regions (ITIRs) were notified in 2008 in order to address the sectors infrastructure needs. As per plans, these regions will be endowed with excellent infrastructure that will allow companies to reap the benefits of co-siting, networking and greater efficiency through use of common infrastructure and support services.

R&D promotion is also being encouraged by the government; major highlights include promoting start-ups that are focused on technology and innovation, and a weighted deduction of 150% of expenditure incurred on in-house R&D under the Income Tax Act. In addition to the existing scheme for funding R&D projects, the Department has put in place the two key schemes Support International Patent Protection in Electronics & IT (SIP-EIT) and Multiplier Grants Scheme (MGS). The Cabinet has approved the proposal to provide a special incentive package to promote large-scale manufacturing in the electronic system design and manufacturing (ESDM) sector which is called the Modified Special Incentive Package Scheme (M-SIPS). The main features of M-SIPS are as follows: The scheme provides subsidy for investments in capital expenditure 20% for investments in SEZs and 25% in non-SEZs. It also provides for reimbursement of CVD/excise for capital equipment for non-SEZ units. For high technology and high capital investment units, such as fabs, reimbursement of Central taxes and duties is also provided. The incentives are available for investments made in a project within a period of 10 years from the date of approval. The incentives are available for 29 category of ESDM products including telecom, IT hardware, consumer electronics, medical electronics, automotive electronics, solar photovoltaic, LEDs, LCDs, strategic electronics, avionics, industrial electronics, nano-electronics, semiconductor chips and chip components, other electronic components and EMS. Units across the value chain starting from raw materials, including assembly, testing and packaging, and accessories of these categories of products are included. The scheme also provides incentives for relocation of units from abroad. The scheme is open for three years from notification. Over and above these, the government has been taking steps to bring down the total taxation level on electronics hardware. The general rate of excise duty (CENVAT) has been reduced to 8% and Central Sales Tax (CST) has been reduced from 3% to 2%. VAT on IT products is at 4%, as per MoC&IT. Further, under the Technical Advisory Group for Unique Projects (TAGUP), the government is developing IT infrastructure in five key areas, including: New Pension System (NPS) Goods and Services Tax (GST)

Setting up the National Taskforce on Information Technology and Software Development with the objective of framing a long-term national IT policy for the country Enactment of the Information Technology Act, which provides a legal framework to facilitate electronic commerce and electronic transactions Setting up of more than 50 STPs for the promotion of software exports SEZs are being set up to enable hassle-free manufacturing for export purposes. Sales from domestic tariff areas (DTA) to SEZs are being treated as physical exports. This entitles domestic suppliers to drawback/DEPB benefits, CST exemption and service tax exemption. 100% income tax exemption on export profits is available to SEZ units for five years, 50% for next five years and 50% of ploughed back profits for five years thereafter.

changing political scenario

Govt of Gujarat have allocated Rs 600Cr for skill up gradation. Provision has been made for setting up 30 new it is, strengthening and modernization of existing ITIs, increasing the seats by 5000 in different ITIs, to train 2.25 lakh youngsters in IT through eMPOWER foreign language learning courses and training classes for competitive examinations conducted by the UPSC and GPSC etc. It is also planned to train approximately 1 lakh youngsters of the Urban Poor for employment UMEED Programme. It is planned to establish Skill Development University & Skill Development Corporation (Source: http://financedepartment.gujarat.gov.in) Govt of India has allocated Rs 1000Cr for the skill development for the whole of country. Expecting the LS polls in 2014, which showing indication of change over powers from the current ruling party, possibility of NDA clinching the power(A/C to the survey conducted by CNN-IBN TV18). Where NDA industrial friendly and focused on the growth strategy and bring new policies for economic reforms, which has made many FDI-FII to rethink or hold the decision of investment in the IT/ITES, engineering and R&D sector.

India ranked 80th out of 104 countries in the World Economic Forums Corruption Sub-Index and 90th out of 146 countries in Transparency Internationals Corruption Perceptions Index. It is a major concern, for the FII's. And it is hampering the Indian image globally. Source: (http://www3.weforum.org/docs/WEF_Scenario_IndiaWorld2025_Rep ort_2010.pdf)

updating the technology

(Source: World Economic Forum) Thou India is one of the largest software exporter in the world, India lags behind in the Innovation, implementation, adaptation of the technology. Also India is considered as the Factor driven stage if the development which is primary stage. Union HRD ministry has asked the Universities and institutions to encourage and increase the output Phd holders, research recourse which is very essential for the industries.