IT & ITES POLICY 2007

IT & ITES POLICY 2007

PROMOTING ECONOMIC DEVELOPMENT OF THE STATE THROUGH INVESTMENTS
IN IT & ITES SECTOR

1. Rajasthan is a globally famous tourist destination. Efforts are continuously being made by the State Government to improve urban infrastructure like roads, sanitation, availability of drinking water, connectivity, etc. Rajasthan can also boast of a relatively good law and order situation. In the recent years, Jaipur has emerged as favoured IT destination thanks to its good urban infrastructure with excellent social and life style infrastructure like international airport and good air and rail connectivity with major cities of the country.

Recent efforts of the State Government to improve the urban infrastructure of Jaipur and other major cities of the State have been instrumental in IT Majors investing in the State. An IT SEZ has been set up in Jaipur where companies like Infosys, Wipro and Genpact are setting up their BPO operations and Development Centres.

Given below are some of the key policy initiatives being envisaged through this Policy document:

1.1 Institutional Framework to attract investment in the State

1.1.1 BIP is the nodal agency that promotes investment in all the sectors including IT/ITES sector in Rajasthan. BIP would work on a target-based approach in marketing Rajasthan as an attractive IT/ITES destination.

1.1.2 State e-Governance Council under the chairmanship of Hon’ble Chief Minister would review IT sector related projects regularly and monitor the progress made by in this regard by BIP and other departments in the State.

1.2 Facilitation of prospective Investors

1.1.1 State Government has a single window system for providing approvals, clearances, concessions etc. To further strengthen the Single Window System, an escort service would be started in which one Government official would be made a single point of contact for getting the necessary approvals and clearances after filling up of a Single Window Form and getting registered. Efforts will be made to ensure all clearances within 60 days of filing of such cases.

1.1.2 A Committee comprising representatives of BIP, Industries Department and DoIT&C would be constituted to appraise the IT industry proposals on expeditious basis.

1.3 Success – fee based partnerships

1.3.1 The Government of Rajasthan will consider tie-ups with leading empanelled international consultancy firms and empanelled global investment promotion agencies on a success fee based approach for attracting investments in the ICT sector. The success fee will be limited to 1% of the total investment brought in, but shall not exceed Rs.40 lacs in a single case. Eligibility criteria and performance matrix of such empanelled consultants will be as per the terms and conditions set out by the Government in consultation with the Industry representatives from time to time.

1.4 ICT Hubs

1.4.1 Bhiwadi, Kota, Jodhpur and Jaipur would be developed as nucleus regions for development of IT and ITES industries. Kota has emerged as the prominent educational centre for training of young students for the IITs and other engineering colleges. The talent pool of good technical talent could be tapped for employment in the IT and ITES sector.

1.5 Self-certification allowed for IT companies on various act

1.5.1 State Government has allowed self certification for IT & ITES companies for the following:

Payment of Wages Act
Minimum Wages Act
Contract Labour (Regulations & Abolition) Act
Payment of Bonus Act
Payment of Gratuity Act
Maternity Benefits Act
Child Labour (Prohibition & Regulation) Act
Workmen’s Compensation Act
Shops and Commercial Establishments Act
Inter-State Migrant Workmen Act
Equal Remuneration Act
Water and Air Pollution Act

1.5.2 In addition, Government of India’s notifications for the following are already in effect in the State

Employees’ State Insurance Act
Employees Provident Fund and Miscellaneous Provisions Act

1.5.3 Employment Exchange Compulsory Notification of Vacancies Act, 1959 and Apprenticeship Act, 1961 will not be applicable to IT/ITES industry employing less than 25 employees.

1.5.4 Inspection by Labour Department would be waived off for IT/ITES Industry

1.5.5 Industrial Standing Order Act, 1946 would not be applicable to IT/ITES industry as this sector already has more beneficial rules to its employees and all employees are categorised as knowledge workers.

1.5.6 Local bodies shall give top priority in providing basic amenities like water, electricity & sewage facility for IT/ITES industry.

1.5.7 The Departments concerned would be encouraged to reengineer their processes so as to enable electronic filing of all legal returns/forms etc.

1.6 IT & ITES declared as Public Utility Services

1.6.1 State Government has declared IT and ITES units as Public Utility Services under the provisions of the Industrial Disputes Act, 1947

1.7 Land and Office Infrastructure Development Incentives

1.7.1 Ready availability of high quality office space serviced with all basic amenities like high-speed telecommunication links with redundant connectivity, uninterrupted power supply, central air-conditioning, etc. are critical to attract IT/ITES companies. Therefore, State Government would facilitate creation of such infrastructure in the State.

1.7.2 Private IT Park, IT unit developers would be given assistance in procuring land and change in land use in Master Plan, wherever feasible.

1.7.3 The acquisition of land in all designated IT parks shall be as per Land Acquisition Act.

1.7.4 State Government would encourage setting up of Special Economic Zones (SEZs) using Public-Private partnership (PPP) model at appropriate locations in the State.The State Government would provide suitable administrative and asset based support to such ventures.

1.7.5 For IT industry only, the FAR applicable shall be up to double of what is applicable for commercial buildings, provided the unit is within the Integrated Township Scheme and subject to the condition that overall FAR of the scheme area shall not exceed 1 (one). Other building regulations and provisions of Notification No. F.10 (1) UD/3/2002 dated 29.3.2007 of Urban Development & Local Self Department would apply to the buildings proposed for IT industry. For areas not covered under the Integrated Township Schemes, commercial FAR of 1.0 would be allowed.

1.7.6 For land in RIICO Industrial Areas, as per provision of Model Building Byelaws RIICO rules shall prevail. FAR in RIICO industrial areas varies from 1.75 to 1.50 depending on the land size as per RIICO guidelines.

1.7.7 50% exemption from Stamp Duty will be provided to eligible IT / ITES Industry as per provisions of RIPS – 2003 or as amended from time-to-time.

1.8 Software units in residential areas

1.8.1 State Government would permit software units to be set up in residential areas.

1.9 Power Related Incentives

1.9.1 State Government would strive to provide 100% availability of power in the long term.

1.9.2 All new IT Industry units would be provided 50% exemption from the payment of Electricity duty for 7 (Seven) years as per provisions under Para no. 8 of RIPS 2003 or as amended from time-to-time.

1.9.3 The captive power unit set up by eligible IT & ITES units will be exempted from payment of ED.

1.9.4 State Government, on the recommendations of Rajasthan Electricity Regulatory Commission (RERC), has changed applicable category of tariff from Commercial to Low Tension Industry category for IT & ITES units.

1.10 IT Incubation Centre

1.10.1 Government of Rajasthan would strive to foster entrepreneurship in the IT in the State by providing necessary assistance to the start-up companies. As a step in this direction, an IT Incubation Centre having state-of-the-art computing facilities is being set up in Jaipur through RIICO.

1.11 Fiscal Incentives

1.11.1 The Government of Rajasthan would provide all the fiscal incentives as given in the Rajasthan Investment Promotion Policy, 2003 or as amended from time-to-time to the IT/ITES companies willing to set up centres in Rajasthan.

1.11.2 VAT on all products has been rationalised to be at par with the minimum floor rate of 4%.

1.12 Special package for Micro, Small & Medium Enterprises (MSMEs)

1.11.1 The classification of Micro, Small and Medium Enterprises shall be as per the classification under the Micro, Small and Medium enterprises Act, (2006).

IT Industry units/companies with investment in Plant & Machinery up to Rs.25 lacs are classified as Micro Enterprises. IT Industry units/companies with investment in Plant & Machinery to the tune of above Rs.25 lacs and up to Rs.5 crores are classified as Small Enterprises. IT Industry units/companies with investment in Plant & Machinery to the tune of above Rs.5 Crores and up to Rs. 10 Crores are classified as Medium Enterprises.
ITES units/companies with investment in Equipment up to Rs.10 lacs are classified as Micro Enterprises. ITES units/companies with investment in Equipment to the tune of above Rs.10 lacs and up to Rs.2 crores are classified as Small Enterprises. ITES units/companies with investment in Plant & Machinery to the tune of above Rs.2 Crores and up to Rs. 5 Crores are classified as Medium Enterprises.

1.11.2 A special package of incentives would be provided to the MSMEs to promote their growth. Some of the key incentives would be as follows:

Allotment of land: State Government will endeavour to reserving land for preferred allotment to MSMEs in the IT Parks. Criteria for allotment will be prepared separately.
State Government will support TiE, NASSCOM, STPI, or any such organization in the creation of a Library for making available material on trends in technology, market intelligence, research reports and analysis etc. by contributing Rs.10 lakhs per annum for development of the SME sector by making such material available at these libraries.

1.13 First Mover Advantage

1.13.1 To encourage establishment of IT SMEs in IT Rajasthan, a subsidy up to Rs. 25 Lacs at the rate of Rs. 10,000 per employee would be given to the first five IT/ITES companies investing in the State and directly employing more than 50 employees in IT or 100 employees in ITES sector. Such employment shall be for a period of at least two years for persons domiciled in Rajasthan.

1.14 Incentives linked to Mega Projects

1.14.1 Projects creating direct employment of more than 500 people in the case of IT industry or 1000 people in ITES industries shall be defined as Mega Projects. Such projects shall be entitled to a special package of incentive of Rs. 10,000 per employee.

1.15 Facilitation to retain and develop existing ICT players within the State

1.15.1 State Government understands that the IT companies investing in the state also need to develop the competence and be world class service providers. The State Government would encourage IT/ITES companies in the State to go for certifications such as ISO, SEI-CMM (Software Engineering Institute-Capability Maturity Model: Level 3 & above) etc., so as to be competitive in the global marketplace.

1.16 Exemptions under Labour Laws

1.16.1 Given the nature of work of the IT and ITES industry, the Government would grant permission to work on a 24x7 model. These units stand exempted from the following provisions of the Shops and Establishment Act:

Closing an establishment and granting of a weekly holiday under Section 5(1) of the Act, provided that every individual has at least one day off every week and a compulsory day off in lieu of working on bank holidays. This enables the IT and ITES companies to run their operations on all the seven days of the week.
Opening and closing hours under Section 7(1) of the Act. This enables the IT and ITES industry to run a three-shift operation.
‘Working hours’ stipulation under Section 7(2) of the Act. This enables ‘flexitime’ operations for the employees.
IT and ITES industry have been permitted to engage female employees between 8 PM and 6 AM, under Section 10(b) of the Act subject to (1) Special arrangements being made for protection of female employees during these hours; (ii) Female employees being employed jointly or in a minimum group of 10 female employees; (iii) Arrangement of a separate rest room for female employees; (iv) A minimum of 50 people to be employed during these hours (including female employees).

1.17 Rebate to IT / ITES companies establishing own facilities

1.17.1 IT/ITES companies establishing their own facilities can avail rebate in the cost of land for all allotments of Government land or land made available by the RIICO according to the terms and conditions given below:

For Urban notified area by Department of UDH, Land shall be granted subject to the availability in desired location. On such land allotted for IT and ITES companies by the State Government rebate allowed shall be linked to investment.
For agricultural government land outside the urban notified area, 25% rebate on DLCC rates will be granted.
Where the land has been allotted by RIICO, upto 60% upfront rebate shall be granted in IT Parks of RIICO subject to a ceiling of Rs. 25.00 lacs, but not lesser than the cost of acquisition of the land by RIICO.

1.18 Building brand equity for Rajasthan

1.18.1 State Government shall take effective steps to build the brand equity for Rajasthan and would encourage participation in the National and International events to position the State as the preferred destination for IT & ITES industries.

1.19 Promoting Investments in Less Developed Areas of Rajasthan

1.19.1 To develop Tier II and Tier III districts as IT destinations, the State Government would consider allocation of land for IT industry at par with institutional rates.

1.20 Reliable Communication Links

1.20.1 Rajasthan already has adequate telecom capacity throughout the State. The State Government would encourage:

Presence of multiple telecom service providers offering high-speed telecommunication links with several levels of built in redundancy for all IT Parks.
Permission to set up base stations and telecommunication network equipment in earmarked areas would also be given on priority.

1.20.2 In order to attract telecom service providers to Rajasthan and encourage existing ones to expand their operations, State Government has already notified free Right of the Way (RoW) Policy allowing any entrepreneur holding the necessary licenses of ISP or telecom operator from Department of Telecommunications (DOT), to lay optic fibre along the state highways, roads, district roads, municipal areas and link-roads, free of any license fees or special charges.

1.21 Public Transport

1.21.1 The State Government would help develop sustainable means of public transport to service the needs of the IT/ITES companies and would encourage state run transport providers to sign Service Level Agreements (SLAs) with companies and infrastructure developers.

1.22 Air Connectivity

1.21.1 Jaipur is now well connected to all the major cities of the Country. Jaipur has an international airport that provides air connectivity to international destinations. This has resulted in reduction of travel time to Rajasthan for the clients of the IT and ITES companies.

1.23 Data Protection and Consumer Privacy

1.23.1 State Government would incorporate necessary regulation on Data Protection and Consumer Privacy to reassure the IT/ITES companies and their client of the safety of their data and indicate the State Government’s commitment to data protection and consumer privacy. Action will be taken to protect the Data and consumer privacy through state policies and recommendation for enactment of suitable laws.