• BUSINESS
• STARTUP

Gujarat IT/ITeS Policy 2022-27

February 11, 2022

Last Updated: February 12, 2022

Having missed the IT bus twice in the 1980s and 2000, Gujarat introduced a special employment generation incentive in the new policy to encourage IT and Information Technology Enabled Services (ITES) firms for hiring local talent.

Here are the glimpses of the policy document at a ceremony held at GIFT City Gandhinagar on Tuesday, February 8, 2022 morning.

Global IT lndustry Scenario

The technological revolution powered by Information Technology (IT) and Information Technology Enabled Services (ITeS) has changed the global economic structure permitting instantaneous communication among the far-flung operations of global enterprises.

These emerging technologies are revolutionising sectors throughout the world and have demonstrated a significant impact on businesses, Government and the labour market, thereby enabling even the smallest players to compete with traditional giants.

The year 2021 saw the global IT Industry demonstrate an overall growth of 8.6 per cent. North America dominated the market share at 35 per cent. Asia was the second-largest region holding around 32 per cent, whereas Europe marked 22 per cent. Latin America and Africa accounted for around 5 per cent market share. North America, Asia and Europe held close to 89 per cent revenue share in 2021.

India Scenario

India is emerging as the hub for ‘Digital Skills’. The Indian IT/ITeS sector is steering India’s leadership position in the global landscape in terms of employment and economic value creation.

The IT industry accounted for 8 per cent of India’s GDP in 2020. The Indian IT industry is expected to contribute 10 per cent to the country’s GDP by 2025. In the pre-Covid-19 years, from 2010 to 2018, the Indian IT market growth was recorded at 10.71 percent.

Gujarat Scenario

Gujarat is a leading industrial state in India and has been recognised nationally and globally for offering a conducive business ecosystem, which is supported by the various Ease of Doing Business(EoDB) initiatives and state-of-the-art infrastructure.

Spread across roughly about six per cent of India’s geographical area and home to five percent of the national population, Gujarat accounts for almost eight percent of India’s Gross Domestic Product (GDP).

As per the 2020 Export Preparedness Index report of NITI Aayog, Gujarat topped the index with a strong display in export promotion Policy, business environment as well as infrastructure.

The state’s Policy-driven business ecosystem primarily focuses on enhancing the industrial output and business viability of the State. However, the total share of Gujarat IT exports in FY18-19 stood at USD 422 million, which was 0.62 per cent of the total exports from Gujarat. Thus, Gujarat has a huge potential for increasing the share of exports in the IT sector.

IT/ITeS Policy 2022-27

Gujarat is committed towards promoting faster & inclusive growth in the IT/IteS sector. This policy focuses on attracting investments and generating employment across the State along with propelling growth incentives and facilitation. The IT/ITeS Policy (2022-27) will enable an innovative ecosystem, establish a robust infrastructure and further develop the state’s IT talent pool. The Policy will reinforce various elements of the IT/ITeS ecosystem and introduce support for co-working spaces to establish Gujarat as a ‘destination of choice’.

Highlights

• First of its kind – Bundles incentive scheme : CAPEX – OPEX model.
• Early mover advantage to first three IT/ITES companies under Mega Projects.
• Facilitating futuristic IT cities to promote Walk-to-Work culture.
• Gujarat AI school at GIFT City – Placing Gujarat at the frontier of technological innovation.
• Fostering Cloud: Bringing Cable Landing Station (CLS) to Gujarat Special focus on Data Centre.
• Nurturing grassroots – Digital literacy & technology awareness programs.
• Enabling creation of state-of-the-art Co-working IT office spaces.

Salient Features

• CAPEX supports up to INR 50 CR for IT/ITeS units and up to INR 200 Cr for Mega Projects.
• OPEX supports up to INR 20 Cr per year for IT/ITeS units and up to INR 40 CR per year for Mega Projects.
• Employment Generation Incentive (EGI) up to INR 60,000 per employee.
• Atmanirbhar Gujarat Rojgar Sahay – up to 100% reimbursement of employer’s contribution of EPF.
• Direct Benefit Transfer (DBT) up to INR 50,000 for every youth towards IT Skills Enhancement.
• Fiscal and Non-Fiscal incentives for development of IT Cities / Townships up to INR 100 Cr.
• Rental subsidy up to INR 10,000 per month per seat under Government facilitated infrastructure & empanelment model.
• Interest Assistance on term loan up to 7% of the principal amount.
• 100% reimbursement of Electricity Duty.
• R & D Center / Institutes: CAPEX support up to INR 5 Cr.
• Data Centers: CAPEX support up to INR 150 Cr and power tariff subsidy.
• Cable Landing Station (CLS): CAPEX support up to INR 20 Cr and power tariff subsidy along with other Non Fiscal Incentives.
• Facilitation for land allotment.
• Online investor Facilitation platform.

Cheers from industry

The industry veterans hailed the new policy. Amit Saluja, Centre Head of NASSCOM Centre of Excellence at Gandhinagar termed the policy “transformational”, which will “drive a lot of growth in the IT and ITeS industry in Gujarat.”

“The focus on skilling, preparing industry-ready talent, and providing robust infrastructure is a meaningful endeavour to take Gujarat among the top-5 states in the IT industry,” he added.

Welcoming the policy, Tapan Ray, MD & Group CEO, GIFT City has hinted that it will boost “fintech and start-up activities giving rise to quality employment opportunities, leading to overall prosperity of the region.”

Rajiv Bhatia, President and Country Head, Analytix Business Solutions stated that the new policy will play a catalyst role in the growth of the IT & ITES industry in the State.

“We look forward to supporting this excellent policy by adding growth and expansion to our operations in the State,” he said.

In the End…

Main objectives of Gujarat IT/ITes Policy 2022-27 are to transform State IT industry in next five years by creating high skilled, industry-ready IT talent pool; provide a state-of-the-art IT Infrastructure; develop a unique and simplified incentive scheme; establish a robust cloud ecosystem, encourage startup ecosystem in the state and foster research & development in new and emerging technologies such as Artificial Intelligence, IoT, Machine Learning, Quantum computing, Blockchain, etc.

Do you have any IT startup ideas? Would like to explore its setup, infrastructure or implementation cost in Gujarat region in India then let’s be in touch.

References

https://gil.gujarat.gov.in/Media/DocumentUpload/IT%20POLICY-FInal-2022.pdf