Gujarat eyes 8-fold rise in exports to Rs 25k cr with new IT policy

Aimed at promoting new SMEs, along with a few big projects, the policy looks to grow the current exports of roughly Rs 3,100 cr to Rs 25,000 cr in next five years

On the back of a new five-year Information Technology and enabled services (IT/ITeS) policy, the Gujarat Government is eyeing an eight-fold rise in IT exports from the state by the end of the policy tenure.

Aimed at promoting new small and medium units, along with some big projects, the policy looks to grow the current exports of roughly Rs 3,100 crore to Rs 25,000 crore in the next five years.

According to Vijay Nehra, Secretary, Department of Science & Technology, Gujarat government, the new policy has been developed on the capital expenditure (capex) and operations expenditure (opex) model. "We are adopting a Capex-Opex Model, to provide a simplified and flexible approach towards the industry. So that they can plan the expenditure and turnaround the viability concerns," said Nehra.

Compared to the previous policy, the financial incentives have been hiked from the previous Rs 1 crore to Rs 100-200 crore based on certain conditions. With the new policy being operative from the day of notification, the same would expire on March 31, 2027.

Unveiled on Tuesday by Gujarat Chief Minister Bhupendra Patel, the new policy for 2022-2027 aims at generating direct employment of 100,000 in the IT/ITeS industry in the said duration.

The new IT/ITeS policy offers upto 25 per cent or maximum Rs 50 crore capex support for projects having Gross Fixed Capital Investment (GFCI) of upto Rs 250 crore and an opex support of upto 15 per cent or maximum Rs 20 crore per annum for five years.

On the other hand, for GFCI of over Rs 250 crore, a capex support of 25 per cent upto Rs 200 crore and an opex support of 15 per cent or upto Rs 40 crore per annum for five years is provided. In an attempt to encourage more and faster investment, the government also announced an early mover advantage for first three companies with GFCI of over Rs 100 crore to be considered as mega units.

To boost employment generation, a one-time support will be provided to those units hiring local employees for a minimum one year period. Moreover, the government will assist 50 per cent of the cost-to-company (CTC) upto Rs 50000 in case of male employee and Rs 60,000 for female employees for each employee employed. The government will also provide upto 100 percent concession for employers on EPF for female employees and 75 per cent for male employees.

While promoting conventional businesses, the policy also entails support for need-of-the-hour domains such as cloud infrastructure, data centres, cable landing stations as well as upskilling of manpower.

For instance, one-time capex support of upto 25 per cent or maximum Rs 20 crore in 20 equal quarterly installments and opex support of Re 1 per unit power tariff subsidy for five years will be provided for setting up a cable landing station (CLS). Similarly, data centres will be entitled for a one-time capex support of upto 25 per cent or maximum Rs 150 crore along with opex support of Re 1 per unit power tariff subsidy for five years.

Commenting on the policy, Patel said, "We are launching this policy with an aim to realise the Atmanirbhar Bharat Mission through Atmanirbhar Gujarat with the help of Information Technology. The other objectives of the policy include creating an IT talent pool for the high-skilled industries and providing modern IT infrastructure to build a complete ecosystem."

The policy, according to Nehra, has enhanced the tailor-made incentive scheme with special provisions for mega projects. While the policy fosters R&D in emerging technologies, it also incentivises the development of IT City/ Townships for facilitating a walk-to-work culture.

"A unique incentive structure is specifically designed to ease the complexity involved in claiming the fiscal incentives," Nehra added.

Meanwhile, commenting on the policy, a Gujarat-based leading IT player stated that unlike the previous policy where the state government unsuccessfully aimed at attracting big companies from outside the state, the new policy largely looks to promote the industry within the state even as it makes provisions to attract big companies.