Software Technology Park of India (STPI)

Hello Readers!!! In this blog, we are covering following points:

1) What is STPI 

2) How to Register under STPI Scheme

3) Compliance under STPI Scheme 

What is STPI? 

Software Technology Parks of India, is an Autonomous Society set up by the Ministry of Electronics and Information Technology(MeitY), Government of India in 1991, with the objective of encouraging, promoting and boosting the Software Exports from India.

The Software Technology Park (STP) scheme is a 100% export oriented scheme for the development and export of computer software & services using data communication links or in the form of physical media including the export of professional services. The major attraction of this scheme is single point contact service to the STP units.

Software Technology Parks of India maintains internal engineering resources to provide consulting, training and implementation services. Services cover Network Design, System Integration, Installation, Operations and maintenance of application networks and facilities in varied areas.

The STP scheme is administered by the respective STPI Directorates. Currently STPI have centers in Noida, Gandhinagar, Guwahati, Bangaluru, Thiruvananthapuram, Hyderabad, Maharashtra/Pune, Chennai, Bhubaneshwar. (kindly check STPI website for new centres, if any)

Highlight on benefits of registeration under STPI Scheme

• 100% Customs duty exemption on imports
• Equipment can also be imported on loan or lease basis.
• All relevant equipment/goods including second hand equipment can be imported (except prohibited items)
• 100% excise duty exemption on indigenous procurement.
• Central Sales Tax reimbursement on indigenous purchases.
• Green card enabling priority treatment for Government clearances / other services.
• 100% foreign equity investment in the companies permissible under the Automatic Route‟ of RBI.
• Sales in the DTA (Domestic Tariff Area) up to 50% of the foreign exchange earned by the unit.
• Software units may also use the computer system for training purpose (including commercial training)

How to register under STPI scheme?

Following is the listed process of registration in STPI Noida

Note: Every Center of STPI have different forms for registration and there is slight difference in registration process in different centers.

The application form is available free of charge. The application form can also be downloaded from our website www.noida.stpi.in. The company has to give the presentation. 

GUIDELINES TO COMPLETE THE FORM

• Company profile
• Capital structure
• Pattern of Shareholding in the paid up capital
• Projection for capital goods requirement
• Manpower Projections
• Export Earnings
• Foreign collaborations.
• Area of expertise.
• Estimated time frame for commencement of operation and exports
• Communication requirement
• Space requirement / Built –up land.

Other:-

• Kindly read the application form thoroughly
• Fill up all the details as required
• Put initials on each page

1.   Memorandum & Articles of Association for registered units (Public and Private Limited).

2.   Board Resolution

• Board resolution copy mentioning the willingness to get registered with STPI as 100% exporting firm. Also, mention the name of the authorized signatory to sign all relevant documents.

• For maintaining separate books of accounts for the unit under STP Scheme  as per foreign trade policy

• For maintaining distinct identity as per Foreign Trade Policy

This is not applicable in case of Partnership Firm or Proprietary concern.

3.    Permanent Account Number Copy

4.    Importer-Exporter Code (IEC) Copy 

5.    Banker’s Certificate

       A certificate from your bank covering duration of maintaining company account with the Bank.

6.    RBI Permission in case of Foreign Equity

       100% foreign equity investment in the companies is permissible under the Automatic Route‟ of RBI. The company has to intimate RBI and a copy should be submitted to STPI.

7.    List of Directors on Board

      Submit Copy of Form DIR-12 (Note: please check ministry of corporate affairs website for updated form)certified by Registrar of Companies. Applicable in case of Private /Public Ltd companies.

8.    List of Directors / Partners with specimen signature (profile of directors/Partners)

       List of Directors / Partners of the company with names, addresses, contact nos, email, specimen signature. 

       For proprietary concern, details of proprietor.

9.   Project Report

The format can be downloaded from the website. Following are some important aspects to be covered in the Project Report:

• Background of company and promoters
• Area of expertise in software development and IT-enabled services
• Profiles of key personnel in the organization
• Strengths and achievements of the company like potential market for software products project developed by the company and in-house expertise in the area of specialization
• Financial arrangements and feasibility of the proposed setup
• Marketing tie-up, if any
• Export performance for last three years in cases of existing firms & last years
• Balance Sheet
• Export Orders in hand / in pipeline / under registration.
• Brochures of the software products / company or Annual Report for the previous year
• Space Requirement / Built up Land
• Manpower: Type of people working

1. Project Manager
2. Project Leader
3. Senior Programmer
4. Junior Programmer/Operators 

• Wage Bill

10.   Projected Financials including Balancesheet and Cash flow for next 5 year

11.   Export Order with Foreign Client

STP registration can also be obtained even without submitting the export order. But, it is preferable to have export order in hand at the stage of STP registration. If available, submit copy of any of the following

• Export order
• Contract
• Purchase Order
• Agreement signed with the foreign client.

Company may also provide the details of the export orders in pipeline in case of non availability of any firm order in hand.

12.  Proof of Premises

STP firm can operate from owned or leased/rental premises.

• For owned premises, submit Sale deed.
• For leased/rental premises, submit Leave and License Agreement.
• Floor plan of the proposed STP premises to be attached.

 13.  List of proposed Plant & Machinery in Three Copies

List of proposed Plant & Machinery signed by authorized person on the company letterhead. The projections viz. Imports and Indigenous purchases mentioned in the list should be as per the application form.

14.  Application Processing Fees and Annual Service Charges as prescribed by STPI

The payment should be in form of Demand Draft in favor of Software Technology Parks of India, Noida.

Following are the standard and major Compliance under STPI Scheme

Note: there are some differences between compliance of different STPI centers 

1)  Legal Agreement (LA) with STPI

LA is mandatory as Commitment for fulfillment of Terms and Conditions of Letter of Permission. It will be executed for granting five years of operations. The LA will be executed on Rs. 100/- Stamp Paper. It should be signed by the duly authorized person in STP premises. LA is mandatory  as commitment for fulfillment of Terms & Conditions of  the approval ( Export Obligation etc.,).

2) Commencement of Commercial Production

STP organisation/unit has to commence its commercial production within the stipulated time frame according to the application form. After commencing the operations, the STP member should intimate in writing to STPI.

3) Minimum Export Obligation: STPI unit has to comply with minimum export obligation as laid down in Foreign Trade Policy

4) Green card 

Green Card helps the STP unit to get preferential treatment in matters relating to implementation of   the project, at the level of both Central and State Governments for allotment of steel, cement, land, finance and other clearances and also allotment of foreign exchange by RBI, telephones/telex/electricity connection etc. The Green Card, issued by the Jurisdictional Director of STPI is valid for a period of 5 years from the date of issue

5) Import Certificate 

The import of the equipment is covered by exemption.  STP unit is entitled for complete customs duty exemption on capital goods / office equipment / data communication equipment / telecommunication

equipment / power equipment as per the Foreign Trade Policy.

To obtain Import Certificate, submit an application in standard format along with 2 copies of Shipping or Commercial Invoice of the overseas supplier. STPI scrutinizes the application and will issue an Import Certificate within 1 or 2 days.

6) Excise Exemption 

STP unit is entitled for excise duty exemption for indigenous purchases. STP units can obtain excise exemption on capital goods / office equipment / data communication equipment / telecommunication equipment / power equipment. Excise exemption is available to the STP unit only if the goods are purchased from the manufacturer.

To obtain an excise exemption, application alongwith 2 copies of Proforma Invoice from manufacturer need to be submitted to STPI.

STPI scrutinizes the application and will issue a No Objection Certificate (NOC) for excise exemption within 2 or 3 days.

7) Approval for Domestic Tariff Area (DTA) Sales 

As per the Foreign Trade Policy, the STP units can make local sales to the extent of 50% of the FOB value of exports and/or foreign exchange earned. This is a DTA entitlement. 

To avail the DTA entitlement, apply in the standard format along with Purchase Order / Contract / Agreement / MOU with domestic client. On the basis of application submitted by STP unit and DTA entitlement, STPI will issue permission to do DTA Sales. STPI scrutinizes the application and will issue an approval for DTA Sales within 5 or 6 days.

8) Change of Name 

As and when you require the approval for change of name, submit an application along with the copy of Fresh Certificate of Incorporation consequent to change of name issued by Registrar of Companies (ROC).

STPI scrutinizes the application and issues No Objection Certificate for Change of Name within 2 or 3 days.

9) Change of Location

STPI permits Change of Location from place mentioned in the LOP/LOI (Approval Letter) to another location. As and when you require the approval for change of location, submit an application along with the copy of Lease and License agreement, Floor plan & original Green card . STPI scrutinizes the application and issues No Objection Certificate for Change of Location within 2 or 3 days.

The STP unit shall also obtain the amendment to the custom bonding license directly for change of name and change of location. Please apply to the Customs along with the No Objection Certificate (NOC) issued by STPI. Immediately after you receive the amendment to the custom bonding license, kindly arrange to submit the same to STPI for updating STPI records.

10) Expansion of STP Location 

STPI permits to include additional location to the place mentioned in the LOP/LOI (Approval Letter). The expansion of STP location is permitted under the Foreign Trade Policy. As and when you require, the approval for expansion of STP location, submit an application along with the ground plan for the expanded location and copy of the leave and license agreement for the same.

STPI scrutinizes the application and issues permission for expansion of STP location. After obtaining an expansion letter from STPI, STP unit has to apply for amendment in Custom bonding license for the expanded unit. Immediately after you receive the amendment to the custom bonding license, kindly arrange to submit the same to STPI for updating  records.

11) Transfer of Imported / Indigenous Goods 

As per Foreign Trade Policy, transfer of manufactured goods including processed / semi finished goods from one EOU/EPZ/EHTP/STP unit to another EOU/EPZ/EHTP/STP unit is permissible. Please submit an application along with the list of equipments and 3 copies of invoices to enable us to issue the No Objection Certificate (NOC) for transfer.

STPI will issue a NOC for transfer of equipment from one EOU/EPZ/EHTP/STP unit to another EOU/EPZ/EHTP/STP unit within 2 or 3 days.

12) Re-Export of Imported Capital Goods (CG)

STP units can re-export imported capital goods. They are allowed to re-export the capital

goods imported in situations explained below:

a) Re-export of CG for Replacement :

Goods or parts thereof on being imported and found defective as otherwise unfit for use or which have been damaged after import may be exported, and goods in replacement thereof may be supplied free of cost by the foreign supplier.

b) Re-export of CG imported on Loan :

Capital Goods imported for specific project/period of time can be re-exported with the permission of the Director, STPI.

c) Re-export of CG for Repair and Return :

Capital Goods imported for a project if found defective the same may be reexported for repair and return.

Please submit an application alongwith the list of equipment and 3 copies of invoices to enable us to issue a NOC for re-export of Imported Capital goods.

STPI scrutinizes the application and issues No Objection Certificate for re-export within 2 or 3 days.

13) Reconditioning, Repair & Re-Engineering 

As per Foreign Trade Policy, EOU/EPZ/EHTP/STP units may be permitted to import goods of any origin to carry out reconditioning, repair, testing, calibration, quality improvement, up-gradation of technology and re-engineering activities for export in freely convertible foreign currency. STP unit may apply in standard format along with the 3 copies of invoices to enable STPI to issue a No Objection Certificate for the same. STPI scrutinizes the application and issues No Objection Certificate within 2 or 3 days.

14) Replacement of Indigenous goods 

As per Foreign Trade Policy, goods or parts thereof on being endogenously procured and found defective or otherwise unfit for use or which have been damaged or become defective after procurement may be returned or destroyed and replacement thereof for the same goods after repairs, may be brought back from their authorized supplier in India / indigenous supplier.

STP unit may apply for the same alongwith the 3 copies of invoices to enable STPI to issue a No Objection Certificate for the same. STPI scrutinizes the application and issues No Objection Certificate within 2 or 3 days.

15) Submission of Bulk SOFTEX form

Submission of information as per Annexure A for software exports and Annexure B for Royalty exports to STPI Authority

• Four copies (Original/duplicate/Triplicate/quadruplicate) of Annexure A needs to be submitted not later than 30 days from the close of the month in which invoices were raised.for attestation.
• On receipt of information in Annexure A, STPI centre may seek any supporting documentation like Invoice, MSA, SOW etc from Exporters for specific invoices on sample basis.
• The software exports declaration is submitted to STPI in Quadruplicate. Triplicate copy is retained by STPI. Original copy is sent to RBI by STPI. Duplicate copy is given to Authorised Dealer Bank by STPI and the Quadruplicate copy is retained by exporter. In this case one quadruplicate copy retained by exporter.
• The soft copy will be in excel and to be password protected

Note: refer RBI Circular dated February 15, 2012  (RBI/2011/12/400 A.P. (DIR Series) Circular No. 80 )  

RBI Circulars dated  13th September 2013 and 5th November 2015

16)    Renewal of Letter of Permission (LOP) for working as STP Unit. 

Please be noted that the validity of LOP is for 5 years, which means after every 5 year, STPI unit has to apply for renewal of LOP.

17) Annual Progress Report (APR) , Monthly Progress Reports (MPR), Quarterly Progress Reports (QPR)

• Monthly Performance Report (MPR) - to be filed online within 10 days after end of the respective month.
• Quarterly Performance Reports (QPR) - to be filed online within 30 days after the end of respective Quarter.
• Exports Details (Un-audited)/Tentative Annual Performance Report -is required to be filed by 31st March 2017.
• CA Certified Annual Performance Report (APR) is required to be filed by 30th June 2017.

Note: Unit having multiple licenses are required to file the above reports separately for each license under that jurisdiction.

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Writer:  Akash Vij

Email ID: Akashvij20@gmail.com

Disclaimer:  This document should not be treated as a manual. Foreign Trade Policy, Handbook of procedures, STPI website etc. should also be referred while applying for necessary approvals and other submission. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. For Authentication of Data/Information provided please refer the respective acts, law, rules, regulations and notifications. This is only a knowledge sharing initiative and writer do not intend to solicit any business or profession. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.