Maharashtra IT & ITeS Policy 2023

Maharashtra released India's first IT & ITeS Policy in 1998 and remains a pioneer in policy planning for the sector. Early planning and effective execution of the IT & ITeS Policies of 2003 and 2009 built a strong IT base and consistent growth in IT exports and investments, and the changes made in the IT Policy 2015 helped the state's IT ecosystem keep pace globally, making it one of the best technology investment destinations not only in India but in Asia. The IT & ITeS Policy 2015 expired on 30 June 2020 and was extended by Government Resolution dated 25 June 2020 until a new policy came into existence.

The Global IT Industry was estimated at USD 5 trillion in 2021. India's IT sector was set to post a 2.3% rise in revenues taking the figure to USD 194 billion; the industry delivers 8% of Indian GDP, contributes over half of services exports and 50% of Foreign Direct Investment, and employed more than 4.3 million people in 2020-21. Maharashtra's Gross State Domestic Product was forecast at INR 26,62,619 crore for 2020-21, contributing 14.2% to national output, and the state received 29% of total FDI inflows to India between April 2000 and March 2021.

Vision

To make Maharashtra a global IT & ITES destination and the Technology capital of India, moving towards innovative, equitable, inclusive and sustainable Technology Development.

Mission

To ensure Maharashtra as the most preferred destination for investment and innovation among global IT & ITES enterprises through Strategic Policy Interventions, Development of Competitive Advantage and Enabling Business Environment.

• •To strengthen the leadership position in the IT & ITES Sector in India.
• •To further accelerate IT & ITES investment flows to the State for sustainable and balanced Regional Development.
• •To promote Intellectual Property creation, innovation, and technology commercialization for new Technology products and services, especially for indigenous products developed in Maharashtra.
• •Becoming Destination of Choice for Global companies by significantly increasing investment inflows in emerging technologies with a focus on developing associated support ecosystems.
• •To develop a robust IT & ITES and Emerging Technology talent pool, which is highly employable, skilled and spurs the growth of the sector in Maharashtra.

Policy Targets

• •To attract new investment of INR 95,000 Crore towards the IT & ITES sector in the State.
• •To create 3.5 million new job opportunities through the IT & ITES sector in the State, and for that, to increase skill development by 15% per annum for developing highly employable, talented and quality manpower.
• •To achieve exports of INR 10,00,000 Crore through the IT & ITES sector in the State.

Policy Applicability and Validity

The policy will be valid for 5 years or till the new policy is announced. Parks and units sanctioned benefits or incentives under this policy or an earlier policy continue to enjoy those benefits for the period for which they were sanctioned even after the policy period is over, until the eligibility period is valid under the relevant policy. If any difficulty arises in giving effect to any provision, the Industries Department will issue clarifications and interpretations.

Classification of Zones (Para 15.5)

This section covers the incentives applicable to all IT & ITES segments. Sector-specific incentives for IT software and ITES, Data Centres, AVGC and Emerging Technologies are additional to these.

7.1 Stamp Duty Exemption

IT & ITES, AVGC, Data Centre and Emerging Technology units are entitled to stamp duty exemption on articles of hypothecation, pawn, pledge, deposit of title deeds, conveyance, charge on mortgage property, lease, mortgage deed and security bond on mortgage deed, as follows:

• •An IT & ITeS unit in production or operation that shifts from one location to another, having availed stamp duty exemption earlier, will not be eligible for stamp duty exemption again.
• •As mentioned in Para 15.8, if an existing unit makes minimum 25% additional fixed capital investment on or after commencement of this policy in IT & ITES / AVGC activity, the project is treated as an expansion or diversification project and is eligible for stamp duty exemption.
• •IT & ITeS units are eligible to avail stamp duty exemption only for premises which have a valid Commencement Certificate or RERA Approval from the concerned planning or competent authority.
• •Condition: units defaulting in starting the operation or work for which the concession was given, or breaching any condition of the policy, will be liable to pay stamp duty and penalty as if they were not given the waiver from the first day itself.
• •Condition: a No Objection Certificate from the Department of Industries must be submitted before the stamp duty waiver is given, to screen whether the unit has received a waiver under any other policy or scheme of the Government.

7.2 Power Rationalization Benefit

Cost reimbursement of up to 25% of retrofitting cost or INR 10 lakhs would be given to IT & ITeS units to conduct a retrofitting study and implement energy efficiency equipment.

7.3 Electricity Duty Exemption

• •The exemption commences from the date the unit starts production or rendering of services.
• •Electricity duty is exempted for IT Parks developed by IT companies for their own use — that is, single unit parks — for the period applicable to the location of the park.
• •The exemption is given only on producing a registration certificate of the Directorate of Industries, STPI or other Competent Authority.
• •No refund is admissible of electricity duty already paid prior to sanction of the exemption.
• •Procedural guidelines for electricity exemption for IT / ITES units in private IT Parks are as per Government Resolution No. ITP-2016/CR 190(C)/Ind-2 dated 17/02/2017, to be modified suitably if needed.

7.4 – 7.6 Certification, Market Development and Patent Assistance

7.7 – 7.14 Operating, Tariff and Facilitation Benefits

AVGC Parks envisaged in the policy are similar to and at par with private IT Parks, and AVGC units are at par with IT & ITeS units.

8.1.1 Additional FSI for IT Parks

• •The Additional FSI limit shall be as above or as per local DCR norms, whichever is higher, excluding Agriculture Zone, NDZ or any other special zone declared by the Urban Development Department, where the maximum additional FSI limit remains as per the prevailing Development Control Regulation.
• •Relevant DCRs, CDCPRs and UDCPRs will be amended accordingly by all concerned Special Planning Authorities (SPAs).

8.1.2 Premium for Additional FSI

• •(D) Other applicable FSIs like Fungible and Ancillary FSI will apply as per local DCR / UDCPR / DCPR norms.
• •(E) The developer is allowed to pay the premium, development charges, ancillary charges and other charges for the increased additional FSI for the IT Park in installments.

8.1.3 Mixed Use — Land Use Percentage in IT Parks

A standalone building or group of buildings in IT Parks with a minimum built-up area of 20,000 sq. ft. will also be eligible for the above benefits.

8.1.5 Establishment of Integrated IT Townships (IITTs)

• •Minimum land requirement: ten (10) acres of contiguous land with a staggered proportion of usage component — 50% for IT & ITES use and 50% for usage without any restriction as per prevailing norms.
• •MIDC will be declared as Special Planning Authority throughout the State excluding CIDCO areas. Approval of the Master Plan will be facilitated by the High Power Committee constituted under the Industries, Energy and Labour Department GR dated 05/07/1996.
• •Completion period: 7½ years where the township area is from 10 acres up to 25 acres, and 10 years where the area is more than 25 acres. In case of delay, extension will be considered subject to approval of the Committee constituted in this regard.
• •Staggered payment facility for the premium payable on additional FSI, allowed in two installments, with the stipulation that the entire premium is paid within a year or by the date of obtaining the Occupancy or Part Occupancy certificate, whichever is earlier.
• •Integrated IT Townships are permitted in any zone across the state, and the developer may implement the project with or without zone conversion of the area. FSI norms continue as per the prevailing classification of the area under the DCR in force for projects proposed in No Development Zone, Green Zone, Special Zone and the like.
• •IITTs will promote the 'walk to work' and all other concepts outlined in the IT & ITeS Policy 2015, GR No. IDC-2015/CR 93/Ind-14 dated 27/12/2016 and the Industrial Policy 2019.

8.1.6 – 8.1.10 Fund, Power and Administrative Provisions

8.2 Penalty for Non-IT Use of Built-Up Space

The developer of every IT Park is bound to provide and update on the MAHITI Portal, on a yearly basis, details of the names of units in the park, utilization of built-up area, activities carried out, and manpower employed for IT / ITeS and support services. The SPA retains the right to verify these details through inspections. Where a private IT Park has availed additional FSI and the built-up space is found not to be in compliance:

• •A per day penalty equal to 0.3% (a thirtieth of a percent) of the prevailing ready reckoner value of the built-up area found to be used for non-IT & ITES activities.
• •The penalty is recovered from the date of issue of the Occupancy Certificate until the day non-compliance continues. After payment, the park must restore the use of premises to the original purpose for which the LOI or Registration was granted.
• •Payment is made to the concerned planning authority and government in the ratio of 3:1. The misuse is ascertained by physical site verification by a team of officers from the Directorate of Industries and the Planning Authority which approved the building plans.
• •If the park fails to pay the penalty or restore the original use even after a second instance of offence, the Planning Authority will take suitable action under the MRTP Act against the erring park, under intimation to the Directorate of Industries.
• •The provision also applies to existing IT Parks. The promoter or developer will not be allowed to sell or lease built-up area reserved for IT / ITES activity to a non-IT user in any case, and the penalty is imposed on the end user or owner of the unit or premises.

India's total supply of IT Power Capacity stood at 1,790 MW as of 2021 and Maharashtra is the largest Data Centre market in the country with more than 700 MW of IT Power Capacity. Mumbai has the highest number of undersea data-cable landing stations in India, is a critical link for the Asia Pacific Region, and alone accounts for 42% of total data centre capacity in the country. The vision is to position Zone I cities, especially Mumbai and Navi Mumbai, as Data Centre Hubs.

AVGC is a sunrise sector in Maharashtra with vast potential for wealth creation and employment generation. India's AVGC market share is estimated to grow to USD 1.5 billion, which is less than 1% of the global market. Mumbai and Pune are home to some of the largest Hollywood and Bollywood VFX studios. AVGC is essentially an ITeS activity and is eligible for the benefits admissible to ITeS.

10.1 Fiscal Support

10.1.7 Market Development Assistance

M-Hub will host annual events and competitions in collaboration with NASSCOM, gaming developers and associations, the Animation Society and the Maharashtra State Innovation Society, with financial support of INR 20 Lakh for each event and competition every year. The number of events and competitions is limited to 1 event and 1 competition each year, and the category may change at the discretion of M-Hub. The listed events are:

• •FICCI FRAMES & Best Animated Frames Awards, Mumbai
• •NASSCOM Game Developers Conference, Pune
• •The Animation Society of India — Anifest, Mumbai
• •ASIFA World Animation Day — 28th October every year, all India
• •MCCIA Digital Content Conference, Pune
• •NTLF — NASSCOM Technology Leadership Forum

A mobile game developer registered in Maharashtra with more than 5 million downloads (iOS and Play Store combined) and a 4+ rating on mobile platforms will receive a Gaming Award and reimbursement of 20% of qualified expenditure on marketing, with a ceiling of INR 10 Lakhs per sanction per company.

10.2 Non-Fiscal Support

• •10.1.9 Infrastructure: establishment of a Maha Centre for AVGC under M-Hub, including AVGC Centres — an integrated facility with production facilities, AVGC studios, space for performing arts, exhibition galleries and workplace requirements for artists.
• •10.2.1 Global Joint Ventures: the State Government will encourage joint ventures between Indian and foreign entities by signing at least 10 MoUs during the policy period.
• •10.2.2 International Promotion: support will be provided for international AVGC events in Maharashtra in terms of promotion.
• •10.2.3 Intellectual Property: facilitation services for patents, designs, copyrights and trademarks as per the National Intellectual Rights Policy and the Startup Intellectual Property Protection Scheme (SIPP), Government of India.

The policy targets the USD 2 trillion global emerging technologies sector. In partnership with NASSCOM the state runs the '10,000 Startups Warehouse Program', which in just 3 years has benefited close to 50 startups employing more than 1,300 people in the state.

11.1 Fiscal Support

• •11.1.4 Power Tariff Subsidy: subsidy at INR 1 per unit for 5 years for new or expansion of Emerging Technologies units located in the State.
• •11.1.6 Recruitment Assistance: INR 2.5 lakh for employing 50 local students per unit.
• •11.1.2 Stamp duty exemption, 11.1.3 electricity duty exemption, 11.1.5 certification assistance and 11.1.7 patent related assistance apply as per the common incentives at Para 7.1, 7.3, 7.4 and 7.6 respectively.

11.2 Non-Fiscal Support

• •Training & Placement: engineering colleges will institute training-based certification and placement programs.
• •Ease of Doing Business: special measures to fast-track timelines for startups including self-certification through the MAHITI portal and access to a 24X7 manned hotline number for round the clock assistance.
• •Intellectual Property: facilitation for patents, designs, copyrights and trademarks as per the National Intellectual Rights Policy and SIPP.
• •A dedicated Centre of Excellence will be established, led by government officials and advisors from industry and academia, to build a conducive ecosystem throughout the policy period.

M-Hub is an integrated Centre of Excellence between the Government of Maharashtra, leading technical institutes, business schools and private entities, to head initiatives supporting tech startups at subsidized costs. It builds on the MIDC-NASSCOM startup warehouse program and, as enumerated in the Maharashtra Industrial Policy 2019, will also act as the State's Apex Institute for promotion of entrepreneurship. It will be established on land of the Maharashtra State Small Industrial Development Corporation (MSSIDC) at Kalamboli, District Raigad, as a state-of-the-art building with training facilities for 300 students and residential accommodation for students and academic staff. M-Hub will be governed by MIDC and anchored by a Chief Operating Officer working under the Principal Secretary (Industries), who also serves as Technology Ambassador for Brand Maharashtra.

12.1.1 Aims and Operating Model

• •Help startups gain access to better technology, talent, business networks and funding.
• •Holistic ecosystem development with workspace, tech labs and deep synergy between corporates, government, investors, mentors and academicians.
• •Offer a cost advantage by provisioning space and operations for IT start-ups and incubation centres at a nominal rent for a maximum of five years, with all amenities like furniture, conference rooms and cafeteria, and expenses on property tax, water tax, security, repairs and maintenance at actuals.
• •Four key task forces under the COO will strengthen four core areas: Centre of AVGC, Centre of Emerging Tech, Startups, and related ecosystem development.
• •M-Hub will integrate initiatives under the Maharashtra State Innovative Startup Policy 2018, the Maharashtra Fintech Policy and the Maharashtra State Innovation Society. Coordination of M-Hub will be done by the State IT Department.

12.1.4 Framework — Four Components

12.1.8 Benefits for Units Registered with M-Hub

12.1.5 Performance Monitoring

• •Goals: profitable startups, revenue generated, jobs created, tax revenue and supporting Zone II.
• •Success factors: number of startups, occupancy of incubation centres, jobs created, funds raised, enterprises and investors connected, market access measured by joint ventures, MoUs and partnerships, events hosted, and revenue generated.
• •Review mechanism: a Quarterly Performance Tracker and Annual Report to be published; the Governing Council reviews every six months; the Advisory Council and M-Hub team review every three months; and the Empowered Committee reviews once a year.

16.4 MAHITI Portal

The Directorate of Industries will develop a central web portal providing a unified single window platform for time bound clearances. It will cover:

• •Registration and application: online application for LOI, De-novo and registration of IT & ITES Parks; LOI and registration of IT & ITES units and Data Centres; extension of LOI or De-novo; system generated essential services approval; application for incentives; online submission of the report on 2% incubation space by a developer; and online submission of the six-monthly report.
• •Information: the detailed IT & ITES Policy 2023 and subsequent GRs; an exports trade facilitation and information centre; and an interactive incentive calculator based on unit type, new / expansion / existing investment, region (Zone I or Zone II), investment size and employment generated from local talent.
• •B2B functionality acting as a market linkage system allowing IT & ITES businesses in Maharashtra to list services and connect with domestic and global demand.
• •An internal Policy Performance Tracker automatically generating annual policy performance on investments, units, utilized built-up area, exports and employment. The portal is managed and operated by the COO embedded in the Empowered Committee.

16.5 Timelines and De-novo Letter of Intent for IT Parks

16.3 Critical Infrastructure Fund — Eligible Works

• •Roads connecting private IT Parks or a cluster of IT & ITeS units with roads of the state, Municipal Council or Corporation, Zila Parishad, PWD or any other local body.
• •Critical power infrastructure projects such as providing an electric transformer, sub-station or express electricity feeder for private IT Parks or a cluster of IT & ITeS units.
• •Providing a drainage line connecting private IT Parks or a cluster of IT & ITeS units to the main drainage network of the Municipal Council or Corporation, Zila Parishad or any other local body.
• •Any other critical infrastructure work with the prior approval of the Empowered Committee. Requirements are received by the Development Commissioner (Industries) from State Planning Authorities, IT & ITeS industry players, field or ministry level offices of departments related to infrastructure creation, and industry associations and chambers of commerce.

16.1 – 16.2 Incubation Centres and Startups

An early-stage startup is eligible for Stage-I incubation facilities until its first round of institutional funding, after which it becomes eligible for Stage-II facilities. Stage-I covers workspace and laboratory infrastructure, legal and business advisory, mentorship sessions and connections, market access, access to seed and angel funds, and networking opportunities. Stage-II covers support in market growth strategies, networks for international and global expansion, access to venture funding, market linkages and acceleration support. The 2% of built-up area reserved for incubation, where it is more than or equal to 2,500 sq. ft., is allotted under the guidelines of Government Resolution IIT-2016/CR 76/Ind-2 dated 18/05/2016 until revised.