INFORMATION TECHNOLOGY INDUSTRY POLICY OF Tamil Nadu 1997 – Issued

G.O.MS.No.300, IND (MIE.2) DATED 3rd NOVEMBER 1997 ORDER

Information Technology Policy of Govt. of Tamil Nadu

INTRODUCTION

The Information Technology Industry in India is a fast growing segment of the Indian economy, with growth rates exceeding 50% per annum. In 1995-96, the Indian Information Technology Industry comprising hardware, software, peripherals and training had a turn over of Rs. 9037.85 crores. The Hardware Industry in India has mainly catered to the needs of domestic consumers, with only marginal exports. On the other hand, 60% of Software revenues are from exports, and the main growth is in this sector.

Tamil Nadu’s contribution to the I.T. industry has been significant . The key elements which have made Tamil Nadu an important player in this area are availability of skilled and educated manpower, comparatively higher standard of educational institutions, reasonably good infrastructure, and lower costs of operation. Apart from these, the presence of an International Airport and a major Seaport in Chennai have also helped the growth of I.T. industry in Tamil Nadu. After the liberalisation process in 1991, and especially after reduction of import duties on hardware in July 1996, Multinational Companies were able to export large volumes to India, thereby boosting the domestic market for both hardware and software. Despite all these advantages, Tamil Nadu accounts for only 7% of the total revenue from hardware and software in the country. The turnover of the industry in Tamil Nadu in 1995-96 was Rs. 289 crores of which Rs. 139 crores was in hardware and Rs. 150 crores in software. The potential for growth of Information Technology in Tamil Nadu is enormous with I.T. penetrating all spheres, including Government Departments, educational institutions, Banking, shopping entertainment and a whole gamut of other consumer applications. The Industry while drawing up the programme for the IX Five Year Plan has projected that by the year 2001-2002, I.T.revenue in Tamil Nadu will be of the order of Rs. 13,000 crores (Rs. 5000 crores in Hardware and Rs. 8000 crores in Software). The industry has predicted that this level of achievement can be obtained provided the State Government announces and implements an industry-friendly I.T. policy. With the aim of achieving the goals spelt out in the IX Plan and to focus attention on the I.T. Industry as an engine of growth in the State, it has been decided to formulate an industry – specific policy for the I.T. Industry.

OBJECTIVES OF THE I.T. POLICY

The main objectives of the policy are :

1. To encourage and accelerate the growth of hardware and software industries and associated services in the State and to remove the bottlenecks for starting and running of such Units in Tamil Nadu.
2. To increase both domestic and export earnings of software and hardware sectors in the State.
3. To upgrade and develop manpower skills required for the I.T. industry by facilitating training, to accelerate the use of I.T. in schools, colleges and educational institutions with a view of providing skills and knowledge to the youth to make them fit for employment in this sector.
4. To upgrade the quality of life the citizens of the State by facilitating access to consumer application of Information Technology.

As part of the above objectives, the Government will also encourage use of I.T. in Government institutions and Departments with a view to improving productivity and efficiency of Government services, revenues and tax collections, and assist in the process of decision – making by Government, and monitoring of Government programmes. A high Power Committee headed by the State Finance Secretary has been constituted to draw up a plan for phased use of I.T. in Government Departments. A separate policy paper will be prepared on this for speedy implementation.

EXISTING INCENTIVES AVAILABLE TO THE INDUSTRY

1. There is no system of Entry Tax or Purchase Tax in Tamil Nadu. I.T. Industry will continue to enjoy facilities of unrestricted movement of capital equipment including hardware, peripherals, captive power gensets, UPS sets and Telephone Exchanges, subject only to Sales Tax payments as per orders in force.
2. Due to self sufficiency in power, Tamil Nadu does not have power cuts for industry. The facility of uninterrupted power will continue to be offered to I.T. industry.
3. Tamil Nadu has already announced fiscal and tax concessions for investments of various slabs starting from an investment of Rs. 50.00 crores (mega projects) upto investments exceeding Rs.1500.00 crores (super mega projects). The orders issued in G.O.Ms.No. 43, Industries, dated 13.12.1992 (for ‘mega’ projects) and in G.O.Ms.No.1, industries dated 2.1.1996 (for ‘super mega’ projects) will be applicable for I.T. industries also in addition to other incentives.
4. Capital subsidy as applicable to electronics industries @ 20% of fixed assets subject to a maximum of Rs. 20.00 lakhs will be available for all I.T. industries, irrespective of their location in the State. Where the unit is also eligible for capital subsidy for backward / most backward areas, this special subsidy will become part of such subsidy. The existing incentives available for industries employing at least 30% of women workers will also be available to I.T. industries.

next page