IT/ITES Policy 2022-2027 benefits: The IT/ITES Policy 2022-2027 is a game-changer for businesses in the IT/ITES sector. It offers extensive financial and operational support, ensuring that companies can grow, innovate, and remain competitive in the global market. By providing a wide range of incentives under CAPEX (Capital Expenditure) and OPEX (Operational Expenditure), the policy enables businesses to scale operations effectively with government backing.
Let’s explore how this policy can benefit IT/ITES units across different key areas.
CAPEX and OPEX Support for IT/ITES Units
CAPEX Support
Firstly, eligible IT/ITES units can receive one-time CAPEX support. This covers up to 25% of the eligible capital expenditure, with a maximum limit of INR 50 Crore. The funds are disbursed in 20 equal quarterly installments, helping businesses cover the cost of building or upgrading infrastructure, purchasing equipment, and implementing new technology solutions.
OPEX Support
Additionally, IT/ITES units benefit from OPEX support, covering up to 15% of their annual operational expenses. This support has a ceiling of INR 20 Crore per year and is provided for up to five years. Disbursements are made quarterly, enabling businesses to manage regular costs like utilities, maintenance, and employee wages more efficiently.
Encouraging Job Creation: Employment Generation Incentive (EGI)
To boost local employment, the policy introduces the Employment Generation Incentive (EGI). This incentive encourages companies to hire and retain new employees for at least one year.
- Male Employees: 50% of one month’s CTC, up to INR 50,000.
- Female Employees: 50% of one month’s CTC, up to INR 60,000.
Importantly, the incentive is tied to each employee and can only be claimed once during their employment with an IT/ITES unit. This initiative aims to support businesses in creating stable, long-term employment opportunities, with a particular focus on hiring women.
Reducing Loan Costs: Interest Assistance
Managing loan repayments is a significant concern for many IT/ITES businesses. Fortunately, the policy offers interest assistance to eligible companies. The government provides a subsidy of 7% on term loans, or the actual interest paid, whichever is lower. There is a cap of INR 1 Crore per year, and the subsidy can be claimed for up to five years.
This assistance applies only to loans from RBI-approved financial institutions, excluding NBFCs. By reducing the financial burden of interest repayments, the policy allows companies to focus on growth and expansion without the stress of high loan costs.
Employee Welfare Support: Atmanirbhar Gujarat Rojgar Sahay
Under the Atmanirbhar Gujarat Rojgar Sahay scheme, IT/ITES units can claim reimbursement for their statutory contributions to the Employees’ Provident Fund (EPF).
- 100% reimbursement for female employees.
- 75% reimbursement for male employees.
This incentive lasts for five years, with a ceiling of 12% of the employee’s basic salary plus applicable Dearness Allowance (DA). Moreover, this support extends to expansion units, offering assistance for the incremental employee count, thus encouraging businesses to grow and hire more staff.
Operational Efficiency: Electricity Duty Incentive (EDI)
Reducing operational costs is critical for IT/ITES units, especially those running large data centers. Fortunately, the policy offers an Electricity Duty Incentive (EDI). Eligible companies can claim back the entire amount of electricity duty paid to the Government of Gujarat for a period of five years. This incentive significantly lowers the operational costs associated with high electricity consumption.
Work-from-Home Support for Flexibility
With the rise of remote work, the policy recognizes the importance of supporting work-from-home setups. Gujarat-based employees working remotely for IT/ITES units can still be covered under both the Employment Generation Incentive (EGI) and the Atmanirbhar Gujarat Rojgar Sahay. This ensures that companies can maintain flexibility without losing out on these valuable incentives.
Facilitating Infrastructure: Ready-to-Occupy Co-Working Spaces
The government also facilitates infrastructure development through ready-to-occupy co-working spaces. IT/ITES units can immediately start operations in these spaces, which come with modern amenities such as high-speed internet and industry-standard facilities. Two models are available:
- Government-Facilitated Model: The government builds or leases co-working spaces.
- Empanelment Model: Private developers, empaneled by the government, offer co-working spaces.
Eligible businesses receive rental support for up to five years:
- First Two Years: 50% of monthly rental, with a maximum fiscal incentive of INR 10,000 per seat per month.
- Years Three to Five: 25% of monthly rental, with a maximum fiscal incentive of INR 5,000 per seat per month.
Boosting Cloud Infrastructure: Support for Cable Landing Stations (CLS)
To further enhance cloud infrastructure, the government provides support for setting up Cable Landing Stations (CLS).
CAPEX Support
The policy offers CAPEX support of up to 25% of eligible CAPEX costs, with a ceiling of INR 20 Crore. The disbursement is made in 20 equal quarterly installments.
OPEX Support
Additionally, companies receive a power tariff subsidy of INR 1 per unit for up to five years, significantly lowering power-related expenses, which are a major concern for cloud infrastructure businesses.
Conclusion
In conclusion, the IT/ITES Policy 2022-2027 is a comprehensive package designed to foster growth and innovation within the IT/ITES sector. From CAPEX and OPEX support to employment generation incentives, interest assistance, and electricity duty exemptions, the policy provides extensive financial relief for businesses looking to expand. Companies should leverage these benefits to ensure their long-term success while contributing to job creation and technological advancement in Gujarat.
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This is a well-written and informative article. Your clear and concise writing style makes it easy to understand the topic, and the practical examples you provided were particularly helpful. Thank you for creating such a comprehensive resource.
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