IT/ITES Policy 2023

To be a global IT &ITES destination, policy planning plays a major role and Maharashtra is one of the first states in India to devise an IT & ITeS Policy released in 1998. Early planning and effective execution of IT & ITeS Policy 2003 & 2009 have led to a strong IT base, and consistent growth figures for IT exports & investments. The state has been reviewing and revising the policy to meet the present date requirement with futuristic vision. The latest edition of IT/ITES policy was done in June 2023. This article highlights the Salient features of the policy.

Policy Duration:

The policy remains effective for a period of 5 years, starting from June 27, 2023, or until superseded by a new policy announcement.

Applicability:

All IT/ITES Parks, whether public or private, are subject to this policy.

Zone Flexibility:

IT/ITES Parks are not subject to zoning restrictions and can be established in any zone, including residential, non-development, and green zones. This flexibility promotes sector growth without geographical constrains.

Land Requirement:

Eligible standalone buildings or premises must have a built – up area exceeding 20,000 Sq Ft with or without additional Floor Space Index (FSI) and Transferable Development Rights (TDR). This ensures substantial infrastructure development.

For IT Township: A minimum of 10 Acres is required, encouraging the creation of larger, integrated IT communities to foster collaboration and potential, economies of scale.

Single Window Clearance (MAHITI):

Managed by the Directorate of Industries, MAHITI serves as a Unified and Integrated Single Window web portal for IT &ITES-related clearances. This simplifies bureaucratic processes and reduces administrative burden. MAHITI facilitates various processes such as registration, application, and reporting for IT &ITES Parks and units, promoting transparency, efficiency, and accountability. Additionally, it provides comprehensive information on the IT &ITES Policy, trade facilitation for IT &ITES exports, and an interactive incentive calculator, enhancing stakeholder decision-making and resource accessibility.

Focus Areas of the Policy:

The policy is tailored to address specific sectors within the IT industry:

a. IT Software: Encompassing programs and codes that empower computers to execute designated tasks efficiently.

b. IT Enabled Services (ITeS): Enabling companies to provide IT services or integrate systems, thereby enhancing operational capacities through technological integration. ITes covers the following:

1. Data Centers: Facilities dedicated to storing, processing, and managing substantial volumes of data, pivotal for digital operations and cloud computing services.
2. AVGC & Emerging Technologies: Encompassing sectors such as Audio-Visual, Gaming, Animation, and Graphic Design, alongside emerging technologies like artificial intelligence, blockchain, and Internet of Things (IoT).

Development Norms for IT/ITES Park

A. Floor Space Index for IT Parks in Private and Public Parks:
FSI may be provided on basis of the following table to all IT Parks in the Greater Mumbai region and rest of Maharashtra:

Note : Additional FSI Limit shall be applicable as above or as per the Local DCR norms, whichever is higher, excluding in Agriculture Zone, NDZ, or any others special zone, declared by Urban Development Department, where the maximum Additional Floor Space Index limit shall remain applicable as per prevailing Development Control Regulation.

B. Premium for additional Floor Space index for IT Park:
For All Public and Private Information Technology Parks/AVGC Parks, Additional FSI shall be admissible by levying a premium at the rate of 50 % of prevailing rate of premium in complete Maharashtra except Vidharbha, Marathwada, Dhule, Nandurbar, Ratnagiri and Sindhudurg. No premium shall be charged for extra floors.

Note: The developer will be allowed to pay the premium, development charges, ancillary charges and other charges for the increased additional FSI for the IT Park in installments.

C. Land Use Percentage:

D. Development Period:

1. 5 Years (3+1+1) For Private IT Parks where the BUA is less than One Lakh Sq.Ft.
2. 7 years (5+1+1) For Private IT Parks where the BUA is more than One Lakh Sq.Ft.

Note: In case the construction is not completed in the stipulated time, Developers will be allowed to complete the IT park project with a new de-novo LoI by paying 30% differential premium based on the incremental Ready Reckoner Rates for IT Parks during the relevant period and obtain the Registration Certificate. The new de-novo LoI will be granted on the merits of the individual proposal, initially, for a period of 3 years.

E. De-Novo Letter of Intent For IT Park:
IT Parks which are unable to complete the construction in stipulated period due to various exigent reasons and the LOI has been expired and the occupancy certificate has been obtained from the Planning Authority such private IT Park Developers may submit an application for De-novo Letter of Intent for the IT Park. Guidelines on timelines under LoI & De-novo Letter for IT Parks are as under:

1. The construction of the IT park has been completed but is an unregistered park : Private IT Parks which have completed the construction and are into operations, but the LoI has expired, & developer has obtained the Certificate of Occupancy/BCC from the relevant Planning Authority, a new de-novo LOI for three (3) years to such private IT parks shall be given without charging differential premium. All the IT Parks those who have not obtained De-novo LoI till date, then this provision would apply to all IT Parks from the date of effect of previous IT Policy-2015. During this period, at least 50% BUA of the IT Park should be occupied by IT &ITES units. If the park fails to obtain occupancy of 50 % BUA, then such cases will be decided by Industry Department.
2. Private IT Parks with incomplete construction: The developer of the Information Technology Park is expected to complete the project and obtain the registration certificate within the stipulated period. However, in the circumstances that the IT park cannot be completed within the stipulated timelines for whatever reasons, for such cases, Developers will be allowed to complete the IT park project with a new de-novo LoI by paying 30% differential premium based on the incremental Ready Reckoner Rates for IT Parks during the relevant period and obtain the Registration Certificate. The new de-novo LoI will be granted on the merits of the individual proposal, initially, for a period of 3 years. If the construction of the IT park is not completed despite the extension, then each case shall be decided separately based on the merits of each case, for further extension if required, by the Industries Department.

1. Fiscal Incentives to IT/ITES Units:

A. Stamp Duty Exemption –
Condition Precedent:

1. For availing Stamp Duty the premises must have valid Commencement Certificate / Rera Approval.
2. No Objection Certificate for waiver from the Department of Industries before availing Stamp Duty Exemption.

The table represents Stamp Duty Exemption % for New/ Expansion Units in IT Parks:

Note : The units defaulting in starting the operation/work for which the concession/ waiver has been given from the stamp duty or breaching any of the conditions in the Maharashtra’s IT & ITeS Policy-2023 will be liable to pay stamp duty and penalty as if they were not given waiver from the first day itself.

*New IT &ITES/ AVGC Unit: An IT (Software) /ITES/AVGC unit set up by an entity which commences its production/ operation at a given location after commencement of this Policy and during the validity of the IT &ITES Policy 2023 and that it is not formed as a result of re-establishment mere change of ownership, change in the constitution, reconstruction or revival of an Existing/ Defunct/ Closed/ Sick Unit

Expansions of existing units: If an Existing Unit, makes on or after commencement of this Policy, minimum 25% additional fixed capital investment in IT &ITES/AVGC activity, then such project will be considered as Expansion/ Diversification Project.

** Zone I and Zone II: Zone I includes Municipal Corporation’s in Mumbai Metropolitan Region and Pune Metropolitan Region and Zone II area includes areas other than those in Zone I & No Industry Districts, Aspirational Districts & Naxalite affected area.

B. Power Rationalization Benefit – Cost reimbursement of up to 25% of retrofitting cost or INR 10 lakhs whichever is lower to conduct retrofitting study and implement the energy efficiency equipment.

C. Electricity Duty – Exemption from payment of Electricity Duty from the date of commencement of production/ activity.

D. Certification Assistance – 50% of the expenditure incurred for certification / maximum of INR 5 lakhs will be reimbursed to micro and small-scale IT units.

E. Market Development Assistance – IT & ITeS MSME unit and startups Units shall be eligible for reimbursement of 50% exhibition participation fee (space cost/rent) for exhibitions approved or organized by NASSCOM & ITPO subject to a ceiling of INR 3 lakhs per unit and limited to two such events during the lifetime of the unit/company.

F. Patent related Assistance MSME units – Reimbursement of 50% cost incurred on patent registration up to INR 5 lakhs per successful Indian patent and INR 10 lakhs per successful international patent, whichever is lower, during the lifetime of the unit.

G. Power Tariff – IT &ITES units will be supplied power at industrial rates applicable.

H. Property Tax – Property tax shall be levied at par with residential rates as applicable.

2. Development Norms and Incentives for Integrated IT Township:

A. Minimum Land requirement – 10 Acres and above.

B. Development Period –

1. For 10 Acres to 25 Acres: 7 ½ years.
2. More than 25 Acres: 10 years.

C. Premium Payment – This is allowed in two installments with the stipulation that the entire premium is paid within a year or the date of obtaining the Occupancy / Part Occupancy certificate whichever is earlier.

D. Zone restriction – No Zonal restrictions ( The Parks can come in any zone including Residential zones, no development zones and green zones ) . The option will be given to developer for project implementation with or without zone conversion of the said area.

E.Power Tariff – Power consumed will be charged at industrial rate for the common facilities in the IT Park (such as lobbies, central air conditioning, lifts, escalators, effluent treatment plant, washrooms, cafeterias, gymnasium, training rooms etc.) which are used by the units, excluding support service areas after the registration is granted to the IT park by the Directorate of Industries and Development Commissioner of the SEZ for an IT SEZ. A separate meter will have to be provided by the developer to the individual IT &ITeS units in the IT parks for leased or purchased premises.

F. Electricity Power/ Sub Station – Provision of electric power / substation at minimum 6 Watt per sq. ft. of total BUA of IT Park will be essential. This provision will also be applicable to existing IT parks.

G. Penalty for use of Built – up space for Non IT use: If a private Data Center Park has availed additional FSI as per the provisions of the said policy and subsequently it is found that the built-up space in the park is being used for non- ITeS / commercial activities/any other activity not permitted as per this policy following action will be taken.

1. Per day penalty equal to 0.3% (a thirtieth of a percent) of the prevailing ready reckoner value of the built-up area that has been found to be used for non-IT &ITES activities.
2. The penalty will be recovered from the date of issue of Occupancy Certificate till the day non-compliance continues. After payment of the penalty to the concerned Planning Authority which had sanctioned the building plans of the concerned Data Center park, the said Park will restore the use of premises to the original purpose for which LOI / Registration was granted.

3. Development Norms and Incentives for Data Center:

A. Stamp Duty Exemption – 100% stamp duty exemption for purchasing land/premises required for setting up a new Data Center and for its expansion as well as hypothecation, pawn, pledge, deposit of title deeds, conveyance, lease, assignment of lease, leave and license agreement, merger, de-merger, and reconstruction.

B. Electricity duty exemption – Permanently for New and Existing Data Center Units registered with the Directorate of Industries established in the state, shall be exempted permanently from payment of electricity duty.

C. Power Tariff Subsidy – All datacenter registered with the Directorate of Industries, Industrial Tariff will be applicable from the date of starting of the operations. Subsidy at INR 1 per unit for 5 years for new Data Centre Units located in areas other than Zone- I.

D. Zone restriction – No Zonal restrictions ( The Parks can come in any zone including Residential zones, no development zones and green zones )

E. Parking Norms – Exemption from standard parking norms that are necessary for other IT parks/ IT units. The norm for parking space inside the park will be modified as one vehicle per 400 sq. m. of built up space.

F. Renewable Energy – Use Permitted to avail renewable energy under open access system after paying cost component to DISCOMs as per existing government norms.

G. Captive Power Farms – Companies willing to establish captive power farms (wind/solar) will be facilitated by the government in line with the prevailing policy of Energy Department in this regard.

H. Dial before dig – The service will be designed to protect Data Centers’ network of underground lines and cables and ensure the safety of those working around this infrastructure.

I. Floor Space Index – FSI may be provided on basis of the following table to all Datacenter in the Greater Mumbai region and rest of Maharashtra:

Note : Additional FSI Limit shall be applicable as above or as per the Local DCR norms, whichever is higher, excluding in Agriculture Zone, NDZ, or any others special zone, declared by Urban Development Department, where the maximum Additional Floor Space Index limit shall remain applicable as per prevailing Development Control Regulation.

J. Premium for additional Floor Space – Additional FSI shall be admissible by levying a premium at the rate of 50 % of prevailing rate of premium in complete Maharashtra except Vidharbha, Marathwada, Dhule, Nandurbar, Ratnagiri and Sindhudurg. No premium shall be charged for extra floors.

Note: The developer will be allowed to pay the premium, development charges, ancillary charges and other charges for the increased additional FSI for the IT Park in installments.

K. Penalty for use of Built –up space for Non IT use – If a private Data Center Park has availed additional FSI as per the provisions of the said policy and subsequently it is found that the built-up space in the park is being used for non- ITeS / commercial activities/any other activity not permitted as per this policy following action will be taken :

1. Per day penalty equal to 0.3% (a thirtieth of a percent) of the prevailing ready reckoner value of the built-up area that has been found to be used for non-IT &ITES activities.
2. The penalty will be recovered from the date of issue of Occupancy Certificate till the day non-compliance continues. After payment of the penalty to the concerned Planning Authority which had sanctioned the building plans of the concerned Data Center park, the said Park will restore the use of premises to the original purpose for which LOI / Registration was granted.

L. Activities exempted from FSI – Basement parking, storage and space used for Diesel Generator (DG) sets installation will not be considered as part of FSI.

4. Provisions for Ease of Doing Business in IT &ITES :

A. Relaxation under the Shops and Establishment Act with regard to working hours, work shifts and employment of women.

B. Exemption from maintaining physical records for attendance and salary.

C. Option for self-certification and filing of consolidated annual returns under 13 Acts administered by the Labour Department.

D. Provision for IT / ITES units to maintain employee-related records required under various Labour laws in electronic form, and acceptance of returns in electronic form will be made in line with the progress of computerization in the Labour Department.

E. IT &ITES units not discharging process effluent and employing less than 100 employees will be exempt from obtaining consent from MPCB. Such unit will be required to submit annual statement to MPCB on disposal of wastes including electronic wastes, used batteries, and used oil. The registration of such units by the Directorate of Industries Department will incorporate specific conditions for this purpose. These units will also have to be connected to local sewage network.

F. Relaxations under the Contract Labour Act which have been approved for units in SEZs will be considered for all IT / ITES units outside also.

G. IT &ITES units will be treated as continuous process units for the purposes of power supply.

H. The Development Control Regulation (DCR) including of MIDC and other guidelines for establishment of IT parks including in MIDC area shall be in consonance with the IT &ITES policy.

I. Integrated IT Townships (Infrastructure for the “Walk to Work” Concept): Encouraging the development of holistic IT communities with infrastructure designed to facilitate a “Walk to Work” culture, promoting sustainability and convenience for employees.

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