IT/ITes Policy 2022

Divya Sitlani
Divya Sitlani is the Client Relationship Manager at The Address. If you ever happen to visit The Address' Ahmedabad offices, do not miss to stop by and say Hi to her.

The government of Gujarat has finally provided a major breakthrough to its IT industry. The IT/ITes 2022 policy has made the IT/ITes industry stand tall amongst the other sectors of the industry. Undoubtedly, this policy owes a large credit to Atmanirbhar Bharat and thereby Atmanirbhar Gujarat – striving to create a sea of IT Talent and infrastructure for all the surrounding industries. The policy shells out Rupees 200 crore worth of financial incentives to companies willing to do capital expenditures. This will push businesses to harness the skills of technology into making something fruitful and transformational. 

This policy’s operative period will be till March 31, 2027. It seeks to attract entrepreneurs to the IT industry by providing them with incentives to create an IT ecosystem in Gujarat. In lieu of this, the government aims to bring about employment for 1 lakh people, uplift the investment by 10 times and wishes to elevate the IT- ITes exports from the current Rupees 3000 crores exports annually to a whopping Rupees 25000 crores in the next 5 years. 

This policy will be a boon to many individuals due to the employment generation incentives, skill development, education and communication program encouragement that it provides. To begin with, per individual there is a 50,000  direct benefit transfer for working individuals and students. In this manner employees and students would get a chance to advance their skills and would step into the world of IT with carefully crafted training programs. The government has realised that by administering Digital – IT literacy, the common man will be well equipped to take Gujarat way ahead as one of the leading states of IT. 

Secondly, for a minimum of one year period, if local employees will be hired then the government will surely provide support to their respective businesses. This would entail a 50% support for each and every employee hired on their respective CTC’s (for one time.) The cap is Rupees 60,000 for women and Rupees 50,000 for men. Moreover and specifically, for the youth employment creation – the policy states that for every 20 individuals employed, one intern needs to be employed as well. This in itself is a great surplus – as, not just is the policy giving rise to local individuals but, even to the women and youth of our society, assuring the state that it is dealing with problems on a holistic level.

Thirdly, there is something special in store for the employee provident fund as well.  There is up to 100% concession for female employees and 75%  concession for male employees on employee provident fund. All of these three ways together, present a robust and strong front for the businesses and employees making their way into IT units.

The most unique part of this policy is that it runs on a Capex – Opex model. Thereupon, by employing this model, businesses can get more freedom and flexibility and can plan their expenses accordingly. IT cities and townships are obviously favoured in this medium. If they are created then a Capex support of Rupees 100 crores would be provided. These townships will benefit from a relaxation in zoning and land laws, assistance in obtaining other statutory clearances, utilities/infrastructure support up to the doorstep, etc. Apart from that, the capex support provided for GFCI up to Rupees 250 crores – policy will provide up to 25% for a ceiling of Rupees 50 crores. Furthermore, for GFCI exceeding Rupees 250 crores, there are customised incentives – capex support at 25% for a ceiling of Rupees 200 crores.

The Opex support will be between Rupees 20 crores to Rupees 40 crores which will consist of power tariff expense, cloud rental, lease rental, patent and many more. 

A stark differentiating factor between the current policy and the previous policy is the significance it is providing to coworking spaces. It was about time that the Gujarat government provided the due merit to coworking spaces. Through the aid of this policy, the state government will inculcate the government facilitated model and the empanelment model to allow IT/ITes units to immediately start working under coworking spaces. The coworking spaces that will operate under these models will get a fiscal support for 5 years. The monthly rental support to IT/ITes units (per seat basis) is 50% of monthly rental – for the first 2 years – 10,000 INR per seat per month. Thereafter, 25% of monthly rental – for 3-5 years – 5,000 INR per seat per month. 

The 2022 IT/ITes policy promotes research and development for all the constituents under the cloud ecosystem such as artificial intelligence, machine learning, quantum computing, blockchain and all the other technologies. To be able to achieve this, the policy includes a concession on electricity for data centres and cable handling stations. What’s more is that non-fiscal incentives are a part of this as well – facilitation of allotment of land, self-certification, investor facilitation centre and preferential market access will be designated.

One can say that this was the need of the hour. This is because IT plays the role of a catalyst in all walks of life and if not used to its best then industries like education, rural development, agriculture, healthcare, tourism and many more will surely fizzle out. If all goes to plan then, Gujarat will have a powerful IT ecosystem and infrastructure that will achieve gigantic heights in employment, education, upskilling, and economic growth in no time.