Software Product Startups To Get Fiscal Incentives Under The ‘National Policy on Software Products-2016’

The National Democratic Alliance (NDA) government has planned to offer fiscal incentives for startups, who aims to create a robust software products industry in India.
The government has finalised a ‘National Policy on Software Products-2016’ to promote talent in the international market. Besides, the government aims to contribute a bigger share of software products from India to the global market.

The global software products industry is estimated to be around $411 Bn; expected to reach around $1 Tn by 2025. According to estimates, Indian software product industry index grew by 26.6% annually in 2015 and 80% of this growth came from companies focused on global markets.

Startups like Druva, Freshdesk, Capillary, Nandan Nilekani-backed Team Indus, Forus Health, Julia (an open-source language), and taxi firm Savari are some of the prominent names under the domain.

In a meeting with senior Department of Electronics and Information Technology (DeitY) officials in June, Communications and IT minister Ravi Shankar Prasad had said that the aim is to create a conducive environment for creation of 10,000 technology startups, to develop software products that are globally competitive, and thereby generating direct and indirect employment for 3.5 Mn (35 lakh) by 2025.

While, as per the draft policy, the country’s IT is currently valued at around $143 Bn and is expected to grow to $350 Bn by 2025. The government aims software products to account for $100 Bn of India’s gross domestic product (GDP) by 2025 from the current level of around $6.1 Bn. The government also strives for a ten-fold increase in the share of the global software product market by 2025. It aims at promoting easy access for software product to the local domestic and international market by creating a sustainable software product industry.

The policy, which is to be announced shortly, plans to offer incentives to startups which create revenues of over INR 25 Cr and directly employ 25 people. The ministry also aimed at encouraging research and development (R&D), disruptive innovations and cutting edge technologies.

The ministry also said that it plans to allocate a fixed portion of funds in electronic development fund, created by department of electronics and information technology, and innovation fund, created by the ministry of finance, exclusively for domestic software product industry promoted by resident Indian nationals.

The policy will also focus on the availability of funds and investments in startups dealing with software products.

Also, an inter-ministerial coordination group will be set up to leverage StartUp India initiative to ensure ease of business and to address concerns specific to software product industry.

Industry bodies such as Nasscom and iSPIRT and other think tanks have been pushing for such a policy for the startups in the software products industry.

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