Maharashtra Information Technology and IT Enabled Services Policy of 2023

Summary: Maharashtra’s IT & ITES Policy 2023 focuses on strengthening the state’s leadership in the IT sector by promoting investment, employment, and infrastructure development. The policy aims to attract INR 95,000 crore in investment, create 3.5 million jobs, and achieve IT exports worth INR 10,00,000 crore. Key areas include IT software, IT-enabled services (ITES), animation, visual effects, gaming, and emerging technologies such as AI, blockchain, and cybersecurity. The policy offers fiscal incentives, including capital subsidies, tax exemptions, power tariff subsidies, and recruitment assistance for IT companies, start-ups, and data centers. Infrastructure support includes the development of integrated IT townships, data center parks, and co-working spaces. The policy also facilitates ease of doing business through the MAHITI portal, single-window clearance, and industry-friendly regulations. Additionally, Maharashtra aims to position Mumbai and Navi Mumbai as major data center hubs by providing incentives like infrastructure status, relaxed building norms, and uninterrupted power supply. The policy is valid for five years, with a strong focus on fostering innovation, skill development, and global collaborations.

Here we are covering a comprehensive view of the Maharashtra State IT and ITES Policy of 2023, highlighting key areas such as objectives, incentives, focus on emerging technologies, infrastructure development, and the long-term vision.

IT & ITeS POLICY EVOLUTION

Maharashtra remains a pioneer in policy planning being 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. Due to effective changes in IT Policy-2015, the IT ecosystem in Maharashtra has evolved rapidly to keep up with global pace making it one of the best technology investment destinations.

IT policy 2023 focus areas & Key strategic drivers:

POLICY TARGETS

To attract new investment of INR 95,000 Crore

To create new 3.5 million jobs opportunities

To achieve export of INR 10,00,000 Crore

MISSION

• To strengthen the leadership position in IT&ITES Sector in
• To further accelerate IT &ITES investment flows to the State for sustainable and balanced Regional Development.
• To promote Intellectual Property creation, innovation, and technology commercialization for new Technology products/Services especially for indigenous products developed in
• Becoming Destination of Choice for Global companies by significantly increase in investments inflows in emerging technologies with a focus on developing associated support ecosystems.
• To develop a robust IT &ITES and Emerging Technology talent pool, which is highly employable, skilled and spurs the growth of the sector in Maharashtra.

POLICY VALIDITY

The IT/ITES Policy 2023 effective from 27^th June 2023 and will be valid for 5 years or till the new policy is announced.

POLICY APPLICABILITY

Under the IT/ITES Policy 2023, Information Technology industry consists of IT Software, IT Enabled Services including AVGC, Data Centers and Emerging Technologies, which are defined in Paragraph 15 of the IT/ITES Policy 2023.

The Information Technology (IT) units are classified into two groups depending upon their activities, namely (a) IT Software units (b) IT Service (IT enabled Service) unit.

For categorization as an IT Software unit or IT service unit, it also requires that the units annual turnover of IT Software or IT services exceed 75% of its total annual turnover in value terms.

IT Software & IT enabled Services (ITES):

IT Software:

IT Software is defined as any representation of instruction, data, sound, or image, including source code or object code, recorded in machine readable form and capable of being manipulated to providing interactivity to a user with the means of a computer.

IT enabled Services (ITES): IT enabled services refer to companies that provide IT services or systems integration services, including those specified by the Central Board of Direct Taxes (CBDT) under section 10 TA of the Income Tax Rules and as decided by Government from time to time and are as below.

Back-office Operations: The administrative and support staff of a financial institute such as Banks, Insurance Company, Mutual Fund, Non-Banking Finance Companies which is responsible for function related to the running of the company such as Settlements, Compliance, Accounting, IT and Other Technology.

Back Office Functions are also often outsourced to external companies and/or in different countries which include:

• Business process outsource services provided mainly with the assistance or use of information
• Data entry, transcription, reconciliation, consolidation, co-ordination, proportion, processing review of documents
• Accounting to reporting and Reconciliations
• Activities excluding front offices of financial services such as corporate finance, asset and fund, Management Broking, Non-Banking Financial Company, Tax and Audit Business and Management Consultancy, Taxation Services, Treasury operations, Risk Management & credit services, Financial Back Office Operations, Computer/disaster recovery and including but not limited to IT operations, financial and administrative support and any other ITeS Activities as set out in Definition 15.19.

1. Financial Back Room operations for Corporate and Investment Bank (CIB) and Private Bank, Disaster Recovery, IT Development and Support and ancillary office which includes Back Offices of Manufacturing and other service, Startups/Companies which have no direct customer interface but provide essential support through Electronic Media but this will not include delivery Godowns /Warehouse of E- Commerce Company/Organizations.

2. Call Centers or Contact Centre Services

3. Data Processing or data mining

4. Insurance Claim Processing

5. Legal Databases

6. Creation and maintenance of Medical Transcription Excluding advise

7. Payroll

8. Remote Maintenance

9. Revenue Accounting ( IT should include back office operations of all Income Tax Offices, GST offices back office operations or any other Government & semi Government offices)

10. Support Centers

11. Website Services

12. Translation Services,

13. Data Search integration & analysis,

14. Content generation/creation using audio, video system and extensive use of computer which can be permitted for education.

15. Clinical database Management-Services Excluding Clinical trials but does not include any research and development services whether or not in the nature of contract research and development services.

16. Visa Processing facilitation & back offices of Travel & Tourism facilitation, V.

17. Entertainment Channels and Sports & Travel Channels

18. Engineering & Designing

19. Geographic information System Services

20. Human Resource Services

21. Super Specialty IT Skill Development Centers/ IT related Hi-Tech Training Centers

22. Co-Working Spaces / Plug and Play

COMMON INCENTIVES

Some of the Common fiscal & non-fiscal Incentives applicable to all IT &ITES units in the state are given below as per IT Policy 2023.

• Stamp duty exemption

An IT & ITeS unit will be eligible for Stamp duty exemption except existing unit who had earlier availed of stamp duty exemption.

Conditions

• For availing this exemption premises must have a valid Commencement Certificate / RERA Approval from the concerned planning authority/ competent authority.
• Submit ‘No Objection Certificate’ for waiver from the Department of Industries before giving waiver from the stamp duty
• 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 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.

IT & ITES, AVGC, Data Centre & Emerging Technology units will be entitled to stamp duty exemption as follow:

* Zone I area: This area includes Municipal Corporation in Mumbai and Pune Metropolitan Region.

* Zone II area: This area includes areas other than those in Zone I & No Industry Districts, Aspirational Districts & Naxalite affected area.

* 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.

* Existing IT &ITES/ AVGC Unit: An IT (Software) /ITES/AVGC unit set up by an entity at a given location which is in production/ operation on or any time prior to commencement of this Policy or a unit which has availed incentives (excluding Stamp Duty) under any of the earlier IT &ITES Polices.

* Expansion/ Diversification Project: 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.

• Power Rationalization Benefit

Cost reimbursement of up to 25% of retrofitting cost or INR 10 lakhs, would be given to IT & ITeS units to conduct retrofitting study and implement the energy efficiency equipment.

• Electricity Duty

Exemption from payment of Electricity Duty from the date of commencement of production/ activity according to the following conditions:

• Certification Assistance

50% of the expenditure incurred for certification of CMM Level 2 upwards, IS0 27001 for security & COPC and e-SCM certification, limited to a maximum of INR 5 lakhs will be reimbursed to micro and small-scale IT units.

• 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.

• 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.

• Power Tariff

IT &ITES units will be supplied power at industrial rates applicable under MERC tariff order.

• Open Access

• The state shall allow IT & ITES parks to get power through open access.
• In MIDC areas, MIDC will be the power distribution agency to all IT &ITES units.
  • Property Tax

Property tax shall be levied at par with residential rates as applicable in the relevant jurisdictions.

• Setting-up IT &ITES units in any zone (including residential, no- development zones and green zone etc.)
• Essential Services Status shall be granted – IT &ITES Units will be permitted to work 24x7x365 days without any close-down (except some exemptions).
• MAHITI Portal: Single Integrated IT Portal

The portal will also act as an IT &ITeS Exports Trade Facilitation and Information center.

• Financial Provisions for IT & ITeS

INR 500 Crore will be allocated for establishment of M-Hub and Venture Capital Fund during the Policy period.

• Rental Assistance to new entrepreneur units established under the IT/ITeS Policy-2023 in urban areas.

Animation, Visual Effects, Gaming and Comics (AVGC)

AVGC is essentially an ITeS activity and shall be eligible for the benefits admissible to ITeS as provided above.

Fiscal Support to AVGC Industry given as under

• Capital Subsidy

• Stamp Duty Exemption & Electricity Duty Exemption

Same as given above in common incentives.

• Power Tariff Subsidy

Subsidy at INR 1 per unit for 5 years for new AVGC Units located in the State.

• Certification Assistance

All AVGC EOU’s will get refund of expenses incurred for compulsory marking like Conformity European (CE), Gaming Lab International (GLI) Certifications, etc. to the extent of 50% expenses subject to maximum of INR 2 lakhs per unit.

• Skill Development Assistance

Reimbursement of up to 25% of expenditure/fee of online courses and programs for Super Specialized Job Roles, provided by autonomous institutes in offline or online learning format. The benefit will be provided on uploading certificate of successful completion on MAHITI portal with a maximum ceiling of INR 50,000 for domestic certifications and INR 1 Lakh for International certifications, whichever is lower.

• Market Development Assistance

M-hub to host annual events and competitions in collaboration with NASSCOM, Gaming Developers and Associations, Animation Society, Maharashtra State Innovation Society, among others.

Financial support of INR 20 Lakh for each event and competition every year

• FICCI FRAMES & Best Animated Frames Awards-Mumbai,
• NASSCOM – Game Developers Conference-Pune,
• The Animation Society of India- Anifest, Mumbai,
• ASIFA- World Animation Day – 28th Oct every year all India
• MCCIA- Digital Content Conference, Pune
• NTLF NASSCOM Technology Leadership Forum

Mobile game developer registered in Maharashtra with more than 5 million downloads (iOS + Play store) and 4+ rating on mobile platforms to receive a Gaming Award and reimbursement of 20% of the qualified expenditure on marketing with a ceiling of INR 10 Lakhs per sanction per company.

• Recruitment Assistance

Recruitment assistance of INR 2.5 lakh for employing 50 local students in Business Incubation Laboratory/R&D Centre for IT & ITeS operation within 2 years.

• Infrastructure Development (Parks/Co-working Spaces/ CoEs )

Establishment of Maha Center for AVGC under the M-Hub including AVGC Centers – An integrated facility including production facilities, AVGC studios and space for performing arts, exhibition galleries and workplace requirement for the artist

Non-Fiscal Support to AVGC Industry

• Global Joint Ventures
• International Promotion
• Intellectual Property (IP) protection

Emerging Technology

These technologies are evolving technologies whose development and practical applications are largely unrealized but include new solutions that cut across components of software and service. These include but are not limited to Virtual reality, Augmented reality, Artificial Intelligence (Including generative AI), Web 3, Machine Learning, Internet of Things, Block chain, Robotic Process Automation (RPA), Spatial Computing, Big Data Analytics, Cloud Computing, Mobile Tech, Cyber Security, 3D Printing, Fintech etc. As per need this list will be modified from time to time by Industries Department.

Fiscal Support to Emerging Technologies

• Capital Subsidy

Capital subsidy of 20% on capital investments (excluding building and land cost) subject to a maximum of INR 1 Crore paid over a period of 5 years. For first 50 new Emerging Technologies units with a minimum investment of INR 5 Cr. and directly employing a minimum of 20 people in the unit.

• Stamp Duty Exemption, Electricity Duty Exemption, Certification Assistance & Patent Related Assistance

Same as provided above in common incentives

• Power Tariff Subsidy

Subsidy at INR 1 per unit for 5 years for new / expansion of Emerging Technologies Units located in the State.

• Recruitment Assistance

Recruitment assistance of INR 2.5 lakh for 50 employing local students per unit.

Non-Fiscal Support to Emerging Technologies

1. Training & Placement

Engineering Colleges will institute training based certification and placement programs.

2. Ease of Doing Business

Special EoDB measures to fast-track timelines for startups including self-certification through the MAHITI portal, access to a 24X7 manned hotline number for round the clock assistance.

3. Intellectual Property (IP) will be protected through legal framework.

Data Center (DC)

Data Center is a dedicated secure space to house computing systems and networking equipment along with required infrastructure such as connectivity, storage systems, etc. for the purpose of collecting, storing, distributing, or allowing access to large amounts of data.

Government of Maharashtra is keen to promote Data Centers. The vision is to position Zone I cities, especially the Mumbai and Navi Mumbai region, as Data Center Hubs. With highly reliable power supply, large number of under-sea cable landings and availability of trained technical man power, Zone- I is poised to grow as Asia-Pacific’s data center hub.

INCENTIVES TO DATA CENTERS

• 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.

• Electricity Duty Exemption

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.

• Power Tariff Subsidy

Subsidy at INR 1 per unit for 5 years for new Data Centre Units located in areas other than Zone- I.

• Infrastructure Status

Data Centers shall be given infrastructure status on a par with sectors such as railways, roadways, and power, to enable the industry to avail benefits such as long-term credit from lenders at easier terms.

• Infrastructure Support

MIDC will serve to set up Data Center Parks with necessary infrastructure like road, power, connectivity, water, and other essential infrastructure.

MIDC will take up Data Center Park with all prior clearances/permissions for land being allotted to Data Centers.

The State Government will provide financial assistance required for laying transmission lines and substation related infrastructure to Data Center Parks to be setup by MIDC.

Initiatives related to Ease of Doing Business

• MAHITI Portal will act as a single window mechanism for facilitation of the processes involved in setting up of Data Center projects both for getting state and Government of India approvals.
• Data Center will be granted industry status for availing benefits of tariffs, concessions, initiatives related to various laws for (EoDB) and incentives under this policy.

Deemed distribution license

Data center developer / operator shall be eligible for getting licenses for green power energy distribution and consumption within data center park.

• FSI Norms

Data centers, being a unique activity will be permitted to avail additional FSI.

Penalty will be levied as mentioned in Paragraph 9 of IT &ITES Policy 2023, if 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.

Some other benefits available are as follows-

• Power Generation Units – the State Government will pursue the Government of India regarding permission for Power generation, Transmission and Distribution to units in Data Centre Parks.
• Allowed to set up in any zone (including residential, No development zone and green zone etc.)
• Essential Services Status under Essential Services and Maintenance Act (ESMA)
• Exemption from standard parking norms
• Permitted to avail renewable energy
• Exempted from State Statutory power cuts and will be given Continuous 24X7X365 power supply & water supply
• Open access for electricity
• Dial-before-Dig Policy to help Data Centers manage down time.
• Relaxed Restrictions on Buildings