The Union Cabinet approved[1] the National Policy on Software Products, 2019[2] (“Policy”) on 28.02.2019. The Policy aims “to develop India as a software product nation and a global leader in conception, design, development and production of software products.”[3]
The Policy will be implemented by the Ministry of Electronics and Information Technology (“MeitY”)[4] in collaboration with the National Software Products Mission, launched to implement the Policy. Organizations such as the Software Technology Parks of India (“STPI”),[5] the Centre for Development of Advanced Computing (“CDAC”),[6] National Informatics Centre (“NIC”)[7] and other industry bodies and institutes of higher education and research will assist the Policy’s implementation.
I. PRELIMINARY
The Policy makes the following observations about India’s Information Technology and Information Technology Enabled Services (“IT-ITES”) industry:
- India’s IT-ITES industry is a critical pillar in the country’s growth.[8]
- According to NASSCOM[9], the IT-ITES industry in India currently generates an estimated revenue of USD 168 billion which includes exports of around USD 126 billion annually.[10]
- India’s IT-ITES industry contributes approximately 8% of India’s GDP.[11] This figure can potentially increase to around 10% by 2025.[12]
- The Digital India Programme, 2015[13] has increased digital access, digital infrastructure and digital empowerment while bridging the digital divide.[14]
- India can potentially become a trillion dollar digital economy by 2025.[15]
- India’s IT-ITES industry is predominantly service led and has scope for expansion of the software products sector.[16] As per NASSCOM Strategic Review 2017,[17] the global software product industry is estimated at USD 413 billion while the contribution of software products to Indian IT-ITES revenue is just USD 7.1 billion.[18]
- India is a net importer of software products.[19]
- Synergy between industry, academia and government will bring about a paradigm shift in the IT/ITES sector of the country. The ‘National Policy on Software Product’ is the first significant step in this direction.[20]
- The Policy aims to develop India as the global software product hub by focusing on innovation, commercialisation, Intellectual property (IP) protection, and technology start-ups and harnessing specialised skill sets.[21]
II. MISSION
The Policy aspires to:
- Achieve a ten-fold increase in share of the Indian IT-ITES industry in the global software product market by 2025.[22]
- Nurture 10,000 startups dealing in the software product industry, including 1000 startups in Tier-II and Tier-III towns and cities and generate cumulative employment for 3.5 million people by 2025.[23]
- Up-skill 1,000,000 IT professionals; motivate 100,000 school and college students and specialise 10,000 professionals.[24]
- Develop 20 sectoral and strategically located software product development clusters with integrated infrastructure and other facilities.[25]
- Set up a National Software Products Mission with participation from the Government, Academia and Industry.[26]
III. STRATEGIES
The Policy proposes the following strategies:
1. Promoting the software products business ecosystem,[27] which will include:
- An Indian software product registry to act as a common pool of Indian software products in a trusted trade environment.[28]
- Capital market participation by India software companies.[29]
- A single window platform to facilitate fast-tracking legal and regulatory issues regarding import-export and opening and closure of software product enterprises.[30]
- A classification system for Indian software products along the model HS code, with appropriate sub-categorisations. This will facilitate tracking and ease export of such products and help gather statistical data for further action.[31]
- A set-off against tax payable by Indian software product companies on the investments made in research and development of indigenous software products.[32]
2. Promoting entrepreneurship and innovation for employment,[33] which will include:
- An incubation programme for at least 10,000 software product startups, 1000 of which shall be set up in Tier-II and Tier-III town and cities. The programme will provide technical and infrastructure assistance, mentoring support, seed fund, research and development, testing facilities and marketing and branding support.[34]
- A Software Product Development Fund (“SPDF”) with a corpus of Rs. 1000 Crore and will participate in venture fund to promote scaling up of market-ready software products. This scheme will create a corpus of Rs. 5000 Crore with the end target to have at least 100 Indian software product companies with valuation of Rs. 500 Crore or employing 200 persons.[35]
- A Research and Innovation Fund (“R&I Fund”) to promote innovation in institutes of higher learning with a budgetary outlay of Rs. 500 Crore. Grants-in-aid will be provided to Indian MSMEs and start-ups for undertaking research with academic/research institutes leading to IP development. A matching fund from such applicants will be a pre-requisite and will ensure absorption of the products of such research. An organisation to commercially leverage such innovation will be identified.[36]
- 20 dedicated challenge grants to solve societal challenges in collaboration with ministries, state governments and industry bodies/ think tanks.[37]
- 20 domain specific Indian software product clusters around existing industry concentrations, such as in automobile, textile, financial services, electronic manufacturing, energy etc. These clusters will have integrated ICT infrastructure, marketing, incubation, research and development/test beds and mentoring facilities. Technical and financial support will be extended up to 500 technology companies so as to achieve global foot print.[38]
- A Centre of Excellence to design and develop software products with industry participation.[39]
- Cyber-security interventions for startups and software product designers, through a common upgradable infrastructure.[40]
3. Skilling and human resource development[41], which will include:
- A FutureSkills programme to up-skill/re-skilling 3 million IT Professionals in emerging technologies, including 1 million IT professionals with competencies required for IP driven software products. This will be implemented through (i) modification in existing course curriculum, (ii) short term training programme, (iii) national competency tests in consultation with the industry. The programme will be implemented in partnership with educational institutes, both public and private, identified industry bodies and the National Skill Development Mission.[42]
- A national talent accelerator programme targeting 100,000 school and college students to attract young talent.[43]
- A talent pool of 10,000 software product leaders to help develop technology and intellectual capital for the software product industry. They will be interlinked with mentor pools for software product incubators and clusters.[44]
4. Improving access to domestic market and cross border trade promotion[45], which will include:
- A registry of Indian software products, integrated with Government e-market (GeM).[46]
- Hackathons to identify Indian product startups/MSMEs to develop solutions for Smart Cities, healthcare, agriculture amongst others and to address social challenges such as bridging digital divide, gender inequality amongst others.[47]
- Open APIs for public and private sector to foster innovation and encourage inter-operability in Indian software products ecosystem 2017.[48]
- Preferential inclusion of Indian software products in Government procurement as per the Public Procurement (Preference to Make in India), Order 2017.[49]
- Promotion of Indian software products in international trade development programmes by leveraging India’s foreign aid programmes[50], providing access under various market development assistance programmes[51] and setting-up specialized infrastructure in India and abroad for software product development.[52]
- Incentives to develop products to overcome language barriers across major Indian languages and major international languages including English.[53]
5. The implementation mechanism[54] will include:
- A “National Software Product Mission” (“NSPM”) to be housed in MeitY under a Joint Secretary with industry and academia participation[55].
- The broad objectives of the NSPM will be to:
- Design an appropriate strategy for the development of the software product industry.[56]
- Recommend measures to create an enabling ecosystem for design and development in the IT-ITES sector.[57]
- Recommend initiatives to tap the full potential of the domestic and the international software product markets.[58]
- Monitor and collate various initiatives taken under this policy.[59]
- Facilitate Government agencies and other bodies in promoting software products.[60]
- Encourage States to contribute to the promotion of Indian software products.[61]
- Monitor SPDF and the research and innovation fund.[62]
[1] Press Note bearing Release ID: 1566747, available at http://pib.nic.in/PressReleseDetail.aspx?PRID=1566747, last accessed on 01.03.2019.
[2] National Policy on Software Products, 2019, available at https://meity.gov.in/writereaddata/files/national_policy_on_software_products-2019.pdf, last accessed on 01.03.2019.
[3] Vision, Page 4 of the Policy.
[4] Ministry of Electronics and Information Technology, available at https://meity.gov.in/, last accessed on 01.03.2019.
[5] Software Technology Parks of India, available at https://www.stpi.in/, last accessed on 01.03.2019.
[6] Centre for Development of Advanced Computing, available at https://www.cdac.in/, last accessed on 01.03.2019.
[7] National Informatics Centre, available at https://www.nic.in/, last accessed on 01.03.2019.
[8] Para 1.1, Page 1 of the Policy.
[9] National Association of Software and Services Companies, available at https://www.nasscom.in/, last accessed on 01.03.2019.
[10] Para 1.1, Page 1 of the Policy.
[11] Para 1.1, Page 1 of the Policy.
[12] Para 1.1, Page 1 of the Policy.
[13] Digital India Programme (2015), available at https://www.digitalindia.gov.in/, last accessed on 01.03.2019.
[14] Para 1.2, Page 1 of the Policy.
[15] Para 1.2, Page 2 of the Policy.
[16] Para 1.3, Page 2 of the Policy.
[17] The IT-BPM Sector in India, available at https://www.nasscom.in/knowledge-center/publications/it-bpm-industry-india-2017-strategic-review, last accessed on 01.03.2019.
[18] Para 1.3, Page 2 of the Policy.
[19] Para 1.3, Page 2 of the Policy.
[20] Para 1.6, Page 3 of the Policy.
[21] Para 1.6, Page 3 of the Policy.
[22] Page 5 of the Policy.
[23] Page 5 of the Policy.
[24] Page 5 of the Policy.
[25] Page 5 of the Policy.
[26] Page 5 of the Policy.
[27] Page 5 of the Policy.
[28] Page 5 of the Policy.
[29] Page 6 of the Policy.
[30] Page 6 of the Policy.
[31] Page 6 of the Policy.
[32] Page 6 of the Policy.
[33] Page 6 of the Policy.
[34] Page 6 of the Policy.
[35] Page 7 of the Policy.
[36] Page 7 of the Policy.
[37] Page 8 of the Policy.
[38] Page 8 of the Policy.
[39] Page 8 of the Policy.
[40] Page 8 of the Policy.
[41] Page 9 of the Policy.
[42] Page 9 of the Policy.
[43] Page 9 of the Policy.
[44] Page 9 of the Policy.
[45] Page 10 of the Policy.
[46] Page 10 of the Policy.
[47] Page 10 of the Policy.
[48] Page 10 of the Policy.
[49] Page 10 of the Policy.
[50] Page 10 of the Policy.
[51] Page 11 of the Policy.
[52] Page 11 of the Policy.
[53] Page 11 of the Policy.
[54] Page 11 of the Policy.
[55] Page 11 of the Policy.
[56] Page 11 of the Policy.
[57] Page 11 of the Policy.
[58] Page 11 of the Policy.
[59] Page 12 of the Policy.
[60] Page 12 of the Policy.
[61] Page 12 of the Policy.
[62] Page 12 of the Policy.
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