Chief Minister Bhupendra Patel unveiled the new “IT/ITES Policy 2022-27” on Tuesday, which provides capital and operational support to Information Technology (IT) firms investing in Gujarat and promises to create one lakh direct jobs.
After missing the IT bus twice in the 1980s and 2000s, Gujarat included a special job creation incentive in the new policy to encourage IT and Information Technology Enabled Services (ITES) firms to hire local talent.
Chief Minister Bhupendra Patel said that the new policy would take the state to “newer heights in IT sector” and will place Gujarat among top five performing states of India in IT sector.
“The new policy will propel an eight-fold growth in IT exports from Rs 3,101 crore to Rs 25,000 crore”, He added. Currently IT exports form about one percent of the total exports from Gujarat.
Jitu Vaghani, State Minister for Science and Technology who accompanied the chief minister, later told reporters that while Gujarat may have missed the IT bus in the past, the new policy, which was developed after studying similar policies in other states, will help attract IT firms from other states to Gujarat.
“Through this policy, we are making a fresh attempt to ride the bus we missed,” Vaghani said.
The policy, which was unveiled at a formal event at a club in Gandhinagar’s GIFT City, replaces the 2016-2021 policy, which set an ambitious target of increasing exports to USD two billion (Rs 13,000 crore), IT turnover to USD 15 billion (Rs 75,000 crore), and direct job creation to 10 lakh.
According to GESIA IT Association office bearers present at the new policy’s launch, Gujarat had 7,000 IT/ITES firms with a combined turnover of Rs 7,000-7,500 crore and a workforce of two lakh as of 2019-20.
When asked how many jobs and investments were generated by the last policy, Vaghani said, “I do not want to get involved in politics, but you journalists can research on why Gujarat missed the bus.”
The policy provides support for both capital (CAPEX) and operational (OPEX) expenditures. “This is a unique model that gives flexibility to industries to plan their expenditures and addresses the viability concerns,” said Vijay Nehra, secretary, Science and Technology department while presenting the policy.
According to the official, future IT growth in Gujarat will be driven by GIFT City, 5G infrastructure, and the government’s Bharat Net initiative to provide broadband connections to rural areas.
The CAPEX support has been increased from Rs 1 crore to Rs 200 crore under the new policy. A maximum of Rs 50 crore in CAPEX support will be provided for capital investments of less than Rs 250 crore.The government has also proposed to provide 15 per cent OPEX support that will range from Rs 20- 40 crore per year for the policy duration of five years.
The policy will also provide an employment generation incentive where a support of up to Rs 50,000 (male employees ) – Rs 60,000 (female employees ) or 50 perc ent of one month’s CTC will be given to the IT firm for hiring and retaining a new local employee for a year.
Aside from that, IT/ITES units will be able to claim reimbursement on the employer’s statutory contribution under the Employees’ Provident Fund, just as they did under the 2016-2021 policy.
The state government will reimburse 100% of EPF contributions for female employees and 75% for male employees.
Apart from that, the government is providing CAPEX support up to Rs 100 crore for the creation of IT office space in an IT city or township.
Reacting to the new policy Tapan Ray, MD and Group CEO of GIFT City stated in a release, “the new IT/ITES policy will further accelerate the presence of technology related companies in GIFT City, which is fast becoming a hub for leading IT/ITES companies in the state. It will also boost FinTech and startup activities, giving rise to quality employment opportunities, leading to overall prosperity of the region.”