Tier II, III cities to be hardware hubs

Bangalore, Jan 18 (PTI)

The State Cabinet on Tuesday approved the innovative Information and Communication Technology (ICT) policy 2011, which seeks to position IT capital Bangalore as an IT R&D hub and tier II and III cities as attractive investment destinations for software and hardware development.

The State has for the first time brought Information Technology enabled Services (ITeS), BPOs and the telecom sector under the ambit of the IT policy, enabling them to avail special incentives and concessions like entry tax exemptions and interest free loan on VAT, being offered to IT firms. Besides, the Cabinet gave its nod for a separate Electronic Hardware Policy 2011, which seeks to set up four electronic manufacturing hubs across the State, IT and BT Minister V S Acharya told reporters.

The new ICT policy plans to encourage IT research and development in Bangalore and set an ambition to transform the IT capital into a hub for products and technology. For this, the policy encourages partnerships between the industry and educational institutions. The Government will establish institutes of higher learning with focus on software product development.

Besides, the Government proposes to set up an Innovative Park on public private partnership PPP basis for Micro, Small and Medium Enterprises (MSMEs) in Bangalore. The park will focus on providing latest technology and equipment to MSMEs to upgrade their technology.

The Government will support the park with 20 per cent Viability Gap Funding. Separate SEZs dedicated to MSMEs will be set up in Mysore, Mangalore, Hubli-Dharwad, Gulbarga and Belgaum.

The policy has re-introduced stamp duty exemptions up to 50 per cent to set up IT firms. The Government had, in 2003, withdrawn this facility.

However, the Government has not considered the request of the industry to extend power tariff concession being given to IT export units. Official sources said the matter had to be discussed with the Karnataka Electricity Regulatory Commission.

With the inclusion of the telecommunications sector in the policy, low-cost mobile phone units, cellular mobile companies and others will get treatment on par with IT firms to set up shop in the State. The IT hardware sector is also included in the policy. The aim of the new policy is to give the much-needed succour to the IT sector, which is contributing to the State’s GSDP growth in a big way, official sources explained.

In a bid to encourage IT firms to move to tier IN and III cities of the State, the Government will extend up to 20 per cent capital contribution to all those who come forward to set up IT parks in cities other than Bangalore. Setting up research hubs will also be encouraged in these cities, officials said.

• Policy includes BPOs and telecommunication sector
• Plan to develop Bangalore into a R&D hub
• Move to make tier II, III cities as new IT destinations
• BPOs & telecommunication sectors to enjoy benefits being offered to IT firms
• Stamp duty exemption up to 50 percent re-introduced
• Govt to extend up to 20 per cent capital contribution to IT parks in small cities
• IT, ITeS, BPO, telecom units to be exempted from statutory power cuts.
• Establish ITIR region in Devanahalli-Doddaballapur area near BIA
• New electronic hardware policy approved