Search for Articles ‘CONTRIBUTOR e0e KocHHAR®&Co. India: IT & ITES Policy Of Maharashtra, 2023 Pivotal For IT Industry? oa september 203 by Mohit Kundu and Chand anwar ‘Your Linkedin Connections wth ee ators Maharashtra has demonstrated overtime that it a pioneer in policy planning, itbeing one ofthe ist states in India to devise ant & TES Policy that was announced in 1998. The state's avant-garde vision, planning and effecive execution of subsequent IT & TES Policies of 2003 and 2009 have led toa strong IT base and have ‘exhibited consistent growth figures for IT exports and investments. Due to effective changes in the IT &ITES Policy, 2015 (2015 Policy’) the IT ecosystem in Maharashtra has evolved swiftly to keep up with global pace, making tone of the best technology investment destinations, nat only in inca but in Asia, ‘The state's IT policies have continually evolved in consonance withthe global tends and demands. In that vein, the Information Technolegy and Information Technology Enabled Services Poy of Maharashtra, 2023, (2023 Policy") was introduced by the Industries, Energy and Labour Department of the Government of Maharashtra vide its Resolution No. ITP-2021/CR-170/Ind-2 dated june 27, 2023. The 2023 Policy shall be valid {or 3 period of 5 years or untilsuch time any new or revised policy announced by the State Government. Ambitions and goals of the 2023 Policy * -AactINR 950 billon new Investments * Innovative, equitable, inclusive and sustainable tech development ‘Achieve INR 10,000 billion through Tf &ITES Global tech destination innovation hub exports Preferred investment & innovation spot ‘Create 3.50 milion jobs and increase skill evelopment Promoting P creation, Innovation & Indigenous | + Technology ambassador in the country tech through improved governance * Developing & nurturing a highly sled talent | + Accelerating Manarashtra's tech journey pool In order to meet such goals, the 2023 Policy has transfused a radiance of joy by intraducing some new incentives and exemptions. The following ae the primary characteristics ofthe 2023 Policy MAHITI PORTAL ‘The MAHITL portal willbe a untied and integrated single window platform for ime bound clearances serving humerous objectives such as (online applications for leter of intent /de-nove letter of intent; (i) online regstation of IES units / parks, data centers; i) online appliation for incentives and exemptions (hi) dally updates and information an I & IES, (iv) nteractive incentive calculator, etc, The MAHITI portal would ‘enable 828 functionality by creating a channel that allows various IT & ITES businesses to lst their units and services for connecting and interacting with demestic and international customers | &svardhmaane@gmailcom QSTAMP DUTY EXEMPTION ‘The 2023 Polity divides exemption eligible locations into two broad categories + Zone | Area: This area includes Municipal Corporations in Mumbai Metropolitan Region and Pune. Metropaltan Region; and + Zone i Area: This area includes areas other than those in Zone | and No Industry Districts, Aspirational Districts and Naxalite affected areas. ‘Type of Document ‘Exemption Percentage and Eligibility Hypothecation, pawn, pledge, deposit of tle deeds, ‘3, 100% on new units in publ / private IT conveyance, charge on mortgage property, lease, parks and expansion of existing unis In mortgage deed and securty bond on mortgage deed areas other than Zone | 759% on new unis in public parks and expansion of existing units in areas other ‘than Zone | ©5086 on new units in private If parks located in Zone ‘All the documents mentioned above and public 100% on new units and expansion of existing assignment of lease units in IT parks for SEZ, STPI registered unit, ‘Merger, demerger, reconstruction of registered IT &ITES [75% on new units and expansion of existing Units, leave and license agreernent and public unis assignment of lease ‘The exemptions available under the 2023 Policy can be claimed depending on the eligibility andthe conditions aslaid down therein. In case of data centers, 100% stamp duty exemption can be claimed for purchasing land / premises required {or setting up a new data centre and/or fr its expansion as well as hypothecation, pawn, pledge, deposit of tile deeds, conveyance, lease, assignment of lease, leave and license agreement, merger, de-merger and BOOST FOR DATA CENTERS ‘The 2015 policy only provided incentives to data centres with minimum 10,000 square feet white raised space and 750 KVA power, within 2 years of operation ancl designed for Ter 2 and above level certification by {an independent agency. No such restrictions have been laid down under tne 2023 Policy ‘As per the 2015 Policy elacricty duty was exempt only for 10 years some areas and 15 years in other ‘reas, However, as per the 2023 policy, the eleccicky duty is permanently exempted for new and existing data ‘centers registered withthe Directorate of Industries, Electricity is 2 major expenditure component of a data centre and hence this will help in reducing the operational costs ‘The 2015 Policy provided power tariff subsidy for 3 years at INR 1 per unit. However, subsidy atINR 1 per unit {or 5 years for new data centre units located in areas other than Zone | has been provided under the 2023 Policy. Some ofthe other key incentives exclusive to data centers are as under: * Data centres can aval power through open access. This wll enable data centres ta buy relatively ‘cheaper power directly from the power producers + Data centers can also aval renewable energy under open access system after paying cost component to DISCOMS as per existing norms. Datacenters wing to establish captive power farms wind / solar) willbe faclitate by the State Government in line with the prevaling poly of Energy Department. * Data centres shall be exempted from the statutory power cuts and willbe given continuous pawer supply Le, 2674365, *+ 100% stamp duty exemption for purchasing land / premises required for setting up new data centers| and for further expansion * Dial before dig policy to help data centres manage down time. The service willbe designed ta protect data centres’ network af underground lines and cables and ensure the safely of these Working arouné this infrastructureData centres shall be given infrastructure status on a par with sectors such as ralaays, roadways and power to enable the industry to aval benefts such as long-term credit from lenders at easier terms and also Industry status to aval benef of tars, concessions and initiatives related to various laws for ease of doing business. * Data centres located in any Indusval Area Development Authority such as MIDC, willbe provided 247 uninterrupted water supply, both inside and outside the data center parks. ‘Datacenters vill be permited to avall addtional FS1 as per prevaling Development Control Regulations (‘DCR Basement parking, storage and space used for diesel generator ses installation will nat be considered as part of FS ‘There willbe relaxed restrictions on building data centers. OCRS willbe suitably amended on parameters such as parking norms, helghtof floors, FS, et Infrastructure suppor like oad, power, connectivity, water, et. willbe provided by MIDC, The State Government wil provide financial assistance required fr laying transmission lines and sub-station related infrastructure to data center patks to be setup by MIDC and the State Government wil ‘earmark land parcels in MIDC areas to be developed as dedicated data centre park. + For promoting use of renewable energy within data centres, the developer / operator shall be eligible {for getting licenses for green power energy dstriaution and consumption within data centre parks, + Property tax shall be levied at par with residential rates as applicable in the relevant jurisdictions INTEGRATED INFORMATION TECHNOLOGY TOWNSHIP ‘The minimum land criteria for establishing an Integrated Information Technology Township CTT) has been reduced from 25 Acres of contiguous land to 10 Acres of contiguous land with staggered proportion of usage ‘component under the 2023 Policy. The 2023 Poliy allows 50% for IT & ITES use and S0% for usage without any restriction. MIDC wil be declared as the special planning authority throughout Maharashtra excluding areas belonging to ‘CIDCO. The project completion period for IITs having aggregate land area of 10 to 25 Acres shallbe 7 years Whereas for ITTs having aggregate land area more than 25 Acres shall be 10 years UTS willbe permitted in any zone acrass Maharashtra. The developer may undertake project implementation with or without zane conversion ofthe proposed area. However, FSI norms will continue to remain in terms of. ‘the prevailing classification as per applicable DCR novms Vi or projects propased inne development zone, green zone, special zone, etc ‘THRUST FOR AVGC & EMERGING TECHNOLOGIES ‘The 2023 Policy acknowledges that Animation, Visual Effects, Gaming & Comics (‘AVGC") is sunrise sector having enormous potential for wealth creation and employment generation, Murals the entertainment «capital of India and it's home to some ofthe largest Hollywood and Bollywood VFX studios. The 2023 Policy ‘ocuses on bridging the demane:-supply gap by atcractng global companies in his sector thereby capturing a sizable share of outsourced AVEC work and facilitating the ecosystem development. The 2023 Palicy envisages to promote indigenous cighal content by establishing a dedicated task force and center of excellence under Maharashera hub, In addition tothe cornmon incentives, significant interventions are proposed for AVGC industry such as ‘customized capital assistance, market development assistance, skill development assistance, specialized Infrastructure, production studios, aigtal art centers, exhibition galleries, etc. and a deaicated IT & TES romation fund, ‘The 2023 Policy aims to create a blueprint for growth of emerging technologies such as Artificial nteligence, 30 Printing internet of Things, Robotic, Cloud Computing, immersive Technology, Nanotechnology, tc ‘which shal be given fiscal and nor-iscal support in terms ofthe 2023 Policy INCENTIVES FOR DEVELOPMENT Additional FS MinimumRoad Width | Maximum Permissible FSi] Maximum PermissibleFSI (Rest of Maharashtra) (Greater Mumbai Region) 12 metres lupto3 upto3 se metres luptoa upte350 27 metres luptos uptos‘Adaitional Fsllimit shale applicable as above or a per the prevaling DCR norms, whichever i higher. However, in case of no development zone, agrcukural zone or any other special zane as declared by Urban Development Department, the prevailing DCR rate shall be applicable. Premium to be pald for Additional FSt Area Premium VVidharbha, Marathwada, Ohule, Nandurbar, Ratnagin | No premium. and Sindnudar, ‘Areas other than those mentioned above including, | S0¥ ofthe prevaling premium rate, Municipal Corporation of Greater Mumbal ‘Area declared as central busines district by special planning authori. Permissible limits for mixed use development ‘area Land Use ‘Applicabity| TrarresUnits | Allied Support Services Zone | 0% 40% ‘a. IT parks inching 2% bul Up area for incubation centers », Standalone bullngs / _roup of buldings in IF parks with a minimum bulltup area of 20,000, square feet. [Areas excluding Zone! [50% som Penalty for use of bull Lup area for non-T & ITES use ‘on utilisation ofthe bultup area ina private I park / data center or an existing I park data center (having benefited ror additional FS for non-!TES / commercial actviues/ any other actly not permited under the £2023 Policy, a per day penalty of 0.30% ofthe prevaling ready reckoner value ofthe bull-up area used for nor-IT & TES shal be levied. The penalty can be recovered from the moment the occupancy certificate / building completion certificate was issued to the IT park datacenter until such date til the non-compliance continues. In contrast to the 2015 Policy, the 2023 Policy provides thatthe penalty must be levied on the end user / owner ofthe unit. Moreaver, the developer af the IT park datacenter will nat be allowed to sell/ lease the buil-up area reserved for IT & TES / data center activity to norsIT RITES /non-éata center user, inary ARTICLE IT parks with incomplete construction or IT parks where the letter of intent (LOI?) has expired de to various ‘exigent reasons, may apply for a'De-navo Letter of Intent forthe IT park terms ofthe following criteria TT parks with complete construction but are unregistered: Private IT parks that have been operational for more than the stipulated period and have completed construction, but the LOl has expired, willbe issued a de-novo LOI for 3 years without charging ary Aiferential premium. To be eligile, the developer must have secured an occupancy cerifiate/ building, completion certificate from the concerned planning authority. ‘This provsion will apply to I parks that have not yet applied fora de-novo LOl as ofthe effective date of the 2015 Policy, However, at least 50% of he built-up area should have been occupied by IT/ITES units during this time period TT parks with incomplete construction: Private IT parks that are stil under construction and will nt get completed within the stipulate timelines for any reason whatsoever, wil be eligible to obtain a de-nove LO by paying a 30% differential premium, This. premium willbe calculated sing the incremental ready reckoner rates for IT parks during the applicable perio. ‘The de-novo LOl willbe granted based on the merits ofeach individual proposal and wil nally be valid for 3 period of 3years. Ifthe construction ofthe IT park snot completed despite the extension then further extension may be granted by the Industries Department atts discretion,CRITICAL INFRASTRUCTURE FUND ‘The State Government will establish a separate ‘Creal Infrastructure Fund for IT &ITES Industries from the premium paid for avalling addtional FSI by the developers of private T parks. This fund shall be tlized for important infrastructure needs of parks or clusters of & TES units such as roads, drainage, power or any ‘other infrastructural needs. Each planning authorky shall deposit the premium they collect from developers ofthe private IT parks for _avaling ational FS inthis fund, $0% of the total premium collected by the planning authorities shal be “deposited in the fund at source. The matching contribution from the State Government will also be deposited in this fund, ‘#KochhardCo #RealEstate #ITRITES2023 #ITRITES2023Policy #ITRITES2023PocyKeyFeatures #1T@TE52023P olicyighlights #ITBITES2023P licyincentives AITAITESMaharashtrastampDuty #rTaITeSManarashtraBeneiits MITAITESMaharashtvalncentves #OataCenter #DataCenterMaharashtra ‘#0ataCenterMaharashtrakeyFeatures #llTTMsharashera #AVGCMaharashtra #Maharashra The content ofthis article is intended to provide a general guide tothe subject matter. Specialist advice should be sought about your specie circumstances. AUTHOR(S) Monie kundy ‘chan sanyant