Complete STP (Software Technology Park)/ EHTP (Electronic Hardware Technology Park) Scheme Information

This section contains all STP scheme benefits and the full STP/ EHTP scheme Document

Government of India has declared computer software as one of the extreme focus area for growth of exports. Therefore, Govt. of India announced a special scheme to provide conducive environment as well as to promote software exports called "The Software Technology Park (STP) Scheme".

STP Scheme is a 100% EOU Scheme for the development and export of computer software using data communication link or in the form of physical media including export of professional services. STP can be a virtual software development unit or can be infrastructural complex set-up for providing necessary support for the STP units.

STPI provides 100% Software Exporting units with single window clearance and fiscal support to enable smooth operations and facilitate industry growth.

S.No.Benefits under STP Scheme
1 Approvals are given under single window clearance scheme.
2 Projects involving imported capital goods up to US$ 10 millions with Indian.
3 Investment are cleared by local STP Authorities.
4 100% Foreign equity is permitted.
5 All the imports in the STP units are completely duty free.
6 Re-export of capital goods is permitted.
7 Minimal Export Obligation with positive Net Foreign Exchange
8 100% depreciation on Capital Goods over a period of five years
9 Domestic purchases by STP units are eligible for the benefit of deemed exports to the equipment suppliers.
10 The sales in the Domestic Tariff Area (DTA) shall be permissible up to 50% of the export in value terms as post export benefit.
11 STP units are exempted from corporate income tax upto 2010.
12 The items like computers and computer peripherals can be donated to recognize the non-commercial educational institutions, registered charitable hospitals, public libraries, public funded research and development establishments, organizations of Govt. of India or Govt. of a State or Union Territory without payment of any duties after two years of their import. This is applicable for both imported and indigenously procured above items.

For encouraging exports of Electronic Hardware items including hard disk drives, computers, television, etc., such parks have been developed by the Ministry of Communications & Information Technology. An Electronic Hardware Technology Park (EHTP) may be an individual unit by itself or a unit located in an area designated as EHTP Complex. As in the case of STP Scheme, the EHTP Scheme is also administered by the Ministry of Electronics & Information Technology (MeitY).

Incentive Package for Electronic Hardware announced in the Foreign Trade Policy 2002-07

An EHTP can also be set up by the Central Government, State Government, public or private sector undertakings or any combination of them.

Obligations and Benefits

The entire production of an EHTP is to be exported to hard currency areas except sales in the Domestic Tariff Areas, subject to the limits set down.

S.No.Benefits under EHTP Scheme
1 An EHTP may import free of duty capital goods, raw materials, components and other related inputs. However these should not be on the negative list of prohibited items in the Foreign Trade Policy. Second hand capital goods may also be imported by EHTP units.
2 An EHTP unit may bunch the products manufactured by it for sale in the DTA with its entitlement. EHTPs are duty free and bonded areas and customs exemptions are extended accordingly.
3 An EHTP is exempted from the payment of corporate income tax up to 2010 and also central sales tax reimbursement.
4 An EHTP may gear up to 100 per cent foreign equity.
5 Supplies that are effected in DTAs under global tender conditions and payment in forex are also considered as part of relinquishment of export obligation.
6 Supplies made by DTAs to an EHTP unit will be regarded as deemed exports and is entitled to benefits under the Foreign Trade Policy. To get this benefit, goods have to be produced in the country and the supplies have to be made against a letter of authority issued by an officer designated in this behalf of the STPI, Government of India.
7 An EHTP unit may be setup for both software and hardware in an integrated manner
8 EHTP unit may purchase indigenous goods free of excise duty
9 EHTP unit may sell Goods/Services in DTA up to 50% of FOB value of exports, subject to fulfillment of positive NFE as per the policy & payment of applicable duties.
10 Minimum Export Obligation As per the Import-Export Policy, 2002-2007, EOU/EHTP/STP Unit shall be a net foreign exchange earner. Net Foreign Exchange (NFE) earning shall be calculated cumulatively for a period of five years from the commencement of production, according to the formula as under:
Positive NFE= A-B >0
A: FOB value of exports
B: Sum total of CG imported+value of payments made in foreign exchange.


The Directors of STPs in respect of STP proposals; and the Designated Officers in respect of EHTP proposals accord automatic approval if - (a) the items do not attract compulsory licensing; (b) the location is in conformity with the prescribed parameters; (c) the export obligation laid down in the respective EHTP scheme is fulfilled; (d) the unit is amenable to bonding by the Customs, and all the manufacturing operations are carried out in the same premises and the proposal does not envisage sending out of the bonded area any raw material or intermediate products for any other manufacturing or processing activity. All proposals for FDI/NRI/OCB investments in EHTP/STP units are eligible for approval through Automatic Route.

Government Approval

All proposals which do not meet any or all of the parameters for automatic approval need to be considered and approved by the Government. Also, Government approval for FDI/NRI/OCB investments under EHTP/ STP need to be obtained through the FIPB.

EHTP Scheme Notifications

Notification No. 42(N-8)92-97 dated 14 September 1992 issued by Ministry of Commerce. Notification issued by Ministry of Industry dated 22 February 1992 and amendment on 02 March 1993.

Import of Goods

Notification 52/2003--Customs dated 31March 2003.

Excise Exemption

Notification No. 22/2003-CE & 23/2003-CE dated 31March 2003.

DTA Sale

Notification No. 91/93-central excise dated 2 July 1993.
Notification No. 1/95-central excise dated 4 January 1995.