STP scheme is a 100% Export Oriented Scheme (100% EoU) for the development and export of computer software using data communication links 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.

For details, click on the links:

Software Technology Parks of India
Electronics Niketan, DoE
6 C.G.O.Complex, Lodi Road
New Delhi
VOICE - 91-11-4362811/3187/4304/3596, 4363108/3484/3309
FAX - 91-011 - 4364336/3436
E-mail : info@stpi.soft.net

Software Technology Parks of India

Software Technology Parks

The Central Government has declared the "Hotel and Tourism-related Industry" eligible for the automatic approval of foreign technological agreements and for 51% foreign equity holdings, subject to certain norms. NRIs (non-resident Indians) are alllowed to hold upto 100% equity. These approvals are given by the reserve Bank of India, Bombay. More that 51% equity is allowed on a case-by-case basis subject to a clearence by Foreign Investment Promotion Bank. Additionally, the Tourism Finance Corporation of India and the State Finance Corporations will extend loan facilities.

If you like to be part of this exciting and profitable sector, please write to;

www.tourisminindia.com/

Economic liberalisation and the new received wisdom of reducing the role of the public sector warrants a greater participation of the private sector in the country's power sector. In response to the new economic realities, the government formulated a policy in 1991 to encourage greater investment by the private sector in the power sector. Legislation governing the electricity sector was amended in October 1991 allowing private investors to set up generating companies which would supply power in bulk to the grid. These companies can also provide power directly to consumers with the consent of the State Governments.

The new policy permits 100% foreign owned companies to set up power projects and repatriate profits without any export obligations. The policy allows liberal capital structuring and an attractive return on investment. An attractive two-part tariff structure was provided through a notification in March 1992 which allowed recovery of full fixed charges with upto 16% return on equity at specified plant load/availability factor.

The tariff structure has been broad-based allowing promoters flexibility in determining tariff provided that the tariff structure proposed is lower compared to the two part tariff formula.

A High Powered Board under the Chairmanship of the Cabinet Secretary comprising Secretaries of concerned Ministries of the Government of India monitors clearances and resolves all outstanding issues pertaining to clearances.

The policy of the Government of India offers virtually all areas of power production and supply to private entrepreneurs for investment, be it power generation, distribution, Renovation & Modernisation or co-generation. Driven by the large demand for power in the country, the policy offers enormous opportunities for the investors. The broad features of the Private Power Policy of the Government of India are indicated below:

* The Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 have been amended to bring about a new legal, administrative and financial environment for private enterprises in the Electricity sector.

* Private Sector can set up thermal projects (coal/gas/naphtha and other liquid fuel based), hydel projects and wind/solar energy project of any size.

* Electricity Projects where the total outlay does not exceed Rs.100 crores need not be submitted to the Central Electricity Authority for concurrence. The limit has been further raised to Rs.1000 crore in case of generation projects to be set up by generating companies selected through competitive bidding.

* All private companies entering the Electricity Sector hereafter will be allowed a debt-equity ratio upto 4:1. * Promoter's contribution should be at least 11% of the total outlay.

* To ensure that private entrepreneurs bring in additionality of resources to the sector, not less than 60% of the total outlay for the project must come from sources other than Indian Public Financial Institutions.

* Upto hundred per cent (100%) foreign equity participation can be permitted for projects set up by foreign private investors.

* The condition of dividend balancing by export earnings which is normally being applied to cases of foreign investment upto 51% equity will not be applicable to foreign investments in the power sector.

* The rates for depreciation in respect of assets have been liberalised.

* With the approval of the Government, import of equipment for power projects will also be permitted in cases where foreign supplier(s) or agency(ies) extend concessional credit.

* The customs duty for import of power equipment has been reduced to 20% and this rate has also been extended to machinery required for renovation and modernisation of power plants.

* A five year tax holiday has been allowed.

* The excise duty on a large number of capital goods and instruments in the power sector has been reduced.

* Upto 16% return on the foreign equity included in the tariff can be provided in the respective foreign currency.

* Fixed costs can be recovered at 68.5% PLF in case of thermal power plants and 90% Availability Factor for hydel plants. Attractive incentives are prescribed for performance beyond this PLF level.

* Tariff can be fixed in deviation of norms stipulated in the March,1992 tariff notification provided that the per unit tariff does not exceed the per unit tariff worked out on the basis of the norms.

* Since R&M is recognized as the alternative offering much cheaper and quicker way to add capacity, it has been decided to accord the highest priority to this area. The R&M policy has been announced by the government which outlines some of the options available for encouraging private investment in this vital area. R&M schemes involving capital expenditure of upto Rs. 500 Crores no longer requires concurrence of CEA.

* As a short term measure, the Government has announced the liquid fuel policy which permits use of certain hydrocarbon fuels for power generation subject to the project meeting certain locational criterion.

* To facilitate setting up of large capacity plants in the private sector, the Government has recently announced its mega power project policy. The necessary support structure is made available to promote such projects.

* State Governments have also been advised to consider setting up of barge mounted power plants

* The Government has also made efforts to streamline the process of project approval. CEA has adopted a two stage process for appraising a project proposal. Detailed guidelines for submission of Detailed Project Report to CEA have also been issued. In addition, number of clearances reqiured for CEA's Techno-economic approval have also been reduced.

* In order to encourage captive, including co-generation, power plants, guidelines have been issued to the state governments for creating institutional mechanism for early clearance of such proposals and also to ensure effective measures such as purchasing or wheeling surplus power from such plants.

Specific incentives for generating companies

* Normative parameters notified which inter alia provide for 16% return on equity at 68.5% PLF and upto 0.7% return on each incremental 1% PLF for thermal power plants.

* The tariff norms for Hydro-electric projects have been liberalised such as providing Capacity charge, incentive of upto 0.7% rise in ROE for each percentage point increase in availability of installed capacity beyond 90%.

* Generating companies operating coal based, gas based and hydro projects can sell power on the basis of a suitably structured two part tariff.

* The tariff and other norms specified are the ceiling norms and allow Boards and Generating Companies to agree on improved norms.

* Premium raised by the Generating Company while issuing share capital and investment of internal resources created out of free reserve of existing company shall also be eligible for return of equity provided such amount is actually utilised for meeting the capital expenditure of the power generation project and forms part of the financial package approved by the Authority.

The specific incentives for Licensees are :

* Licences of longer duration of 30 years in the first instance and subsequent renewals of 20 years instead of 20 and 10 years respectively as it was before.

* Higher rate of return of 5% in place of the previous 2% above the RBI rate.

* Capitalisation of Interest During Construction (IDC) at actual cost (for expansion projects also) as against 1% over RBI rate as it was before.

* Special appropriations to meet debt redemption obligations.

Ministry of Power

Shram Shakti Bhawan
New Delhi - 110 001
Fax: 91-011-3717519

National Thermal Power Corporation Ltd.

Power Finance Corporation Ltd.

Chandralok Building, 36 Janpath
New Delhi-110001
Tel. No: 91-11-3722301- 08 (8 Lines)
Fax No: 91-11-3315822

www.pfcindia.com

Private Participation in the Infrastructure Sector - Policies and Incentives

The Government of India has announced the following initiatives for infrastructure development :-

Infrastructure Development Finance Company (IDFC) registered for innovative financing to address the needs of infrastructure projects.

5 year tax holiday available to companies developing, maintaining and operating infrastructure facilities.

Income tax exemption on all income of any fund dedicated to specified infrastructure sectors. Long term capital gains cut by 10% to boost investments through the capital market route. These investments would be totally exempt from tax if reinvested in certain sectors.

Increase in tenor of preference shares to enable structuring of senior subordinated debt in infrastructure companies.

The corpus of the National Highways Authority of India (NHAI) increased by Rs. 7 billion (US$ 233 million) to enable it to raise additional funds from the market. NHAI has also been permitted to raise loans in foreign currency.

Enhancement of tax rebate limits to help channelise domestic savings into debentures and shares offered by infrastructure companies in specified sectors. For this purpose such investments in public offerings would be eligible for the rebate computation.

A committee, on infrastructure, headed by the Prime Minister has been constituted.

Andhra Pradesh

Chandigarh

Gujarat

Rajasthan

Karnataka

Kerala

Maharashtra

Maharashtra- II

Pondicherry

Punjab

HimachalPradesh

TamilNadu

Tamilnadu

Uttar Pradesh

West Bengal