Maharashtra’s IT-ITES Policy 2023: Key Points for Foreign Investors in India

The Maharashtra IT-ITES Policy 2023, recently approved by the state cabinet, aims to position the western Indian state as the leading "tech capital" of the country. Leveraging the already acclaimed status of Mumbai as India's "financial capital" and "entertainment capital," along with the state's robust industrial ecosystem, the policy focuses on propelling the growth of the technology sector in Maharashtra. In this article, we explore expanded benefits under the updated technology policy regime, including 'continuous operations' status for the IT industry.

The Maharashtra state government recently approved its latest policy for the information technology (IT) and IT-enabled services (ITES) sector, aimed at fostering growth and attracting long-term investments. (Cabinet Decision – May 30, 2023: राज्याला माचिती तंत्रज्ञाानात आााडीवर नेर्ाऱया नवीन माचिती तंत्रज्ञाान धोरर्ास मान्यता : ९५ िजार र्ोटींिी गुंतवर्ूर् आर्र्गषत र्रर्ार)

Maharashtra’s IT-ITES Policy 2023 presents significant opportunities for multinational companies and foreign investors in fast-growing technology sectors, including Industry 4.0, financial global capability centers (GCCs), and AVGC (animation, visual effects, gaming, and comics) industries.

Overall, the state's proactive approach to business-friendly initiatives has made it an attractive destination for legacy investors. The Maharashtra government now seeks to build upon its capacity in the financial, manufacturing, logistics, and entertainment industries to push for next-generation development.

The 2023 IT-ITES policy is driven by ambitious goals and a vision to foster innovation, attract more capital, and create a conducive environment for technological advancements in Maharashtra. Previous iterations of the IT policy were rolled out in 1998, 2003, 2009, and 2015.

Incentives 

Subsidies

Under this new policy, IT companies will have the freedom to establish tech parks anywhere within the state of Maharashtra. Additionally, they will receive substantial subsidies, ranging from 50 to 100 percent on stamp duty, and electricity charges will be waived for a period of 10 to 15 years.

The IT industry will also be eligible for industrial-rate power supply, among other favorable provisions. The government's goal is to draw an investment of INR 950 billion (US$11.5 billion), create 3.5 million job opportunities, and achieve exports worth INR 1 trillion (US$12.13 billion).

To encourage the development of specialized industries like AVGC, where Maharashtra holds unique strengths, the state government will offer a subsidy of up to INR 250 million (US$3.03 million) or 25 percent of the capital expenditure, as stated in the official document from the chief minister's office.

Ease of doing business

Furthermore, the state's industrial department will implement a streamlined approval process for all IT projects and IT-enabled services, through a single window clearance mechanism. The Maharashtra Information Technology Interface (MAHITI Portal) will provide time-bound clearances for projects, unit registrations, and incentives, as announced by a senior industry official.

MSME support

For fostering innovation by micro, small, and medium enterprises (MSMEs), start-ups, and incubation centers in emerging technologies, the government has allocated INR 5 billion (US$60.76 billion) for establishing the Maharashtra hub (M-Hub).

Support for IT real estate and infrastructure

In a bid to promote the growth of IT Parks and IT-enabled services, the government has allowed the establishment of integrated IT townships, private IT Parks, and IT-ITES units across various zones, including residential, no-development, and green zones.

The state government has also decided to grant IT companies more Floor Space Index (FSI) than was previously allowed, encouraging them to establish additional units within Maharashtra.

Private IT parks will be empowered to develop critical infrastructure, such as power and sewage lines, on their own.

There are relaxations for permissible land use for IT Parks – mixed use by IT-ITES units and allied services.

Support for frontier technology industries

To support the IT industry's uninterrupted operations, the government has granted them a 'continuous industry status,' permitting them to operate 24/7 throughout the year, except in exigent circumstances. IT services have been designated as essential services, and data centers will now be covered under the Essential Services Maintenance Act, 1968.

Further, data centers will benefit from exemptions in standard parking norms, access to renewable energy under open access, and the ability to develop captive power plants. Data centers are also given infrastructure status on par with railways, roadways, and power. This will enable the data center industry to access long-term credit from lenders on favorable terms.

Other state financial assistance will also become available – such as from (a) MIDC to set up data center parks with necessary infrastructure and utilities like road, power, connectivity, and water as well as secure all necessary permissions, and (b) the state government to lay transmission lines and substation related to data center park infrastructure.

Emerging technologies, such as artificial intelligence (AI) and cloud computing, will receive customized capital assistance.

To foster the growth of these frontier tech sectors, Maharashtra will establish a dedicated Center of Excellence (CoE) comprising officials from the government, industry, and academia, working together to develop the industry ecosystem.

Area-wise exemptions

The 2023 Policy classifies areas eligible for exemptions into two main categories:

• Zone-I, which comprises Municipal Corporation areas in Mumbai and the Pune Metropolitan Region
• Areas outside of Zone-I, including those in No Industry Districts, Aspirational Districts, and Naxalite affected areas.