~ Information Technology (IT) ~

India's IT Services industry was born in Mumbai in 1967 with the establishment of
the Tata Group in partnership with Burroughs. The first software export zone, SEEPZ
– the precursor to the modern-day IT park – was established in Mumbai in 1973.
More than 80 percent of the country's software exports were from SEEPZ in the
1980s.

The Indian economy underwent major economic reforms in 1991, leading to a new
era of globalization and international economic integration, and annual economic
growth of over 6% from 1993–2002. The new administration under Sri Atal Bihari
Vajpayee (Posthumus) (who was Prime Minister from 1998–2004) placed the
development of Information Technology among its top five priorities and formed the
Indian National Task Force on Information Technology and Software Development.

Information Technology (IT) is a phenomenon that has dramatically changed the

daily lives of individuals, the modes of business operations as well as the market
competitiveness. IT comprise of design, development, implementation and
management of computer-based information systems, particularly software
applications and computer hardware. Today, it has grown to cover most aspects of
computing and technology. The Information Technology-enabled Services (ITeS)
industry provides services that are delivered over telecom or data network to a range
of external business areas.

Therefore, IT acts as a facilitator, an enabler and also assumes the role of custodian.
It facilitates large volumes of information to be stored, processed and/or transferred
at lightning speed. Only few selected specialized companies in the world are
engaged in IT business but most corporations and institutions use information
technology to enable functions (like better communication between staff, suppliers,
customers, asset management etc.) that drive their business. The constant upgrade
in IT, along with increasing global competition, is adding complexity of several orders
of scale to the related business and trade.

The impacts of IT on all trade industries and business have never being denied and
it affects workers at all levels in the organisations, from the executives to middle
managements and lower level workers. In the contemporary world economy India is
the largest exporter of IT. Exports dominate the Indian IT industry and constitute
about 79% of the industry's total revenue. However, the domestic market is also
significant, with robust revenue growth. The industry’s share of total Indian exports
(merchandise plus services) increased from less than 4% in FY1998 to about 25% in
FY2012. The technologically-inclined services sector in India accounts for 40% of the
country's GDP and 30% of export earnings as of 2006, while employing only 25% of
its workforce.
 Top Companies in INDIA
Top product companies in India which are actually worldwide product companies like
Microsoft, Google, Oracle, SAP have development centers or research centers in
India. In case of pure Indian IT product based software companies then the it will be
different. Here is a list of product companies in India having their development
centres/research centres in India namely:

(1) Microsoft (2)Google (3)IBM (4)Amazon

(5)EMC (6)BMC (7)Paypal (8)Oracle
(9)CISCO (10)VMWare (11)Redhat (12)Drupal
(13)Allscripts (14)Amdocs (15)Symantec (16)Adobe

I could go on. At the same time if you are looking for Indian software based product
companies then there would be 30 0f them including companies in the e-commerce
space and some of them are as follows:

(1)Zoho (2) Druva (3)Tally (4) Finacle from Infosys

(5) Eka (6) QuickHeal (7) Capillary (8) Sapience
(9) PubMatic (10) InMobi (11) AdNear (12)BrowserStack
(13) Freshdesk (14) Newgen (15) Nucleus Software (16) CRMNext
(17) Ramco (18) Persistent (19) Vserv (20) Wingify
(21) Mindtree (22) SunTec

I could go on. I have not sorted this list based on revenues or some parameter so
they may not be the best product based companies or in that order but yes to some
extent they are good product based companies.

 Software Importers List & directory in India-Software Buyers &

Prices
We provide most authentic import shipment data (based on bill of entry) of Indian
companies that import Software from Singapore, United Kingdom, United States Of
America, Australia and Austria and many other countries, please call us on +91-11-
40703045 for List of active Importers of Software in India.

The top Indian importers of Software are:

 Milestone Interactive Software Limited

 Ordnance Factory Board
  Ingram Micro India Pvt Limitno11 Newy
 Klg Systel Limited
 Micrographics

These companies are dealing in a number of Software variants like COMPUTER

SOFTWARE ON CD-ROM COMMANDOS BEYOND THE CALL OF DUTY,
COMPUTER SOFTWARE ON CD ROM CD PROJECT IGI2 COVERT STRIKE,
COMPUTER SOFTWARE ON CD ROM CHESMASTER 9000, COMPUTER
SOFTWARE ON CD ROM:SINBAD LEGEND OF THE 7 SEAS and COMPUTER
SOFTWARE ON CD ROM BRIAN LARA CRICKET etc.

We’ve collected data from the ports where these consignments are received by the
importer companies. Bombay Air and Bombay Sea are some of the major ports
where these importers of Software are receiving their consignment.

These companies are importing their products mainly from Singapore, United
Kingdom, United States Of America, Australia and Austria. These countries ship their
consignments from their respective ports like Not Available, Singapore, London, Pt
Allen and Man.

A US company wants to outsource software development to India. Will the US

company have to pay import duties on the software? If so, what is the tax or
range?

Electronic transmission and data exchange have evolved at an alarming rate in the
last ten years. Mulit-million dollar projects are outsourced and completed overseas
with the final result often delivered simply by email or FTP. The US International
Trade Commission addresses the import of data in a some what archaic manner by
exempting electronic tele-communications under General Note 16(b) of the HTSUS.
Data imported in a physical form (on CD or diskette), however, is dutiable under the
classification of the physical media itself. It is important to realize that value of the
data contained in physical media may directly influence the value of the media itself.
An importer importing a $0.50 cent compact disc containing a $30,000 software
bundle may be liable for paying import duties as a percentage of the $30,000.

Importers considering outsourced software projects should also note that imports
and exports of cryptographic hardware and software are regulated by the Bureau of
Industry and Security.
 The Indian IT Industry:

Strong Growth Opportunities

The IT BPM sector in the country grew at a CAGR of 11.14 % to US $ 154 billion in
FY17 from US $ 74 billion in FY10, which is 3 to 4 times higher than the global IT-
BPM growth. It is anticipated that the size of the industry will increase to US$ 350
billion by 2025.

Leading Sourcing Destination

India is a well-known sourcing destination across the world, accounting for about 55
% market share global services sourcing business. India has a share of about 38 %
in the overall Business Process Management (BPM) sourcing market.

Largest Pool of Ready to Hire Talent

India’s highly qualified talent pool of technical graduates is one of the largest in the
world, easing its emergence as a preferred destination for outsourcing, computer
science/information technology contributing for the biggest chunk of India’s fresh
engineering talent pool, exceeding 98% of the colleges offering this stream.

Most Lucrative Sector for Investments:

The Information Technology sector ranks 3rd in the country’s total Foreign Direct
Investment share and contributes to about 37 % of total Private Equity and Venture
investments in India.

The computer software and hardware industry in India attracted cumulative Foreign
Direct Investment (FDI) inflows worth US$ 29.825 billion between April 2000 and
September 2017, according to report released by the Department of Industrial Policy
and Promotion (DIPP).

Export and Employment Growth:

Indian IT exports are forecasted to increase at 7 to 8 %. IT-BPM sector accounts for
largest contribution in total Indian services export, which accounts for 45 %.

Large Contribution to the Indian Economy:

The country’s IT industry contributed around 7.7 % to India’s Gross Domestic
Product. IT industry has given jobs to about 3.9 million people in India of which more
than 170,000 were added in Financial Year17.

The industry is expected to add 130,000 to 150,000 jobs in FY18 and over 100,000
jobs in FY19. IT industry is accelerating the growth of start-ups in the country, with
the presence of more than 4,750 start-ups in India.
 Strategies for Software Export to USA
While the global software market is concentrated today, technological change is
making it increasingly possible for all nations to compete. After an introductory
discussion of the global software market, this paper outlines three forms of software
export: programming services, conversion and localization, and product
development, giving examples where these are taking place and suggesting some
company strategies. The final section examines some of the steps taken by national
governments to stimulate software export: subsidizing telecommunication,
establishing research institutes and university programs, offering tax and financial
incentives, reducing trade barriers, planning and coordinating industry efforts,
marketing collectively, and passing and enforcing copyright laws.

It is fashionable to speak of "globalization" today, of international corporations and

markets, falling trade barriers, and proliferating communication networks. However,
Africa, Latin America, the Caribbean, and other regions have failed to enter the
global market place in many industries.

This has certainly been the case in the software industry. However estimate that the
US accounts for about 52% of world software consumption, and US software
producers hold roughly 70% of the world market. Another study published by
International Data Corporation estimates that in 1989 the US, Europe and Japan
accounted for 91% of the world software market. Palma estimates that only 2% of
the world's software is produced in Latin America. Such figures are never precise,
and the studies defined the software somewhat differently; however, there is no
denying that today's software market is concentrated in North America, Europe and
parts of Asia.

TOWARD A GLOBAL MARKET

While most less-developed nations have not yet played a major role in the software
market, there are political, economic and technical reasons to believe they could do
so in the future.

Economic and Political Factors

The movement to market economies in Eastern Europe and the Soviet Union is
beginning to produce new software companies. For example, Goodman and
McHenry describe the new software joint ventures in the Soviet Union as more
dynamic and outward looking than those of the old state sector. Free-trade will also
encourage software export. Many Latin American nations are moving away from
earlier protectionist policies toward free trade, seeing exports as a road to economic
growth. Free- trade negotiations between the US and Mexico is advancing as are
several others in the hemisphere, and one goal of George Bush's Enterprise for the
Americas Initiative is "free and open trade throughout the hemisphere".

It seems to be working. Exports now account for 30% of the economy, and that
figure is rising, Chilean bonds are much stronger than others in Latin America, and of
the seven largest Latin American countries, Chile has had the highest growth rate
and lowest inflation rate over the last five years.

Less tangibly, there is an air of entrepreneurial optimism in the computing industry.

This is exemplified by the Chilean Software Association, which for the last two years
has hosted a meeting of Iberio-American software exporters. At this meeting,
software company executives from throughout the region plan regional strategy,
make deals, and attend keynote talks.

Technological Factors

The advent of mass-produced personal computers has lowered the cost of capital
needed to enter the global software market. Because they are cheaper and
appropriate to the needs of people in both industrial and non-industrial countries,
personal computers have spread throughout the the world faster than mainframes
did. For example, in surveying the Indian software industry, Yourdon tells us "the
history of the Indian computer industry can be neatly divided into two phases: a
stagnant, IBM-less, pre-PC period, and a new, thriving era that began with the
introduction of the PC and [Rajiv] Gandhi's push for modernization of the information
technology sector."

Computer-mediated communication networks are also helping shrink the world. As

John Quarterman says, we are developing a worldwide matrix of connected
computer networks and conferencing systems. The matrix is being built by the
academic community, corporations, and vendors of commercial services. Fuelled by
rapidly decreasing communication cost, the matrix is growing exponentially, as
exemplified by the Internet:

The nature of software development also favours small companies with relatively low
capital requirements. New products and visions seldom come from within big
companies; they are often bought or developed by a small internal group.

These factors suggest that less-developed nations may have success as software
exporters. Yourdon puts it more dramatically. He feels international competition will
put American programmers out of work, that "the American programmer is about to
go the way of the dinosaur and the dodo bird. During the next five to seven years, I
foresee massive unemployment amongst the ranks of American programmers,
systems analysts and others in the data processing industry."
FORMS OF SOFTWARE EXPORT

Less-developed nations have had some success already in exporting software. They
sell programming services, do conversion and localization, and have developed
some products.

Programming Services

Tata Consultancy in India is perhaps the first and largest exporter of programming
services. They began when an MIT graduate returned to India and bought a
Burroughs computer. He obtained a contract to do some development for Burroughs,
thus beginning his offshore programming business. The programming services
business is growing, and will continue to do so. In a survey of 50 Fortune 1000
companies in the US, Woodring found that 38% have decentralized application
development and 22% are evaluating doing so. Some of this decentralization will
leave the country. As consultant Herb Halbrecht states "The role of a CIO is
becoming like that of an international investment broker. Companies scour the world
looking for pockets of excellence."

At first, Indian (and other) programming services were provided almost exclusively
by on-site programmers, and in 1989, 80% of Indian software export was still from
on-site programming. However, this approach is costly, disruptive to the
programmer, and exposes exporters to the possibility of the programmer leaving the
company in order to remain in the host nation. It also encourages competition solely
on hourly wage.

Rajesh Huuku, Vice President of CitiCorp Information Technology, is responsible for

programming projects for US firms using Indian programmers. He suggests that as
soon as possible, software exporters take responsibility for full projects using
programmers at home (Huuku [10]). He states that this yields higher profit margins
since the competition shifts from pure price to quality and speed of completion.
Huuku does not compete on low cost, but on speed and quality. He also advises
focusing by industry, application and geographic area. By specializing, his staff is
able to develop and exploit specialized business expertise and knowledge,
knowledge of local market conditions, and idiosyncrasies of the local requirements.
This specialization leads to higher margins, as does utilization of the latest, most
powerful development tools.

Of course working abroad requires increased communication overhead. Huuku

stresses the need to give the client the feeling of being in control by submitting
frequent status reports and keeping in constant contact with email, fax,
teleconferences and phone. Communication infrastructure is particularly important.
For example, he has one project in which 100 programmers situated in Bombay are
developing a system on a mainframe computer in New York. Communication is
provided by a dedicated satellite link that is subsidized by the Indian government.
Huuku foresees a day where the operations will move off- shore also. For example,
the computer running an application may be in India with data entry terminals in the
United States.

Conversion and Localization

In order to be successful, a software package must be converted to the language of

the nation where it will be used, and tailored to the local dialect. It should be noted
that there could be more than one version in a country. For example, there could be
a significant Spanish- speaking market in the United States.

Many companies also manufacture European software and support and distribute it
from Ireland. The company doing conversion often also is responsible for software
manufacturing and distribution as well. Conversion and manufacturing in Latin
America and Africa are often superficial, with a license merely copying a version
prepared for another nation.

Product Development

Software products can take many forms, and while it would be unrealistic to enter
North America with a new brand spreadsheet or word processor at this time, there
are opportunities for software product export.

There are many paths to a new software product. A company may have a program
which is successful in its local market, which can be adapted for sale abroad. These
products may enjoy a special advantage based on local knowledge or cultural
characteristics. Excelsys has also developed software that is embedded in export
products such as automatic teller machines or queue maintenance systems for
banks.

It is also possible to reverse the effect of the traditional "brain drain," by developing
software based on a returning student's work. Another Chilean example is Ars
Innovandi's text retrieval program Search City, which grew out the doctoral research
of Ricardo Baeza-Yates at Waterloo University. After graduating, he returned to the
University of Chile, and collaborated with Ars Innovandi on developing an exportable,
world-class product. Such stories may become increasingly common.

As standards of living for professionals increase, hardware costs fall, and local
research facilities and communication nets improve, there will be less incentive for
students to remain in North America or Europe after completing their education.

The first step is to conduct market research in the target nation. Companies should
know who their competitors are and look at their products, prices, market size and
shares, distribution channels, marketing approach, etc. Even if you end up working
with an publisher, you will be better able to negotiate if you have done independent
market research.
It is necessary to prepare a business plan, anticipating investment, staffing, cash
flow, etc. Ken Wasch, Executive Director of the US-based Software Publisher's
Association, estimates that between $500,000 and $1,000,000 is required to enter
the United States with a new product that has its own identity. The business plan will
serve to guide your work and can be used in raising capital.

One should also learn as much as possible about legal and financial factors like
taxes, trademark, copyright, and import regulations. Contacts should be made with
consultants, lawyers, accountants, bankers, government people, etc. who can be on
call for a fee rather than be on your payroll.

A market may be entered alone or with a local partner. Options include finding a
publisher, OEM sales, selling through a distributor, or opening a joint venture or your
own local office. Partnership with a publisher or an OEM sale lowers investment and
return. Royalty rates are typically 5-15%, but your partner will assist in product
development and marketing. Distributors typically offer far less service, leaving the
software company fully responsible for creating the product and demand for it. It is
also possible to remain independent. For example, Graphisoft, a Hungarian firm, has
opened their own offices in Canada, the US, and Western Europe, and market their
internally developed CAD software for the Macintosh. The six year old company now
has 30 programmers, so it appears to be viable.

In any case, a decision to enter a new market is a commitment to an ongoing project,

requiring software maintenance, product upgrades, a public relations presence, and
looking for new product variations. The latter is particularly important because cross-
cultural insights can lead to truly innovative follow-on products.

 GOVERNMENT STRATEGIES
There are many ways in which governments can encourage the development of
software exports. This section outlines several of them.

Subsidize Telecommunication Infrastructure

In any industry, the ability to communicate with customers, employees, and suppliers
for marketing, coordination and control is critical. The strategic importance of
telecommunication is even greater in software and other information processing
industries, where the product itself is information. Low cost telecommunication has
been a major contributor to the software export success of nations such as India and
Ireland.

Note that both internal and external telecommunication are necessary, and that the
telecommunication may be relatively low-cost appropriate technology. An excellent
example is afforded by the Relcom network in the old Soviet Union. Relcom was
initially established to support customers of Demos, a software company specializing
in the Unix operating system. Relcom connects 391 organizations in over 70 cities
from Saint Petersburg to Vladivastock. It does not provide broadband services, but
simple electronic mail and Usenet-like bulletin boards, which have a significant
marginal impact because the alternative communication services are very poor. It
should be noted that the vast majority of the 391 computers on the network are 286-
based PC clones, and the communication uses voice grade phone lines.

Offer Tax and Financial Incentives

Tax and financial incentives are used to attract subsidiary offices of software
companies. For example, Ireland offers a 10% corporate tax rate for computer
services companies, employment grants for jobs created, capital grants toward the
cost of computers, equipment, office furniture and buildings, training grants, rent
subsidy grants for companies renting facilities, and research and development
grants.

Reduce Trade Barriers

Lower trade barriers (tariffs, quotas, currency conversion restrictions, needless

bureaucracy, etc.) on computers, software, communication equipment, and related
information processing products will make it possible for software companies and
universities to import modern hardware and software tools at competitive prices. It
will also encourage general expansion of the information technology sector and
create demanding, sophisticated users. Demanding users and the availability of
competing imports force the local software industry to excel in order to compete. A
larger domestic information technology industry also provides demand for software
products, employment buffers, support for university growth, etc.

Plan and Coordinate Efforts

According to Chang and Aoyama, software has been one of the fasting growing
industries in most Far Eastern countries in recent years. In surveying software in
Japan, Taiwan, South Korea, and Singapore they observe a high level of activity in
every country. They also note that while developments in each country are unique,
there is one common thread, that "the effort to industrialize software is likely to be
made through a national, government-directed, and publicly funded initiative."
[footnote 1] Carlos Ominami, Chilean Minister of Economics has also established the
Intersector Committee for Development of Software which will ensure high-level
coordination between universities, the government and software companies.

Invest in Related University Programs

Encouraging students to study computer science and related fields by investing in

universities creates a body of professionals needed to establish a healthy local
software industry and user community, to build the local infrastructure, and to staff
foreign offices. A sophisticated and demanding local user community is a driving
force toward software innovation; they will push software companies to produce
world-class software. Infrastructure also requires well-trained people. The organizers
of the Soviet Relcom network described above state that a lack of trained unix
system programmers is the key constraint they face in expanding the network

In the long run, the ability of the university system to produce trained programmers
and computer scientists may be a critical limitation in the expansion of a national
software industry. For example, India may become a victim of their own success.
Today they have only around 50,000 programmers, and they for 275,000
programmers by 1995.

Establish World-Class Research Facilities

The "brain drain" has been a major problem for less-developed nations. Some of the
best students remain abroad after obtaining an advanced degree. A major reason for
this is the inability to continue the sort of work they had done as students. However,
declining hardware and telecommunication costs make it increasingly feasible to
establish major computer science research centers in any nation. Such centers
would offer powerful incentives for gifted students to remain at home and would be a
continuing source of innovation for exportable products.

Market Collectively

There are many examples of coordinated marketing activities. Ireland has

established Industrial Development Agency offices in 17 cities in North America,
Europe and the Far East, and many other nations have similar offices. In Chile, the
Economics ministry subsidizes technical assistance and consultation, market
research, preparation of promotional material, marketing design, and quality
certification.

Governments can also provide national booths at foreign trade shows. For example,
at the 1991 Fall Comdex show there were 20,000 attendees from 102 countries, and
over 1,000 companies signed up to be listed in an Export Interest Directory. There
were trade-delegation booths from India, The Netherlands, Belgium, Israel,
Singapore, Hong Kong, Canada, Brazil, Columbia, Uraguay, and the United States.
Most of these covered extended areas, providing exhibit space for several
companies.

Pass and Enforce Copyright Laws

To develop a domestic software industry, copyright laws must be passed and

enforced (legally and by persuasion). Jeremy Butler, past Senior Vice President,
International and OEM, at MicroSoft, estimates that biggest "opportunity" in software
export is stopping piracy (Butler). Table two presents his estimates of the software
sales increases in various countries if piracy were completely eliminated. In spite of
these figures, Butler stated that progress is being made in most countries, with new
and enforced copyright laws.
 U.S. Export Control System
The U.S. Government controls exports of sensitive equipment, software and
technology as a means to promote our national security interests and foreign policy
objectives. Through our export control system, the U.S. government can effectively:

Provide for national security by limiting access to the most sensitive U.S. technology
and weapons

 Promote regional stability

 Take into account human rights considerations
 Prevent proliferation of weapons and technologies, including of weapons of
mass destruction, to problem end-users and supporters of international
terrorism
 Comply with international commitments, i.e. nonproliferation regimes and UN
Security Council sanctions and UNSC resolution 1540

Building A Single Licensing Agency

Under the current export control system, three different USG agencies have the
authority to issue export licenses: the Departments of State, Commerce, and the
Treasury. In 2009, licensing agencies within these departments processed over
130,000 applications. In 2010 alone, the Department of Commerce processed
approximately 22,000 applications. In some cases, exporters were required to apply
for multiple licenses from separate departments.

The goal of the ECR Initiative is to create a Single Licensing Agency (SLA), which
would act as a “one stop shop” for businesses seeking an export license and for the
USG to coordinate review of license applications. The result will be a licensing
process that is transparent, predictable, and timely.

Essential Elements of an Effective Export Control System

To effectively implement an export control system, a country must exhibit a broad

national commitment to the endeavour. This commitment is first illustrated by making
the political decision to adhere to international non-proliferation norms, as defined by
various multilateral regimes, and engage solely in responsible arms transfers.

Second, a nation must establish a legal authority to control the export of defence-
related and dual-use goods and technologies. This authority would adhere to six
legal principles:

 Comprehensive Controls
 Implementing Directives
 Enforcement Power and Penalties
 Interagency Coordination
 International Cooperation
Protection against governmental dissemination of sensitive business information.

Third, a country should implement regulatory procedures to support export control

laws and policies. These procedures should establish clear lines of authority and
provide for a list of controlled items. The control list should adhere to international
norms (multilateral regime lists and their associated catch-all controls). The
regulations should be clear and easily accessible to exporters in their description of
licensing and enforcement policy. The designated authority administering the
regulatory regime should review license requests for completeness and clarity. The
regulations should encourage transparency and predictability of governmental
decision making, and should give sufficient room for exceptions to policy in the
interest of the government.

Fourth, proper enforcement measures should be built into the system. Preventive
enforcement is essential, and should include established procedures related to
export license applications (i.e. screening the proposed item, quantity, end-use and
all parties involved in the transaction for any potential export) and compliance
mechanisms (i.e. working in partnership with industry to educate them on how and
why -- to monitor and control their own export activity). The ability and authority to
interdict and investigate illicit exports are necessary to implement an effective export
control system. International cooperation can ensure full compliance with export
legislation.

Non-proliferation Regimes and Arrangements

The U.S. is a member of various multilateral non-proliferation regimes, including:

 Nuclear Suppliers Group (NSG) - With 39 member states, the NSG is a widely
accepted, mature, and effective export-control arrangement which contributes
to the non-proliferation of nuclear weapons through implementation of
guidelines for control of nuclear and nuclear-related exports.
 Zangger Committee - The purpose of the 35-nation Nuclear Non-proliferation
Treaty (NPT) Exporters (Zangger) Committee is to harmonize implementation
of the NPT requirements to apply International Atomic Energy Agency (IAEA)
safeguards to nuclear exports. The Committee maintains and updates a list of
equipment and materials that may only be exported if safeguards are applied
to the recipient facility (called the "Trigger List" because such exports trigger
the requirement for safeguards).
 Missile Technology Control Regime (MTCR) - The 34 MTCR partners have
committed to apply a common export policy (MTCR Guidelines) to a common
list of controlled items, including all key equipment and technology needed for
missile development, production, and operation. MTCR Guidelines restrict
transfers of missiles - and technology related to missiles - for the delivery of
WMD. The regime places particular focus on missiles capable of delivering a
 payload of at least 500 kg with a range of at least 300 km -- so-called
"Category I" or "MTCR-class" missiles.
 Australia Group (AG) - Objective is to ensure that the industries of the thirty-
eight participating countries do not assist, either purposefully or inadvertently,
states or terrorists seeking to acquire a chemical and/or biological weapons
(CBW) capability.
 Wassenaar Arrangement (WA) - The regime with the most extensive set of
control lists; it seeks to prevent destabilizing accumulations of arms and dual-
use equipment and technologies that may contribute to the development or
enhancement of military capabilities that would undermine regional security
and stability, and to develop mechanisms for information sharing among the
34 partners as a way to harmonize export control practices and policies.

 U.S. Export Control Legislation and Authorities

The Arms Export Control Act (AECA) is the cornerstone of U.S. munitions export
control law. The Department of State implements this statute by the International
Traffic in Arms Regulations (ITAR). All persons or entities that engage in the
manufacture, export, or brokering of defense articles and services must be
registered with the U.S. government. The ITAR sets out the requirements for
licenses or other authorizations for specific exports of defense articles and services.
The AECA requires the State Department to provide an annual and quarterly report
of export authorizations to Congress. Certain proposed export approvals and reports
of unauthorized re-transfers also require congressional notification.

The Export Administration Act of 1979, as amended, authorizes the Department of

Commerce, in consultation with other appropriate agencies, to regulate the export or
re-export of U.S.-origin dual-use goods, software, and technology.

The release of software may require an export control license from the U.S.
Department of Commerce’s Bureau of Industry and Security (“BIS”) under the Export
Administration Regulations (the “EAR”). Software delivery has evolved from a
physically transferred product to a product now most often disseminated through
electronic transmissions of the software code. This evolution diminished the
interaction between software suppliers and customers, while increasing the access
for customers around the world to a broad range of software products. The EAR,
however, makes no distinction between software transferred through the physical
shipment of tangible items and electronic transmissions.

A software export under the EAR includes “any release of technology or software
subject to the EAR in a foreign country,” or any release of “source code subject to
the EAR to a foreign national.” The latter example is commonly known as a deemed
export. The actions comprising a release of software and technology are broad,
extending beyond the physical export of tangible goods or electronic transmissions.
The EAR applies to items on the Commerce Control List (“CCL”), classifying the
items by Export Control Classification Numbers (“ECCN”). Moreover, the regulations
contain an important “catch-all” category known as “EAR 99” for all items not
specifically listed on the CCL, but covered by the EAR. Because the EAR is
expansive, the items covered by the EAR 99 catch-all are also expansive. By
definition, the reach of EAR export controls extends to (i) all items exported from the
United States, (ii) all U.S.-origin items wherever located, (iii) foreign-made
commodities “bundled” with U.S.-origin software, and (iv) qualified foreign made
direct software.

The ECCN for controlled software predominantly informs the level of export
restriction under the EAR. The ECCN provides a precise description of the item, the
reason for control (e.g. anti-terrorism), and information as to pertinent license
exceptions. A key determinant as to the level of control for software under the EAR is
the presence of data encryption. Many unique definitions and specifications
expansively control encryption software, even when embedded within software with
mostly non-encryption functionality. Also, all items, whether classified as EAR 99 or
under a specific ECCN, must comply with the ten general prohibitions under the
EAR. Among these general prohibitions are the end-user and end-use restrictions.

Even with the broad classification of software items under EAR 99, some items
remain excluded from control under the EAR. For example, the EAR excludes
publicly available software from control, although this exclusion does not generally
include encryption software. Information is publicly available when “published” by
becoming “generally accessible to the interested public in any form.” Specifically,
software publication occurs “when it is available for general distribution for free or at
a cost that does not exceed the cost of reproduction or distribution”

License exceptions under the EAR may be available to export-controlled software

depending on the ECCN description, the applicable general prohibitions, and other
qualifying factors. Typical license exceptions which may be available for your
software transaction include the following: civil end-users (“CIV”); governments,
international organizations, international inspections under the Chemical Weapons
Convention, and the International Space Station (“GOV”); baggage (“BAG”); limited
value shipment (“LVS”); temporary imports, exports and re-exports (“TMP”);
computers (“APP”); technology and software under restriction (“TSR”); technology
and software-unrestricted (“TSU”); and, encryption commodities and software
(“ENC”).

The EAR embargo restrictions may prohibit software transmissions ordinarily

permitted under an EAR license exception. Pursuant to General Prohibition Six,
license exceptions are generally unavailable for controlled software exports to
countries embargoed under the EAR. However, part 746 of the EAR sets forth a
positive list of license exceptions which may be available for software transmissions
to customers residing in embargoed countries such as Cuba, North Korea, Syria and
Iraq. Moreover, General Prohibition Seven prohibits the export of software
transmissions, covered by the EAR, originating from the United States, when
intended for a banned purpose, such as nuclear proliferation. These end-user and
end-use restrictions arising from the general prohibitions usually prohibit a software
transmission without a license.

The Department of Commerce implements this authority through the Export

Administration Regulations (EAR). In addition to export controls agreed in the
multilateral regimes, the Department of Commerce also imposes certain export and
re-export controls for foreign policy reasons, most notably against countries
designated by the U.S. Secretary of State as state sponsors of international
terrorism, as well as certain countries, entities and individuals subject to domestic
unilateral or UN sanctions. Additionally, the Department of Commerce administers
and enforces regulations that prohibit certain trade and transactions with certain
countries, entities, and individuals by U.S. persons or from the United States under
the Trading with the Enemy Act and the International Emergency Economic Powers
Act.

Various other U.S. agencies have licensing authority for different exports, for
example:

 Nuclear - Nuclear Regulatory Commission, Departments of Energy and

Commerce
 Trade embargoes & sanctions/Transactions - Department of the Treasury.

U.S. Control Lists and Licensing Procedures

U.S. control lists correspond directly with the lists maintained by the various
multinational export control regimes, but are augmented by unilateral controls when
necessary to ensure national security and foreign policy imperatives. The three
major lists of export-controlled items are the Commerce Control List (CCL), the
United States Munitions List (USML), and the Nuclear Regulatory Commission
Controls (NRCC).

The CCL includes the following:

 Items on Wassenaar Arrangement Dual-Use List

 Nuclear-related dual use commodities (compiled in the Nuclear Suppliers
Group's Nuclear Referral List)
 Dual-use items on Missile Technology Control Regime List
 CW Precursors, biological organisms and toxins, and CBW-related equipment
on the Australia Group lists
 Items controlled in furtherance of U.S. foreign policy and other objectives,
including anti-terrorism, crime control, Firearms Convention, regional stability,
UN sanctions, and short supply reasons
  Unlisted items when destined for specified end-uses or end-users (catch-all
controls)

The U.S. Munitions List regulates defense articles and services. An article or service
may be designated as a defense article or service if it:

1. Is specifically designed, developed, configured, adapted or modified for a military

application and
1) Does not have predominant civil applications, and
2) Does not have performance equivalent (defined by form, fit, and function) to
those of an article or service used for civil applications, or
2. Is specifically designed, developed, configured, adapted or modified for a military
application, and has significant military or intelligence applicability such that
control is necessary.

NOTE: The intended use of the article or service after its export is not relevant in
determining whether the article or service is controlled on the U.S. Munitions List.

The NRCC regulates:

 Exports of nuclear equipment and materials, such as those in Part I of the

NSG Guidelines.

Also, the Department of Energy regulates the provision of assistance for foreign
atomic energy activities:

 Under its legal authorities, DOE can authorize U.S. persons under certain
circumstances to engage in the production of special nuclear material outside
the United States. Some transfers may take place pursuant to general
authorizations in DOE regulations. Other transfers - including transfers of
unclassified nuclear technology related to trigger list items listed in Part I of
the Nuclear Suppliers Group Guidelines - require specific authorizations.

Exporters generally must submit a license request with the appropriate agency for
any item on one of these lists. License requests typically go through an extensive
review process, including review by interested U.S. government agencies, such as
the Department of Defense, Department of Energy, the intelligence community, and
NASA, as well as interested bureaus within the Department of State. During this
process, the U.S.government reviews:

 The eligibility of the applicant

 All parties involved in the transaction
 Appropriateness of the quality and quantity of the proposed export to the end-
user and stated end-use
 Any legal impediments to the proposed export
 Any national security implications presented by the proposed export
  Any foreign policy implications, including but not limited to:
 Potential effect on regional stability
 Human rights
 Ensuring compliance with multilateral control regimes.

In 2004, the Office of Defense Trade Controls in the Department of State's Bureau of
Political-Military Affairs reviewed approximately 55,000 requests for export licenses.
The U.S. Department of Commerce receives some 12,000 to 14,000 dual-use export
applications per year. Both the munitions and dual-use export control systems of the
United States allow for license exemptions (or exceptions) when the government has
determined that the particular item, value, end-use and end-user do not constitute
sufficient risk to require an export license.

In addition to control lists, the U.S. export control system also relies on catch-all
controls to ensure that problematic dual-use exports -- which are not otherwise
subject to export controls -- are capable of being tracked, discussed with the
recipient government, or even denied as an export transaction. Catch-all regulations
incident to the dual-use list prohibit the export without a license of any equipment,
software, or technology that would contribute to projects of proliferation concern. The
Export Administration Regulations provide specific identification of particular foreign
entities that the U.S. Government designates as end-users of concern. An individual
license to export an otherwise non-controlled item is required if an exporter:

 Knows or has reason to believe that an export will be used in a weapons of

mass destruction (WMD) program or missile project of concern, or
 Is informed by the Department of Commerce that an export would present an
unacceptable risk of use in or diversion to a WMD program or missile project
of concern.

Each license application under catch-all controls is reviewed on a case-by-case

basis. If the U.S. Government determines that the export poses an unacceptable risk
of use in or diversion to a nuclear proliferation activity, or that the export would make
a material contribution to a chemical or biological proliferation activity, or a missile
project of concern, the license is denied. These controls are consistent with AG,
MTCR, and NSG catch-all requirements.

Exporters: Be familiar with your customers

Applying common sense is essential in weeding out potentially problematic transfers.

Alarms should sound if:

A customer or agent –

 Is reluctant to provide end-use/user information

 Is willing to pay cash for high-value shipments
 Has little background or history in the relevant business
  Appears unfamiliar with the product or its use
 Declines normal warranty/service/installation
 Orders products/quantities incompatible with the relevant business
 Provides vague delivery dates or locations

A shipment involves -

 Private intermediary in major weapons sale

 Freight forwarder designated as consignee/end-user
 Intermediate consignee's business or location incompatible with end-user's
 Shipments directed to trading companies, freight forwarders, or companies
with no connection to buyer
 Requests for packing inconsistent with normal mode of shipping
 Choice of circuitous or economically illogical routing, or through multiple
countries;

The end-user requests -

 Equipment inconsistent with inventory

 Spare parts in excess of projected needs
 Performance/design specs incompatible with resources or environment
 Technical capability/end-use incompatible with consignee's line of business
 End-use at variance with standard practices
 Middleman from third country to place order
 Refuses to state whether goods are for domestic use, export, or re-export

U.S. Mechanisms of Enforcement

The U.S. government has built in various enforcement mechanisms to ensure

compliance with our export control laws. U.S. Customs officials (now part of the
Department of Homeland Security) have the authority to check any export or import
against its license at the borders. For dual-use items, Department of Commerce
officials also investigate violations. Licensing authorities often require pre-license
checks and post-shipment verifications.

Criminal and civil penalties for export control violations can be severe. For munitions
export control violations, the statute authorizes a maximum criminal penalty of $1
million per violation and, for an individual person, up to 10 years imprisonment. In
addition, munitions violations can result in the imposition of a maximum civil fine of
$500,000 per violation of the ITAR, as well as debarment from exporting defense
articles or services. For dual-use export control violations, criminal penalties can
reach a maximum of $500,000 per violation and, for an individual person, up to 10
years imprisonment. Dual-use violations can also be subject to civil fines up to
$12,000 per violation, as well as denial of export privileges. It should be noted that in
many enforcement cases, both criminal and civil penalties are imposed.
Controls on Brokering Activity

The Arms Export Control Act (AECA) was amended in 1996 to cover brokering
activity by all persons (except officers/employees of the USG acting in an official
capacity) with respect to the manufacture, export, import, or transfer of any defense
articles or defense service on the U.S. Munitions List of the ITAR. It is noteworthy
that this coverage is not limited to U.S. origin defense articles/services, but can also
extend to brokering involving foreign defense articles and services. Under the ITAR,
persons engaged in the business of brokering activities are required to register with
the Department of State and obtain the applicable authorizations for each brokering
transaction. Brokering activities involving non-munitions items, where known by the
perpetrator to be destined for WMD or missile activities, would be subject to U.S.
catch-all controls.

As defined in the ITAR, a broker is anyone who acts as an agent for others in
negotiating or arranging contracts, purchases, sales or transfers of defense articles
or defense services in return for a fee, commission or other consideration. "Brokering
activities" include the financing, transportation, freight forwarding or taking of any
other action that facilitates the manufacture, export, import, or transfer of a defense
article or service irrespective of its origin. This includes activities -- by U.S. persons
who are located inside or outside of the U.S., or foreign persons subject to U.S.
jurisdiction -- involving defense articles or defense services of U.S. or foreign origin
that are located inside or outside of the U.S. This does not include, however,
activities by U.S. persons that are limited exclusively to U.S. domestic sales or
transfers, and persons exclusively in the business of financing, transporting, or
freight forwarding, whose business activities do not also include brokering defense
articles or defense services.

Any person registering as a broker must also provide an annual report to the U.S.
government enumerating and describing its brokering activities and any exemptions
used for other covered activities. Violations would be punishable under the same
penalties noted above for munitions export violations.

Sanctions

The United States works closely with its friends and allies to halt the transfer of
arms-related and proliferation-related items to countries or end-users of concern as
well as regions of conflict. When we receive information on potential transfers of
concern, we seek to persuade the countries involved to prevent such transfers. U.S.
laws and regulations also provide for imposition of mandatory and/or discretionary
sanctions on governments, entities, or persons involved in transferring certain
military equipment or other items of proliferation of concern.
 RBI Regulations for Software Exporters
Every exporter of goods or software has to give declaration in one of the forms
SOFTEX / Bulk SOFTEX. Under the revised procedure (RBI/2013-14/254 A.P. (DIR
Series) Circular No.43 Dated 13th September,2013), the exporters will have to
declare all the export transactions, including those less than US$ 25000, in the form
as applicable.

1. Most of the companies are exporting and raising invoices as low as 100
Dollars and /or have over 100 transactions per month. It will be a herculean
task for them to file a form with each invoice.

BMR comments - A common SOFTEX monthly form can be filed for all invoices
raised in a month. SOFTEX Form is required to be filed within 30 days of the last of
the invoices in the month. Therefore, there is no need to file SOFTEX Form with
every invoice, monthly SOFTEX is enough, within 30 days of last invoice in the
month.
As per the September 2013 RBI Circular (Circular No 43 dated Sep 13, 2013), the
SOFTEX Forms are no more manually allotted by RBI. It is an online allotment
process. Therefore, this does away with the manual process for allotment of
SOFTEX numbers. The numbers are allotted as per an online request procedure,
which is not per se cumbersome. This applies to every exporter (this is as per the
RBI circular of Sep 13, 2013). The online allotment process for SOFTEX numbers
was therefore a welcomed change.

SOFTEX Bulk filing relaxations

Further, as per the bulk filing relaxations (RBI Circular 30 dated Feb 15, 2012), which
applies to an exporter exporting > Rs 1,000 crores in a year OR who files > 600
SOFTEX Forms in a year, following relaxations apply -
 ''Monthly Soft copy filing of excel summary sheet (prescribed format) giving
details of exports, invoice number wise, SOFTEX number wise along with an
Annexure with other details
 ''Hard copy filing with a cover letter along with above summary sheet and
annexures (in quadruplicate). There is no specific requirement to file the
SOFTEX Forms, MSA, Contract, invoice copies, etc along with the above
filings
 ''STPI may do a sample audit and only if STPI calls upon exporter to furnish
the above documents, the same has to be furnished to the STPI
 ''Based on soft copy/hard copy filings of the summary sheets, STPI directly
sends the data to RBI and the AD Bank as indicated by the exporter (bulk
exporter is not required to furnish the certified SOFTEX Form to AD Bank in
21 days)
 ''Exporter is required to furnish a quarterly statement of collections, invoice
wise SOFTEX wise. AD Bank matches this data with the data provided by
STPI as above and monitors the export collections.
2. Many of the companies are relatively small and will not have the desired
infrastructure to handle such compliance.

BMR comments - For non-bulk exporters, SOFTEX Form is monthly (one Form for
all invoices in a month and filing time of 30 days from date of last invoice in the
month) and not one for each invoice. Therefore, at the most 12 SOFTEX filings may
be involved in a year for each STP unit. The understanding that SOFTEX is required
for each invoice is incorrect.

Also, as per the Feb 2012 RBI Circular, STPI was to computerize the process of
SOFTEX submission, thus avoiding the need for manual (triplicate) filings.
Therefore, while there is an intent to provide for computerized filing, it appears that
this has not yet been activated by STPI.

Therefore, in line with the 2012 RBI Circular, STPI/SEZ authorities could be
requested to speed up the facility for computerization of the SOFTEX filings.

3. It is also a procedural nightmare and one person has to be stationed at

STPI on a 365 day basis. Will STPI also have the bandwidth to handle all the
paperwork and certification?

BMR comments - Handling 12 SOFTEX Forms in a year for each STP Unit may not
be substantial load vis-à-vis each STP unit. With the computerization of SOFTEX
filings, this also should be eased out. As mentioned above for bulk exporters, there
is already a facility for online filing and quarterly reporting to AD banks (as against
the 21 days reporting)

4. Payments are being received for exports through bank as well as credit
card by majority of the companies. However, there will be a major issue of
compliance if payments are received through credit card.

BMR comments - Payment through international credit card of the buyer is a

permitted form of payment as per FEM (Manner of Receipt and Payment)
Regulations, 2000, provided it is routed through the AD bank of the exporter. This
should not therefore be a compliance issue where it is routed through the AD bank of
the exporter.

5. Getting the duplicate approved from RBI is again going to be a procedural

nightmare.

BMR comments - The Duplicate SOFTEX copy is to be submitted to the AD bank;

therefore, prima facie, there is no need for RBI approval. As per the time allowed for
realization (ie, 9 months), exporter has to report the realisation to the AD bank with
reference to the duplicate copy submitted. AD Bank then reports the realisations to
RBI as part of its R-returns reporting system, which the exporter is typically not
involved in.
Therefore, role of the exporter (other than bulk exporter) is to only provide STPI
certified SOFTEX (duplicate form) to AD bank within 21 days of STPI Certification
and there after report the invoice-wise SOFTEX wise realisation to AD bank
(realization is within 9 months).
6. Many of the companies have two or more current account with nationalized
or with Foreign bank for receiving their Foreign Inward remittance as it is
not possible for any companies to prefix only one Authorised Dealer code
in the SOFTEX form as companies have different terms with different
banks.

BMR comments - Yes, SOFTEX Form reporting is required separately for each AD
bank indicated. If there are multiple AD banks, then the SOFTEX Form has to be
reported AD bank wise. This has however always been the procedure.

7. One of the major issues is regarding the valuations of project which can be
easily used by the departments to harass and increase litigation.

BMR comments - If there is any specific case of such harassment, the same could
be looked into/ escalated. Generally, as we are aware, STPI certifies the SOFTEX
without raising any valuation issues. Since in unrelated party exports, this will be
based on commercial invoice, contract, etc, there should be no reason why STPI will
challenge valuation. For related party transactions, there are stringent transfer
pricing rules as per income-tax laws; any specific issue can be discussed/ way
forward evaluated.

8. Further the need for supporting documents to be submitted to the

authorised dealer will make things more complicated. In small contracts
and those won online it is very difficult to have proper contracts as will be
required by the departments.

BMR comments - Supporting documents need to be given only to STPI along with
the SOFTEX. Documents required are invoice, contract, MSA, etc. AD bank is
ordinarily interested only in realization of the export once the same is certified by
STPI. They may not call for documents beyond what is submitted to STPI. For
example, the online literature, commercial invoice, etc. In these cases, with these
minimal documentation, if explanations are provided to the STPI (if they call for it)
and if they certify the SOFTEX, AD bank should not have a problem.

9. The full value of the software exported as declared on the SOFTEX form or
as certified by the official of GOI at STPI, whichever is higher should be
repatriated to India on due date of payment or within 180 days from the date
of invoice, whichever is earlier in the manner prescribed in Rule 9 of the
Foreign Exchange Regulation Rules, 1974. Majority of the companies are
not aware of this notification as there has been no communication from
STPI or the Authorised Dealer stating or enforcing the same. Even majority
of the bankers are not aware of this direction from RBI.

BMR comments - Time limit for realization of sale proceeds of software exports is
governed by Foreign Exchange (Exports of Goods and Services) Regulations, 2000
as amended till date. As per Regulation 9 of these Regulations, payments should be
received within 9 months from date of export (earlier 12 months was reduced to 9
months recently vide the 2014 amendment Regulations wref from April 1, 2013). The
FERA Rules, 1974 are no longer applicable since these were issued under FERA
1973 which has since been repealed by FEMA.
 Developed Software export From India by STP Setup
Unit and Procedure for Software Export Off Shore
Services and disposal of SOFTEX Form.

STP Setup Unit Export Procedures

Developed Software can be exported through Data communication Link or physical
Media and software can be developed at customer site abroad by deputing software
professionals of the unit.

Developed Software export From India by STP Setup Unit

Procedure for SOFTWARE Export

The valuation of Software Export declared on SOFTEX Form & Physical Export will
be done by the designated official of DoE at the Software Technology Parks of India
(STPI). Time limit for realisation of Export Value & Invoicing In respect of long
duration contracts involving series of transmissions the exporter should bill their
overseas clients periodically i.e., at least once in month or on reach the milestone as
provided in the contract entered into with the overseas client and last invoice/bill
should be raised not later than 15 days from the date of completion of the contract.

In respect of contract involving only ‘One shot operation’ the invoice/bill should be
raised within 15 days from the date of transmission.

The exporter should submit SOFTEX form to the concerned official of the Govt. of
India at STPI for valuation/certification not later than 30 days from the date of
invoice/the date of last invoice in a month as indicated above.

The full value of the software exported as declared on the SOFTEX form or as
certified by the officials concerned of Government of India, whichever higher should
be realised on due date of payment or within 180 days from the date of invoice which
ever is earlier.

 Off-Shore Services
 Disposalof SOFTEX Form
 Check List for Export Declaration
 Checklist for the Invoice enclosed with Softex forms in respect to
 Exports through Physical Media
 Check list for Export Declaration (Physical)
Off-Shore Services

Export of computer software in non-physical i.e., Export through Datacom./Satellite

links form should be declared on SOFTEX form. Each set of SOFTEX forms
comprises three copies marked, Original, Duplicate and Triplicate, which carry a
identical pre-printed number. All the three forms in each set should be completed
and the entire set submitted for the purpose of certification together with relevant
documents. Each exporter will have to designate a single branch of an authorized
dealer to whom export documents in respect of all software exports made via
dedicated earth stations / satellite links will be submitted by him together with the
relative SOFTEX forms for negotiation / collection.

Disposal of SOFTEX Form

1. After certifying all three copies of SOFTEX Forms the designated DoE Official
will forward the original directly to the nearest office of the Exchange Control
Department of Reserve Bank. The duplicate will be returned to the exporter and the
triplicate will be retained by the DoE for their record.

2. Within 21 days, from the date of certification of SOFTEX Form by DoE the
exporter should submit the duplicate copy together with a copy each of the
supporting documents to the authorized dealer. The duplicate copy of the form
together with documents will be retained by the authorized dealer till full export
proceeds have been realized and repatriated and thereafter will be submitted to
Reserve Bank, duly certified under cover of an appropriate R return along with the
copy of invoice/s.

Check List for Export Declaration STP Unit are required to file a copy of Purchase
Order / Agreement / Contract with STPI as soon as the STP unit enter into purchase
agreement with their client. This can be done one time before raising the first invoice.

1) Check for Softex form is neatly typed.

2) Check for the Address of the Exporter.
3) Check for the STPI Center Address.
4) Check for the Importer and Exporter Code number.
5) Check for the Buyer’s name and address.
6) Check for the Date and Number of Invoice.
7) Check the Purchase Order is submitted to STP authorities.
8) Confirm is there any Royalty i) Check the Data Comm. Service Provider (STPI
/ VSNL / DOT / Internet / Others)
9) Check for the Software Category is defined (906, 907, 908, 909, 910 & 911).
10) Check for the Export Value Currency and Amount as per the Export Invoice
and Agreement / Contract / Purchase Order.
11) Check for the Authorised Dealer and Code No.
12) Check if any Royalty on Software Packages / Products Exported.
 13) Check for Section "C" for Signature, Date, Name Designation, and Official
Rubber Stamp of the Exporter.

Checklist for the Invoice enclosed with Softex forms in respect to

1) Buyers name and address should be cross verified with export order
2) Check for Invoice No. & Date.
3) Check for Importer’s and Exporter’s Code Number.
4) Check for Data Comm. Services (STPI / VSNL / DOT / Internet / Others).
5) Check for the Export Destination
6) Check for Export / Agreement / Contract / Purchase Order No. & Date.
7) Check for Currency and Amount
8) Check for Banker’s Name and Address.
9) Check for Authorised Dealer’s Code No.
10) Check for the Authorised Signature

A request letter with relevant forms and corresponding invoices based on media of
Exports should be submitted to STPI for certification.

Exports through Physical Media

If Export of computer software is undertaken in physical form i.e., software prepared

on magnetic tapes and paper media the same needs to be declared in EDI with two
copies of invoice/bill for certification Check list for Export Declaration (Physical)

1) STP unit are required to file a copy of Purchase Order / Purchase Agreement
/Contract with STPI as soon as the STP unit enter into Purchase Agreement
with their client. This can be done one time before raising the first invoice.
2) The Floppy / CD / Cartridge any other mode of Software has to be submitted
to STPIB for Examination and verification for the Certification of Physical
Exports.
3) The Invoice should be submitted in Duplicate (the invoice should be as per
the Customs guidelines).

 A request letter with relevant forms & corresponding Invoices based on

media of Exports should be submitted to STPI for certification Procedure
for Reimbursement of CST.

4) The units are required to obtain Sales Tax Registration from the concerned
office of Sales Tax who will issue a Sales Tax Registration number (CST/ST
No.). This number is necessary for doing DTA sales as well as claiming
reimbursement of CST paid on the goods procured within the country. Govt.
of India has empowered Department of Electronics to reimburse the same to
STP units.
 Any local purchase within the country should be made against C-Form
available from the Sales Tax authorities.

For the purpose purchased against C-Forms units will maintain a ‘Material
Receipt Register’ which must show the details of goods, quantity, the source
of purchase and the C-Form against which purchase is made.

STP/EHTP units will be entitled to full reimbursement of Central Sales Tax paid by
them from the funds of Market Development Assistance (MDA) on purchases made
by them from the DTA, to be utilised for export production, on the following terms &
conditions:

The Supplies from DTA to STP/EHTP units must be utilised by them for production
of goods meant for export and /or utilised for export production and may include raw
material, components, consumable, packing materials, capital goods, spares
material handling equipment etc., on which CST has been actually paid by
STP/EHTP units.

1) As soon goods are received by the STP/EHTP units in its premises it will be
entered in the material receipt kept for the purpose. The register must show
the details of goods, quantity, the source of purchase and the C form against
which purchase is made etc., A Self attested copy of the register relevant to
the claim shall be submitted alongwith the claim.
2) The reimbursement of CST shall be admissible only to those units who get
themselves registered with the Sales Tax Authorities in terms of Section 7 of
the CST Act, 1956 read with (Registration and Turnover) Rules, 1957 and
furnish a Photostat copy of the Registration Certificate issued by the Sales
Tax Authorities.
3) The unit shall present its claim for reimbursement of Central Sales Tax in the
prescribed form in supported with Chartered Accountant certificate (format is
at annexure XXVI & XXVIA) to STPI for processing along with the following
documents :

I. Original Invoice/Bill along with AR-3 of the supplier showing details

regarding the description of goods, quantity, value, amount of CST paid
etc., and the CST registration number of both the buyer and supplier;
II. Photostat copy of C form issued by the purchaser to the supplying unit
which will be attested by the Gazetted Officer of the Zone with reference to
the counterfoil produced by the unit. The counterfoil of C form will be
returned to the unit after making suitable endorsement like ‘Cancelled/CST
reimbursement’ duly signed by the authorised officer of the zone
administration and the Photostat copy will be retained by the officer for
keeping in respective file;
III. Original receipt (alongwith Photocopy) issued by the supplier in token of
having received the amount of the bill, including the CST, which will be
 compared and attested by the concerned officer of Zone Administration
with reference to the original produced by the unit. The original receipt will,
however, be returned to the unit after making necessary endorsements
thereon such as "Canceled and CST of RS...... reimbursed" duly signed by
the authorised officer of the zone and the photostat copy will be retained in
the concerned file. In case original receipts are not available and payment
was made through bank, a certificate from Bank showing the payments
specifically against the invoice shall be submitted. The amount paid and
the invoice amount should tally;

4) The reimbursement will be limited to the payment of CST against C form only;
5) The unit shall also intimate the name of the persons who are authorised by
the firm to sign the C form and furnish three copies of his/their specimen
signature(s) which will be kept in the relevant file of the unit;
6) The reimbursement will be made on quarterly basis. No claim for period of six
months from completion of the quarter in which the claim has arisen. In
exceptional cases, on application, The Director STPI may consider delayed
application after satisfying that the delay was due to genuine grounds. Claims
delayed beyond one year will be summarily rejected.
7) The claim for CST reimbursement for the amount below Rs 25/- on any singly
invoice