Software Technology Parks of India (STPI): STP Scheme, Tax Holiday and Startups

Software Technology Parks of India (STPI) is an autonomous society under the Ministry of Electronics and Information Technology (MeitY) that has run India’s software export scheme since 1991. Registered on 5 June 1991, it approves export units through a single window and certifies the value of the software they send abroad. Its 73 centers, most of them in smaller cities, now incubate startups too.

The name misleads most readers. STPI isn’t mainly a builder of office parks, and an STP unit doesn’t have to sit inside one, because the scheme lets a unit be set up anywhere in India. The park is a legal status more than a campus. The second confusion is the tax break. The Section 10A holiday that made STP registration valuable ended on 31 March 2011, yet STPI-registered units still reported software exports of about ₹10.64 lakh crore in 2024-25. This note settles what STPI does, why the tax holiday ended and why the scheme outlived it.

What Is Software Technology Parks of India?

STPI is a government society, not a company and not a body created by an Act of Parliament. It works under MeitY and runs two export schemes written into the Foreign Trade Policy, with startup incubation added later. These are the facts worth memorizing first.

Why STPI Was Set Up in 1991

STPI exists because India in the late 1980s had software talent but no easy way to get the work to foreign clients. STPI’s own history records a run of mid-1980s measures to promote software exports, among them a new computer policy and a software policy, and notes that the RBI handed the job of evaluating software exports to the Department of Electronics.

The first step came in 1989, when the three parks named in the table above were set up, though STPI’s own list of centers files them under 1990, a year later than its history does. On 5 June 1991 they were merged and registered as one society. That was a few weeks before the budget and industrial policy of July 1991 that began the 1991 LPG reforms. So STPI isn’t a product of liberalization. It grew out of an export push the Department of Electronics had been running inside the older, permit-heavy industrial policy.

What made the parks different was the data link. In 1992, STPI’s timeline records, it launched satellite-based High-Speed Data Communication (HSDC), which let Indian companies work on their foreign clients’ computers from India. The same year the STP and Electronics Hardware Technology Park (EHTP) schemes began working as single-window schemes, and registered units exported ₹52 crore of software in 1992-93.

Picture an early STP unit as an export-only address with a satellite dish on the roof: the code traveled while the programmers stayed home. The picture fits the early 1990s, when the dish was the scarce part. It fits less well today, when bandwidth is ordinary and a unit registers for the approvals and customs benefits, not the link.

How the STP Scheme Works

The STP scheme is a 100% export-oriented scheme for developing and exporting computer software, including professional services delivered over communication links. STPI describes it as a blend of the export-oriented unit idea and the technology park idea. Its legal home today is Chapter 6 of the Foreign Trade Policy 2023, which also covers export-oriented units (EOUs) and the hardware and biotechnology park schemes.

The benefits, as STPI lists them, explain why exporters signed up:

• approvals come through a single-window clearance system;
• a unit can be set up anywhere in India;
• jurisdictional STPI officers can clear projects costing under ₹10 crore with Indian investment;
• 100% foreign equity is allowed;
• hardware and software imports are duty free, second-hand capital goods included;
• the export obligation is limited to positive net foreign exchange earnings;
• sales in the domestic tariff area (DTA), the rest of the Indian market, are allowed;
• computers and peripherals can be depreciated fully over five years.

That export test is worth understanding properly. Net foreign exchange earnings (NFE) are the foreign currency a unit earns minus what it spends abroad, mostly on imports. Paragraph 6.04 of the Foreign Trade Policy requires every unit under Chapter 6 to keep NFE positive.

Here’s how it plays out for a hypothetical unit. A small firm in Bhubaneswar writes software for a bank in London. It registers with the local STPI director, imports its servers without customs duty and bills the bank in pounds. Each export is declared to STPI, which certifies its value. As long as the pounds coming in exceed what the firm spends abroad on servers and licenses, its NFE is positive and it stays within the scheme.

That declaration step has a name. Under the RBI’s export rules, software exported in non-physical form is declared on the SOFTEX form, which STPI, or the SEZ authority for units in a zone, certifies before the data goes to the RBI electronically. Certification is why STPI matters even to firms that never rent its office space: it sits at the point where India’s services exports get counted.

The EHTP scheme applies the same logic, duty-free imports and the NFE test, to electronics hardware.

The Section 10A Tax Holiday and Why It Ended

From the mid-1990s, STPI’s history records, software export units could claim an income tax holiday on export profits under Section 10A of the Income-tax Act, 1961, a benefit meant to draw investment into the industry; its twin, Section 10B, covered export-oriented units. A tax holiday leaves profits untaxed for a set period, so a young exporter kept far more of what it earned.

The holiday was always meant to end, and the deadline moved. The Budget speech of July 2009 said the deductions under Sections 10A and 10B wouldn’t be available beyond 2009-10 and, “to tide over the slowdown in exports”, extended the sunset by one more year to cover 2010-11. Neither of the next two Budgets renewed it, so the holiday ended with that year, on 31 March 2011.

What happened next matters as much as the sunset. The only income tax holiday still open to new export units was inside Special Economic Zones, under Section 10AA: 100% of export income exempt for 5 years, 50% for the next 5 and 50% of reinvested export profit for 5 more. New IT capacity followed the tax break into the zones, and the trace is still visible: more than half of the 276 operational SEZs on the official list of 31 December 2025 are IT or IT-enabled services zones.

Then the SEZ route narrowed as well:

• the Budget for 2011-12 proposed Minimum Alternate Tax (MAT), a floor tax on book profits, for SEZ developers and units, and SEZ units lost their MAT exemption from 1 April 2012;
• the Budget for 2016-17, as part of a plan to phase out exemptions, limited Section 10AA to new SEZ units that began operating by 31 March 2020.

Put the two facts together and a common mistake disappears. The STP scheme didn’t end in 2011; its tax holiday did. Units kept registering because the scheme’s approvals and customs benefits still saved them time and money.

How STPI Is Organized

The Governing Council is STPI’s apex body and sets its policy direction. Its members, as STPI publishes them:

• the Union Minister of Electronics and IT as chairperson;
• the Minister of State for Electronics and IT as deputy chairperson;
• the MeitY Secretary as executive vice-chairperson;
• officers of Joint Secretary rank or above from the telecom department, the home and finance ministries, the commerce department and the Intelligence Bureau;
• the chairman of the Electronics and Computer Software Export Promotion Council and nominees from industry bodies.

The Director General is the council’s Member Secretary and holds the executive powers to run the society. Below the DG, an Executive Committee of Directors examines new schemes and budgets. In every state where STPI has a center, a Standing Executive Board works as the link with the state government and industry.

In the field, STPI works through 14 jurisdictional directorates and 73 centers. Each center’s Director is its technical and administrative head and the jurisdictional authority for STP and EHTP units, the officer a unit actually deals with. The home ministry and Intelligence Bureau seats make sense for a body that began by running international data links.

STPI’s Newer Roles: Incubation, CoEs and NGIS

After the tax holiday ended, growing startups became STPI’s second job, especially outside the metros. Incubation wasn’t new; its timeline places the first incubation services in 1992. What changed was the scale and the aim, set by the National Policy on Software Products (NPSP), 2019, which wants India to be a software product nation rather than mainly a services exporter.

Centres of Entrepreneurship (CoEs) are domain-specific incubators, each built around one technology area, that STPI began setting up in the late 2010s. A Lok Sabha answer of August 2025 counted 24; STPI’s CoE page, updated in July 2026, counts 26 launched out of 27-plus planned. A few show the spread:

• Electropreneur Park in New Delhi, for electronics system design and manufacturing (ESDM);
• FinBlue in Chennai and FinGlobe at GIFT City, Gandhinagar, for fintech;
• OCTANE, a group of 8 CoEs across the north-east, from data analytics in Agartala to gaming in Aizawl.

The Next Generation Incubation Scheme (NGIS) is the funding arm, launched in 2020 to carry out the 2019 policy. MeitY entrusted it to STPI with an outlay of ₹95.03 crore over 3 years, targeting 300 software product startups with seed funding of up to ₹25 lakh each. Founders still at the idea stage can join a six-month pre-incubation track that pays ₹10,000 a month. It runs from 12 Tier-II locations, Agartala in the north-east to Vijayawada in the south.

The government’s Lok Sabha answer of 6 August 2025 gave the results so far:

• 1,121 startups supported through STPI schemes and programs, with a total outlay of ₹445.77 crore;
• ₹39.86 crore disbursed as direct funding to 590 startups over the last 3 financial years;
• about 9,800 jobs reported by non-metro startups supported under the CoEs and NGIS.

All of this sits inside the wider startup ecosystem in India, and STPI’s CoE page ties the CoEs to Startup India, whose action plan came on 16 January 2016.

STPI also runs two BPO schemes under Digital India, aimed at jobs in smaller towns:

• the India BPO Promotion Scheme (IBPS), to set up 48,300 BPO and IT-enabled services seats, shared among states in proportion to population, with an outlay of ₹493 crore;
• the North East BPO Promotion Scheme (NEBPS), for 5,000 seats in the north-east with an outlay of ₹50 crore.

Both reimburse up to 50% of capital or operating spending, capped at ₹1 lakh per seat.

STPI Today: Centers, Exports and the 2026 Changes

STPI today is bigger than ever and still the authority that approves and certifies STP and EHTP units. Its network grew from 67 centers in February 2025 to 73 on its website in 2026, 65 of them in Tier-II and Tier-III cities. The dated developments worth knowing:

• 5 June 2024: at its 33rd Foundation Day, STPI announced Ananta, a sovereign cloud built in India, and launched two startup portals, SayujNet and STPI-Workspace.
• 20 February 2025: it opened an incubation facility at Salt Lake, Kolkata, spread over 2 lakh sq ft with 75,000 sq ft of raw incubation space.
• 6 August 2025: a Lok Sabha answer put STPI at 68 centers, 60 of them in Tier-II and Tier-III cities, and STPI-registered units’ software exports at about ₹10.64 lakh crore in 2024-25.
• 13 January 2026: the RBI notified new export and import regulations under FEMA, in force from 1 October 2026. They replace the 2015 regulations and prescribe one Export Declaration Form for goods, software and services, filed for software exports from the domestic tariff area with an Authorised Dealer bank or STPI.
• 2026: STPI opened its 69th to 73rd centers, the newest including Amritsar and Itanagar.
• 5 June 2026: at the STPI Tech Summit marking its 35th Foundation Day, Minister of State Jitin Prasada said there should be “a Software Technology Park in every district”.

The export figure needs one caution. STPI’s website gives ₹10,69,270.59 crore for 2024-25 and calls it about half of India’s software exports, while the government’s figure in Parliament for the same year is about ₹10.64 lakh crore. Either way, the rise from ₹52 crore in 1992-93 is roughly 20,000-fold in nominal rupees, unadjusted for inflation. For scale, the NASSCOM estimate cited in the same answer puts the whole IT industry’s export revenue at $224.4 billion in 2024-25.

The note on global capability centers, the in-house technology arms of multinational firms, is the natural companion on where IT exports go next.

Where the STPI Model Falls Short

STPI’s record is strongest on exports and thinner on the two goals it has taken on since: spreading jobs beyond the big hubs and turning service firms into product companies.

Start with dispersal. Of STPI’s 73 centers, 65 are in smaller cities, but the jobs haven’t followed at the same scale. The government reported 2,98,250 jobs in STPI-registered units in non-metro cities as on 31 March 2025. Set that against the 5.8 million people the IT industry employs directly, per the NASSCOM figures in the same answer, and the non-metro share works out to about one job in twenty. The dispersal is real. It’s also small.

The product push faces similar arithmetic. STPI has supported 1,121 startups, while NASSCOM counts more than 32,000 tech startups in India. That is useful work in smaller cities, but a small share of the total.

The 2011 sunset also showed how much of the early pull was tax. New capacity moved to SEZ campuses, and STPI had to find a second purpose in incubation. The same worry runs through the debate on services-led growth: whether an export model built on skilled services can create jobs on the scale that manufacturing does.

One design question is also fair: the body that certifies a unit’s exports can be its landlord and bandwidth provider too, and an answer on institutional reform can argue for keeping those roles apart.

How to study Software Technology Parks of India for exams

STPI belongs to GS Paper III, where the economy syllabus covers industrial policy and investment models. For Prelims it’s a set of institutional facts, the kind a two-statement question can test.

Mains usually reaches STPI through export zones and tax incentives. Mains 2015 GS Paper III asked: “There is a clear acknowledgement that Special Economic Zones (SEZs) are a tool of industrial development, manufacturing and exports. Recognizing this potential, the whole instrumentality of SEZs requires augmentation. Discuss the issues plaguing the success of SEZs with respect to taxation, governing laws and administration.” The move from Section 10A to Section 10AA after 2011, and MAT on SEZs from 2012, is a ready example for its taxation part. On the Prelims side, Indian Economy accounts for 256 of the 1,403 questions in the Prelims question bank from 2013 to 2026, the largest single subject.

The revision facts to hold:

• STPI was registered on 5 June 1991 as a society under the Societies Registration Act, 1860, and now works under MeitY.
• It was formed from the 1989 parks at Bengaluru, Pune and Bhubaneswar.
• It runs the STP (software) and EHTP (electronics hardware) schemes, both in Chapter 6 of the Foreign Trade Policy 2023.
• An STP unit can be anywhere in India, may be fully foreign owned, imports duty free and must keep NFE positive.
• The Section 10A holiday for STP units ended on 31 March 2011; the SEZ holiday under Section 10AA is closed to units that began operating after 31 March 2020.
• NGIS carries ₹95.03 crore for 300 startups, with seed funding of up to ₹25 lakh, across 12 Tier-II locations.
• STPI had 73 centers in 2026, 65 in Tier-II and Tier-III cities, and its units exported about ₹10.64 lakh crore in 2024-25.

The confusions that cost marks, and how to keep them apart:

• STPI is the society, the STP scheme is what it administers and an STP unit is a company registered under that scheme.
• An STP unit is a status that can sit anywhere, while an SEZ unit must sit inside a zone notified under the SEZ Act, 2005.
• Section 10A (STP units, ended 2011) isn’t Section 10AA (SEZ units, closed to new units from 2020).
• STPI is a government society, while NASSCOM is an industry association whose estimates the government often cites.

The comparison that matters most is STP against SEZ, the route that new IT capacity took after 2011. For the wider SEZ debate, the site’s evaluation of Special Economic Zones goes further.

STPI is worth your time less for its facts than for the lesson it carries. A scheme built on facilitation outlived the tax holiday it was famous for, while the holiday itself mostly decided where new capacity went. When an answer on export incentives or services-led growth needs one Indian example of what worked and why, this is the one to use.

Frequently Asked Questions

Practice Questions

Prelims

1. Consider the following statements about Software Technology Parks of India (STPI): 1. It is registered as a society under the Societies Registration Act, 1860. 2. It functions under the Ministry of Commerce and Industry. Which of the statements given above is/are correct?

• (a) 1 only
• (b) 2 only
• (c) Both 1 and 2
• (d) Neither 1 nor 2

Answer: (a) STPI was registered on 5 June 1991 as a society under the then Department of Electronics and now works under MeitY, not the Commerce Ministry.

2. Consider the following statements about the Software Technology Park (STP) scheme: 1. An STP unit must be located inside an STPI-owned park complex. 2. An STP unit must be a positive net foreign exchange earner. 3. 100% foreign equity is permitted in an STP unit. Which of the statements given above are correct?

• (a) 1 and 2 only
• (b) 2 and 3 only
• (c) 1 and 3 only
• (d) 1, 2 and 3

Answer: (b) The scheme lets a unit be set up anywhere in India, so statement 1 is wrong, while the NFE test and full foreign ownership are both part of it.

3. The income tax holiday for Software Technology Park units under Section 10A of the Income-tax Act, 1961 was last available for which financial year?

• (a) 2005-06
• (b) 2008-09
• (c) 2010-11
• (d) 2019-20

Answer: (c) The July 2009 Budget extended the sunset by one year to cover 2010-11, and no later Budget renewed it, so the holiday ended on 31 March 2011.

4. The Next Generation Incubation Scheme (NGIS), implemented by STPI, is designed to:

• (a) incentivize BPO seats in the north-eastern states
• (b) support software product startups in Tier-II locations with incubation and seed funding
• (c) subsidize semiconductor fabrication plants
• (d) grant income tax holidays to IT units in SEZs

Answer: (b) NGIS supports software product startups from 12 Tier-II locations, with seed funding of up to ₹25 lakh each for 300 startups.

5. Consider the following statements: 1. Under the export regulations notified by the RBI in January 2026, a software exporter in the domestic tariff area can file its export declaration with STPI. 2. The deduction under Section 10AA of the Income-tax Act is available to an SEZ unit that began operations in 2024. Which of the statements given above is/are correct?

• (a) 1 only
• (b) 2 only
• (c) Both 1 and 2
• (d) Neither 1 nor 2

Answer: (a) The 2026 regulations name an Authorised Dealer or STPI as the authority for software exports from the domestic tariff area, while Section 10AA is closed to units that began operating after 31 March 2020.

Mains

1. How are startups in India promoting entrepreneurship, innovation and employment? Discuss the global and domestic challenges in their working and suggest suitable measures to overcome these challenges. (15 marks, 250 words) Previous year: Mains 2026, GS Paper III.
2. The Software Technology Park scheme combined export-zone benefits with the freedom to locate anywhere in India. Examine how this design helped India’s software exports grow after 1991. (15 marks, 250 words)
3. Tax holidays can change where investment goes without adding much to how much of it there is. Discuss this claim with reference to the end of the Section 10A holiday for STP units in 2011 and the growth of IT SEZs. (15 marks, 250 words)
4. Examine the role of Software Technology Parks of India in spreading the IT industry to Tier-II and Tier-III cities. How far has it succeeded? (10 marks, 150 words)
5. Evaluate the Next Generation Incubation Scheme and STPI’s Centres of Entrepreneurship as instruments for making India a software product nation. (10 marks, 150 words)

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