Introduction

The Software Technology Parks of India (STPI) scheme is one of the most widely used export-oriented frameworks for IT/ITES and software product companies. For foreign companies establishing a subsidiary in India, registering an STP unit can unlock import duty concessions, simplified clearances, and targeted support for software exports. This guide explains who is eligible, the benefits, the step-by-step application process, and post-approval compliance that foreign subsidiaries must follow. Software Technology Parks of India

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What is STPI / STP scheme? (Quick overview)

STPI is an autonomous organization under India’s Ministry of Electronics & Information Technology (MeitY) that promotes software exports and IT/ITES businesses. Under the STP (Software Technology Parks) scheme, eligible units obtain a Letter of Permission (LoP) or registration that enables them to be treated as export-oriented software units with associated incentives and facilitation.

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Who can apply? (Eligibility for foreign subsidiaries)

A foreign company can apply for STPI benefits through its Indian subsidiary or branch office provided the Indian entity:

• Is registered under the Companies Act (or valid branch/liaison structure where permitted),
• Is engaged in software development, IT/ITES services or eligible technology exports, and
• Meets STPI’s documentation and business plan requirements.
  (Eligibility and exact documentation lists are available on the STPI downloads and registration)

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Key benefits of STPI registration (why foreign subsidiaries consider it)

• Duty-free imports of capital goods and IT hardware for unit operations (saves upfront capex).
• Single-window clearances and facilitation via STPI for approvals, making compliance simpler than alternate routes.
• Export-oriented framework: favourable export reporting (SOFTEX), simplified export documentation and easier access to export incentives.
• Location flexibility: STP units can be set up anywhere in India (not geographically bound like some SEZs).
• 100% foreign equity permitted (in most cases), allowing wholly owned subsidiaries to avail benefits.

Note: STPI is often preferred over SEZ for IT/ITES units because of locational flexibility, lower compliance burden, and faster clearances — but the right choice depends on your business model (imports, tax benefits, scale).

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STPI vs SEZ vs Other Schemes (short comparison)

• STPI: Best for pure software/IT/ITES exporters; moderate compliance, can be set up anywhere; duty-free imports for approved items.
• SEZ: Often heavier compliance but may offer stronger tax incentives for large projects and manufacturing.
• MOOWR / Other Export Schemes: Have specific use-cases (merchandise exports, certain manufacturing scenarios). Choosing a scheme depends on imports, export commitments, deployment model, and tax planning.

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Step-by-Step: How a foreign subsidiary applies for STPI registration

Step 1 — Confirm the right Indian entity

Most foreign companies apply through an Indian subsidiary (Private Ltd) — ensure company incorporation is completed and the business objects include IT/ITES services.

Step 2 — Prepare the project file & documents

Typical documents required for STPI application:

• Certificate of Incorporation & Memorandum & Articles of Association (MoA/AoA)
• PAN & GST details (if available)
• Detailed Business Plan / Executive Summary explaining export activity, timelines, infrastructure and investment plan
• Proof of office premises / lease or commitment for virtual/incubation (as applicable)
• Copies of contracts, MoUs, or PO/SOW for anticipated exports (if available)
• Board resolution authorizing application and signatory
• Bank certificate with account details
  (Refer the STPI checklist for the full Annexures required for STP or Non-STP registrations).

Step 3 — Online submission / application

• Most STPI hubs now provide online application portals — upload the checklist and required annexures as per the jurisdictional STPI center.
• Pay the required application fees (check the local STPI center for updated fee schedules).

Step 4 — Site verification & approval

• STPI may conduct verification of the premises and review the business plan.
• When satisfied, STPI issues the registration/Letter of Permission (LoP) or a certificate under the STP scheme. Typical provisional approvals may be given earlier for incubation units.

Typical timelines

• Incorporation → STPI application: depends on how quickly you prepare documents (1–4 weeks)
• STPI review & approvals: variable by STPI hub and completeness of documents (commonly 2–6 weeks)
  (Timelines are indicative — always check your jurisdictional STPI office for exact SLAs.)

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Costs & Financial considerations

• Application & registration fees: nominal; check STPI hub for exact fee schedule.
• Import duty savings: major cost advantage if you need to import hardware or specialized equipment.
• Compliance overhead: STPI requires export reporting (SOFTEX) and maintenance of accounts for exports — plan for bookkeeping and compliance costs.

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Export performance & compliance obligations

• Export reporting (SOFTEX): STPI units must report software exports through the Softex mechanism and adhere to documentation norms. STPI provides guidelines and formats for SOFTEX filings.
• Foreign exchange / FEMA: Units must follow foreign exchange regulations for repatriation, inward remittances, and FDI reporting where applicable.
• Minimum export performance & positive NFE: STPI rules & subsequent clarifications often focus on net foreign exchange earnings or positive NFE over specified periods — verify the exact performance norms at the time of application.

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Post-approval: Practical checklist for a newly approved STPI unit

1. Register with Customs/EPC (if import of equipment needed) and coordinate duty-free import clearances. Software Technology Parks of India
2. Set up SOFTEX reporting process (monthly/quarterly submissions as required). Software Technology Parks of India
3. Maintain export accounting & evidence of foreign exchange earnings.
4. Keep statutory bookkeeping & tax records ready for audits and declarations.
5. Renewal & updates: STPI approvals or registrations may need periodic renewals or updates of LoP details — track timelines. Software Technology Parks of India

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Common pitfalls & practical tips for foreign subsidiaries

• Don’t rely solely on expected incentives — plan cashflows assuming a time lag for approvals and imports.
• Prepare export contracts / POs to support your application — STPI prefers visible export intent.
• Choose location & operating model carefully — STPI units can be remote, but infrastructure and local support (banking, telecom) matter.
• Consider alternative schemes (SEZ/MOOWR/EHTP) if you plan manufacturing / heavy hardware imports — run a comparative analysis.

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Who should consider STPI registration?

• Foreign subsidiaries focused on IT/ITES exports, software product companies, BPO/KPO and other services delivered internationally.
• Firms that plan significant equipment imports for development/testing and want duty relief.
• Companies looking for single-window facilitation and local STPI support for export documentation.

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🔎 Frequently Asked Questions – STPI