The National Policy on Software Products, 2019 (“the Software Products Policy”) is intended to help the software industry to transform itself from a service-oriented industry into a software product ecosystem.  The Software Product Policy refers to the NASSCOM Strategic Review 2017 as per which the Global Software Product Industry is estimated to be USD 413 billion. However, the contribution of Software Products in Indian IT-ITES revenue is just USD 7.1 billion  out of which 2.3 billion USD are exports. On the other hand, in India import of Software Products is estimated to be nearly 10 billion USD, thus making India  a net importer of software products . Therefore, the goal of the Software Products Policy is to develop a conducive Software product ecosystem and to develop India as the global software product hub, driven by innovation, improved commercialisation, sustainable Intellectual property (IP), promoting technology start-ups and specialised skill sets, for development of the sector, based on ICT.

The Policy defines a Software Product as a programme used or produced by a computer or network which can be stored or transmitted through an electronic medium and offers some form of utility. In addition, such a product can be protected in India through permissible Intellectual Property Right laws and can be commercialized for use through licensing.  The benefits under the Policy can be utilised by  an Indian Software Product Company (“ISPC”)  which is defined in the Policy as  ” an Indian company in which 51% or more shareholding is with Indian citizen or person of Indian origin and is engaged in the development, commercialisation, licensing and sale /service of Software products and has IP rights over the Software product(s).

The Missions of the Policy are:

  • To promote the creation of a sustainable Indian software product industry, driven by intellectual property (IP), leading to a ten-fold increase in share of the Global Software product market by 2025.
  • To nurture 10,000 technology start-ups in software product industry, including 1000 such technology start-ups in Tier-II and Tier-III towns & cities and generating direct and in-direct employment for 3.5 million people by 2025.
  • To create a talent pool for software product industry through (i) up-skilling of 1,000,000 IT professionals, (ii) motivating 100,000 school and college students and (iii) specialise 10,000 professionals that can provide leadership.
  • To build a cluster-based innovation driven ecosystem by developing 20 sectoral and strategically located software product development clusters having integrated ICT infrastructure, marketing, incubation, R&D/test beds and mentoring support.
  • In order to evolve and monitor schemes & programmes for the implementation of this policy, National Software Products Mission will be set up with participation from Government, Academia and Industry.

The Strategies evolved in terms of the Policy are:

(a) Promoting Software Products Business Ecosystem

  • An Indian Software product registry will be created through industry ownership. This will act as a common pool of Indian Software Products thereby providing a trusted trade environment.
  • A conducive environment will be created in order to facilitate active participation of software companies in Capital Market.
  • A Single Window platform will be established for facilitation of Indian software product industry in fast-tracking legal and regulatory issues regarding (i) import and export and (ii) opening and closure of software product enterprises.
  • A classification system for Indian software products will be evolved through a model HS code.
  • The Indian Software Product Companies will be allowed to set off tax payable, if any, on the investments made (on an accrued basis) in R&D of indigenous software products

(b) Setting Up of National Software Product Mission (“NSPM”)

To implement the goals and mission a National Software Product Mission (“NSPM”) would be established under the aegis of MeitY. under a Joint Secretary, with participation from Government, Academia and Industry. The NSPM shall be responsible for would be responsible for designing appropriate strategies for the development of the software product industry, facilitating Government agencies in the promotion of Software Products and monitoring the funds earmarked for the software product industry.

(c) Promotion of Entrepreneurship, innovation and Employment:

  • A “fund of funds” called Software Product Development Fund (“SPDF”) with a corpus of Rs. 1,000 crores would be created in terms of the Policy for participation in venture fund to promote the scaling up of market ready products, with the ultimate goal of having at least 100 ISPCs with a valuation of Rs 500 crore or employing more than 200 employees.
  • An incubation program would be initiated to provide start-ups with adequate mentoring, seed fund, R&D and testing facilities and marketing support. Rs. 500 crores would be set aside by the Government to support innovation and research in institutes of higher learning, with the objective to support industry-academia research. 20 dedicated challenge grants would be initiated to encourage the industry to tackle issues related to pressing societal needs such as sanitation and healthcare.
  • A centre of excellence would be set up to specifically promote design and development of software products. The Policy envisions the creation of an “upgradable” infrastructure to help software product start-ups to identify and tackle cyber vulnerabilities.

(d) Human Resource Development:

Skilling and Human Resource Development

  • For catering to large scale requirement of trained manpower in futuristic technologies, a FutureSkills programme has been initiated for upskilling/re-skilling of 3 million IT Professionals in emerging technologies.
  • creating a talent pool of 1 million IT professionals with competencies required for IP driven software products, a special emphasis on modules related to software products will be added into the programme.

A national “Talent Accelerator” programme targeting, 100,000 school and college students, will be initiated for motivating young talent for software product development.

A talent pool of 10,000 committed software product leaders will be created that can meet the distinct skill set requirement for the sector to move up the value chain for developing technology and intellectual capital for product industry and will be suitably interlinked with the mentor pool for software products incubators and clusters.

(e) Improving Access to Domestic Market and Cross Border Trade Promotion:

  • The registry of Indian software products to be set up in terms of the Policy will be integrated with Government e-market (GeM) and will also provide necessary handholding for marketing support
  • Indian Product Startups / MSMEs will be encouraged to develop solutions for Smart Cities, healthcare, agriculture, e-learning, transport, fin-tech and addressing social challenges, such as, bridging digital divide, gender inequality, empowering the less privileged citizens and divyangjans.
  • Implementation of open APIs will be proactively promoted both for public and private sector to foster incremental innovation and to encourage inter-operability in Indian software products ecosystem.
    • Integrating Indian software products in India’s foreign aid programmes.
    • Providing opportunities and access under the various market development assistance programmes to showcase innovative products and solutions in important events, exhibitions, trade fairs etc.
    • Setting-up of specialized infrastructure in India and abroad for Software Product development so as to enhance presence of Indian Innovation in global markets.

In all the Software Products Policy is intended to take India into the next level in the technology space.