IT and ITeS Policy of Uttar Pradesh, 2022: Incentives, eligibility and implementation

POLICY AT A GLANCE

  

The policy uses the term IT-enabled services, or ITeS, for business processes delivered substantially through information technology. These may include business-process management, customer support, software testing, analytics, remote services, knowledge-process outsourcing and other technology-enabled operations. Eligibility depends on the policy definition and approval by the competent authority rather than merely on a company describing itself as a technology business.

 

What is the IT and ITeS Policy of Uttar Pradesh?

 

It covers new units, qualifying expansion projects and supporting infrastructure. Potentially eligible activities include:

• Software development and maintenance;
• Information technology consulting;
• Business-process and knowledge-process services;
• Call centres and customer-support operations;
• Engineering and design services delivered through technology;
• Data analytics and digital platforms;
• Cybersecurity and information-security services;
• Research and development in information technology;
• Emerging-technology operations;
• IT parks and IT cities;
• Centres of Excellence;
• Other IT and ITeS activities accepted under the policy.

The policy should not be treated as the governing framework for every technology-related investment. Dedicated data-centre projects are covered principally by the Uttar Pradesh Data Centre Policy, while qualifying Global Capability Centres may fall under the Uttar Pradesh GCC Policy, 2024. A company must identify the correct policy before calculating incentives.

 

Why was the policy introduced?

Uttar Pradesh has a substantial pool of graduates, engineering institutions, management institutes and workers who can support software and technology-enabled services. However, much of the established IT and ITeS activity has historically been concentrated in Noida, Greater Noida and neighbouring parts of the National Capital Region.

 

The policy seeks to retain the state’s position in these established locations while encouraging investment in Lucknow, Kanpur, Prayagraj, Agra, Varanasi, Gorakhpur, Meerut and other cities.

 

Its broader rationale includes:

• Creating skilled employment;
• Attracting domestic and international technology companies;
• Developing IT infrastructure beyond the National Capital Region;
• Reducing operating costs for new units;
• Supporting research in emerging technologies;
• Improving collaboration between industry and educational institutions;
• Encouraging companies to recruit graduates from Uttar Pradesh;
• Supporting work-from-home employment located within the state;
• Developing IT parks, IT cities and Centres of Excellence.

The policy’s expected investment and employment effects are objectives. They should not be presented as realised outcomes unless supported by project-level official data.

 

Who is eligible?

Both new and eligible expansion units may apply.

 

A new IT or ITeS unit requires a minimum fixed capital investment of Rs 2 crore to enter the policy framework. However, the principal capital subsidy is available only where eligible fixed capital investment is at least Rs 5 crore.

 

Fixed capital investment generally refers to approved expenditure on long-term assets used for the project. Depending on the implementation decision, this may include:

• Buildings or fit-outs;
• Computer hardware;
• Networking and communications equipment;
• Servers and technical systems;
• Plant and machinery;
• Electrical and power-support systems;
• Other approved fixed assets.

Working capital, routine salaries and recurring business expenses are not fixed capital investment. Certain operating expenses are addressed separately through the operating-expense subsidy.

 

An expansion unit must make at least Rs 2 crore of incremental fixed capital investment that qualifies under the policy. Employment-linked benefits for an expansion are calculated only on the incremental workforce above the unit’s pre-expansion baseline.

 

What capital subsidy is available?

An eligible new IT or ITeS unit may receive a capital subsidy equal to 10 per cent of eligible fixed capital investment, capped at Rs 50 crore.

 

The project must have minimum eligible fixed capital investment of Rs 5 crore. The subsidy is disbursed in annual instalments over five years after commercial operations begin. Each annual instalment cannot exceed Rs 10 crore.

 

An eligible expansion unit may also receive 10 per cent of its incremental fixed capital investment, subject to the same maximum subsidy of Rs 50 crore.

 

The rate should not be applied automatically to the total amount mentioned in a project report. The competent authority must first determine which assets constitute eligible fixed capital investment. Applicants should verify the treatment of:

• Land;
• Office interiors;
• Leased equipment;
• Imported equipment;
• Taxes and duties;
• Used assets;
• Capitalised software;
• Expenditure incurred before the eligibility date;
• Assets receiving support under another scheme.

 What operating-expense subsidy is available?

The policy provides a subsidy equal to 10 per cent of eligible operating expenses.

 

The eligible cost categories include:

• Lease rentals;
• Bandwidth expenses;
• Data-centre or cloud-service costs;
• Power charges.

 

The current Invest UP sector page describes support for five years with a ceiling of up to Rs 20 crore a year. The shorter policy-summary page refers to a maximum of Rs 20 crore without reproducing the full annual wording. Applicants should therefore use the sanctioned terms in their Letter of Comfort and the operative implementation procedure when calculating the claim.

 

The operating subsidy is reimbursement-based. A unit must ordinarily submit invoices, payment evidence, tax records and proof that the expense relates directly to the approved Uttar Pradesh operation.

 

A company cannot assume that all rent, power or cloud expenditure incurred across India or overseas is eligible. The expenditure must be attributable to the approved unit and fall within the sanctioned period.

 

What land rebate is available?

Eligible IT and ITeS units may receive a rebate equal to 25 per cent of the qualifying land cost, capped at Rs 50 crore.

 

 

The required employment must continue for at least one year.

 

Where land is allotted by a state agency, the actual allotment price paid—excluding stamp duty and registration charges—is considered. For private land, the eligible cost is the lower of the prevailing circle rate and actual purchase price.

 

The benefit therefore cannot be calculated solely on the price agreed between private parties. It also depends on location, approved acreage and sustained employment.

 

Is stamp duty exempt?

The policy provides 100 per cent exemption from stamp duty on the purchase or lease of qualifying:

• Land;
• Office space;
• Buildings used for IT or ITeS operations.

The unit must commence operations within the policy’s prescribed implementation period.

 

The exemption is a front-end benefit and normally requires an eligibility or exemption certificate before the document is registered. A company that pays full stamp duty without following the prescribed process should not assume that reimbursement will automatically be available later.

 

The state subsequently issued a government order concerning stamp-duty exemption under the policy.

 

What interest subsidy is available?

An eligible unit may receive interest subsidy at 7 per cent annually, or the actual interest paid, whichever is lower.

 

The benefit applies to eligible term loans obtained from scheduled banks or recognised financial institutions. It is capped at:

• Rs 1 crore per unit per year;
• Five years from commencement of commercial operations.

The subsidy does not reimburse the principal component of the loan. It also does not cover every form of borrowing. Applicants must verify whether the loan, lender, asset and interest-payment period satisfy the implementation conditions.

 

What employment incentives are provided?

Employees’ Provident Fund reimbursement

The policy provides reimbursement of the employer-linked Employees’ Provident Fund amount for qualifying IT and ITeS professionals who:

• Are domiciled in Uttar Pradesh;
• Remain continuously employed for at least one year;
• Work in the approved unit or through an eligible work-from-home arrangement within Uttar Pradesh;
• Belong to one of the specified employee categories.

The eligible categories are women, Scheduled Caste, Scheduled Tribe, transgender and persons with disabilities.

 

Reimbursement is capped at:

• Rs 2,000 per employee per month;
• Rs 1 crore per unit per year;
• Five years after commercial operations begin.

The headline description of “100 per cent Employees’ Provident Fund reimbursement” must therefore be read with the employee-category, domicile, continuity and monetary ceilings.

 

Recruitment assistance

Eligible units outside Gautam Buddha Nagar and Ghaziabad may receive Rs 20,000 per qualifying employee.

 

The conditions include:

• Annual recruitment of at least 30 students;
• The employee must be entering a first job;
• The employee must be a Uttar Pradesh domicile holder;
• The employee must have studied at a Uttar Pradesh-based college;
• The employee must remain deployed at a unit in Uttar Pradesh for at least one year.

The assistance may be claimed for five years from commencement of operations.

 

This benefit is intended to connect local educational institutions with technology employers. It is not a general payment for every person recruited by the company.

 

Work from home

The policy recognises eligible employees working from home or another premises within Uttar Pradesh for employment-linked benefits.

 

A unit may claim Employees’ Provident Fund reimbursement and other qualifying employment assistance for these workers, provided the employee, domicile, location and continuity requirements are satisfied.

 

This provision is significant for distributed service operations, but it does not cover employees working outside Uttar Pradesh merely because the employer’s registered office is in the state.

 

What certification and patent support is available?

An eligible unit may receive reimbursement for up to three approved quality or information technology certifications, subject to a combined ceiling of Rs 25 lakh per unit.

 

Recognised examples include:

• Capability Maturity Model Level 2 and above;
• ISO 27001 for information security;
• ISO 20000 for service management;
• Customer Operations Performance Center certification;
• eSourcing Capability Model certification.

Other sector-relevant certifications may be included with approval from the Empowered Committee.

 

For patents awarded to a unit in Uttar Pradesh, the policy provides reimbursement of up to:

• Rs 5 lakh for domestic patents;
• Rs 10 lakh for international patents.

The reimbursement is linked to actual filing costs and awarded patents. Filing an application without obtaining the patent does not automatically establish eligibility.

 

What support is available for research and skills?

The official IT-sector page lists reimbursement of 50 per cent of eligible research and development expenditure, capped at Rs 5 crore.

 

The policy also supports skill development in emerging technologies. The official summary provides reimbursement of 50 per cent of the course fee, capped at Rs 50,000 per candidate, subject to recognition of the course, institution and beneficiary.

 

These measures are intended to support fields such as artificial intelligence, cybersecurity, analytics and other emerging technologies accepted by the competent authority. Companies should verify whether a proposed internal training programme qualifies before assuming reimbursement.

 

What incentives are available for IT parks and IT cities?

An IT park must have a minimum floor area of approximately 15,000 square metres. At least 75 per cent of the allocable area should be used for IT activities. It is expected to provide technology infrastructure such as fibre connectivity, broadband, Wi-Fi and video-conferencing facilities.

 

An IT city requires approximately 100–500 acres. The policy envisages an approximate 60:40 division between processing and non-processing areas. Processing areas contain IT, business-process outsourcing and knowledge-process outsourcing units. Non-processing areas may contain housing, public utilities, commercial facilities, education, healthcare and open spaces.

 

The official sector summary lists:

• Capital subsidy of 25 per cent, capped at Rs 20 crore, for an IT park;
• Capital subsidy of 25 per cent, capped at Rs 100 crore, for an IT city.

 

An ordinary office building should not be treated as an IT park merely because technology companies occupy it. The developer must meet the minimum area, allocation, infrastructure and approval conditions.

 

What support is available for Centres of Excellence?

The policy seeks to encourage Centres of Excellence in partnership with recognised academic institutions, industry organisations and technology companies.

 

The official policy summary provides financial assistance equal to 50 per cent of the approved project cost, capped at Rs 10 crore per Centre of Excellence.

 

These centres may support research, testing, skilling, incubation and industry-academic collaboration in emerging technologies. A proposed centre must be appraised and approved; merely setting up a training laboratory does not create an entitlement.

 

How can a company apply?

Uttar Pradesh Electronics Corporation Limited is the nodal agency.

 

The government has created an Online Incentives Management System, integrated with the state’s investment-facilitation architecture, for project applications, approvals and issue of Letters of Comfort.

 

The broad process involves:

• Identifying the eligible IT, ITeS, expansion or infrastructure category;
• Preparing a detailed project report;
• Registering the proposal through the designated online system;
• Submitting incorporation, investment, employment, land and financing documents;
• Undergoing technical and financial appraisal;
• Obtaining approval and a Letter of Comfort;
• Completing statutory approvals and the sanctioned investment;
• Commencing commercial operations within the permitted period;
• Submitting audited claims for the relevant incentives;
• Undergoing verification before disbursement.

Separate approvals may be needed for land use, building plans, fire safety, power, labour registration and pollution-control requirements. The online incentive approval does not replace these statutory permissions.

 

Implementation and progress

The policy remains listed by Invest UP and the Department of IT and Electronics. The state’s Online Incentives Management System is reported to be operational for applications and Letters of Comfort.

 

Official sector information reported around 300 Software Technology Parks of India-registered units, employment of nearly 3.55 lakh people in the IT and ITeS sector and more than 40 Global Capability Centres in Uttar Pradesh. These are sector-wide figures and should not be attributed solely to this policy.

 

The state also reports upcoming Software Technology Parks of India facilities in Varanasi, Bareilly, Panki in Kanpur and Gorakhpur, and a proposed artificial intelligence city in Lucknow. The artificial intelligence city is currently described as a planned project; it should not be presented as an operational IT city.

 

Consolidated official data were not identified on:

• Policy applications received;
• Letters of Comfort issued;
• Capital subsidy sanctioned or disbursed;
• Operating-expense subsidy paid;
• Employment incentives claimed;
• IT parks or IT cities completed under the policy;
• Investment realised specifically under approved projects.

 

Key challenges and practical takeaways

The policy offers a broad combination of capital, operating, land and employment support, but most benefits depend on post-investment verification.

 

Businesses should pay particular attention to:

• The difference between the Rs 2 crore basic eligibility threshold and the Rs 5 crore capital-subsidy threshold;
• The definition of eligible fixed capital investment;
• The operating-expense claim period and ceiling;
• Employment-density requirements for land rebate;
• Employee domicile and category requirements;
• Exclusion of Gautam Buddha Nagar and Ghaziabad from recruitment assistance;
• Baseline employment for expansion units;
• Timely commencement of commercial operations;
• Restrictions on duplicate assistance under another policy.

 

The company should obtain a formal Letter of Comfort before relying on the incentives in its financing model.

 

FAQs

What is the main capital subsidy?

Eligible units may receive 10 per cent of fixed capital investment, capped at Rs 50 crore.

 

What is the minimum investment?

Yes. A qualifying expansion requires at least Rs 2 crore of incremental fixed capital investment.

 

Which agency implements the policy?

Uttar Pradesh Electronics Corporation Limited is the nodal agency.

 

Conclusion

The IT and ITeS Policy of Uttar Pradesh, 2022 combines capital assistance with support for operating costs, land, financing, employment, research, skills and technology infrastructure.

 

Its principal unit-level benefit is a capital subsidy of 10 per cent of eligible fixed capital investment, capped at Rs 50 crore. It also provides operating-expense assistance, land rebate, stamp-duty exemption, interest subsidy and targeted employment incentives.

 

The policy’s effectiveness should be assessed through projects beginning commercial operations, incentives actually disbursed, employment sustained outside established National Capital Region clusters and IT parks or cities completed. Policy announcements, proposed projects and sector-wide employment figures should remain clearly distinguished from outcomes directly attributable to approved units.

 

Sources

• IT and ITeS Policy of Uttar Pradesh, 2022, Department of IT and Electronics, Government of Uttar Pradesh; November 18, 2022.
• IT and ITeS Policy of Uttar Pradesh, 2022 — policy and government-order page, Invest UP, Government of Uttar Pradesh.
• IT and ITeS Sector, Invest UP, Government of Uttar Pradesh.
• IT and ITeS Policy, 2022, Uttar Pradesh Electronics Corporation Limited.
• Policies and Government Orders, Invest UP, Government of Uttar Pradesh.