In a big boost to the domestic software products industry, which has a significant presence of technology startups, the Union Cabinet has approved the National Policy on Software Products, which envisages the creation of a separate Rs 5,000 crore fund and support for creation of Intellectual Property (IP).
The key objectives of this policy will be to promote the software product industry, which is driven by IP, with an aim towards a 10-fold increase in India's share of the global software product market by 2025.
To incentivise this segment, the policy also provides for a dedicated Software Product Development Fund (SPDF) with a corpus of Rs 5,000 crore, in the form of fund of funds with industry participation.
There will also be a programme to promote R&D and innovation for developing software products that are solving societal challenges. The programme, with a budget outlay of Rs 500 crore, will provide financial support to MSMEs and will have matching contribution from government and industry.
Welcoming the initiative of the government, iSPIRT, a non-profit think tank focused on software products segment in India, said, it has been pursuing with the government of India on a policy to boost product eco-system and bring "product" focus to its IT industry which today is primarily a "service" driven industry.
The software products industry is relatively of a smaller size when compared to the IT services segment. The revenues of the India’s software product industry comprise around $7.1 billion, of which $2.3 billion are software product exports. In contrast, IT services' revenue stood at $86 billion for FY18, of which $69 billion was exports, according to Nasscom.
The new policy estimates that the software products industry will grow at a compounded annual growth rate (CAGR) of around 40 percent to touch a size of $70-80 billion with a potential to generate total employment of 3.5 million jobs by 2025.
To achieve this target, the policy aims to nurture 10,000 technology startups in the software product industry, including 1,000 such technology startups in Tier II and III towns and cities. It will provide infrastructure, incubation, R&D, testing, and mentoring support by developing industry-linked clusters in 20 sectors.
“It was a commitment of Prime Minister Narendra Modi’s government to develop India as a software product nation, and this policy will guide India in that direction,” according to a statement.
According to iSPIRT, what was created with ''startupIndia policy' acted as a seed, the new policy will act as a fertiliser for startups in software product. "This is a well drafted policy that truly offers a 360 degree approach towards developing India's potential to be a global software product hub," said, Nakul Saxena, Director - Policy.