Navigate India’s STP and EHTP Frameworks: Benefits and Registration Process

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India’s Software Technology Parks (STP) and Electronic Hardware Technology Parks (EHTP) schemes play a central role in boosting export-driven growth in the software and electronics sectors. By offering fiscal incentives and a streamlined regulatory environment, these schemes help businesses scale competitive, innovation-led operations.

India’s Software Technology Parks (STP) and Electronic Hardware Technology Parks (EHTP) schemes have long served as catalysts for export-oriented growth in the country’s technology sector. STP and EHTP are administered by the Software Technology Parks of India (STPI), an autonomous society under the Ministry of Electronics and Information Technology (MeitY).

The STP and EHTP frameworks offer fiscal incentives, streamlined compliance procedures, and access to dedicated infrastructure, enabling enterprises to set up and scale export-focused units more efficiently. Over the years, they have continued to attract both domestic startups and global technology firms seeking to capitalize on India’s engineering capabilities, cost-competitive production environment, and evolving innovation-friendly policy landscape.

Overview of the STP and EHTP Schemes

STP Scheme

India’s STP Scheme, launched in 1991, is exclusively focused on the development and export of computer software and IT-enabled services (ITES).

Companies registered under the STP Scheme may operate from STPI-managed technology parks or from their own private premises that are formally approved as STP units. All export-related activities are monitored and facilitated by the STPI, ensuring operational ease and compliance transparency.

EHTP Scheme

The EHTP Scheme complements the STP framework by supporting the manufacture and export of electronic hardware, components, and embedded system products. Like STP units, EHTP units gain access to customs duty exemptions, import facilitation, and streamlined approval processes. However, while STP units focus on software and services, EHTP units are oriented toward product-centric manufacturing, often integrating design, research and development (R&D), and prototyping capabilities.

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Eligibility and benefits

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A wide range of business entities, such as a proprietorship, partnership, limited liability partnership (LLP), private limited company, or foreign subsidiary, can apply to register under the STP and EHTP schemes. The firm, however, must be engaged in the following activities:

  • Software development, IT-enabled services, or Software as a Service (SaaS) exports (for STP units)
  • Manufacture or design of electronic hardware, components, or embedded systems (for EHTP units)
Key Benefits

Incentive

Description

Duty-free imports

Import of capital goods, raw materials, and software free of customs duty.

100 percent FDI allowed

Foreign investors can hold full ownership under the automatic route.

Single window clearance

All approvals, including customs bonding, are processed through the STPI

Goods and services tax (GST) and excise benefits

Exemption from GST on imports and exports under specified conditions.

Green card facility

Priority customs clearance for STP/EHTP units.

Repatriation flexibility

100 percent of foreign exchange earnings can be retained in Exchange Earners Foreign Currency (EEFC) account.

Registration and approval procedure

The registration process under the STP and EHTP schemes involves three main stages, i.e., application submission, evaluation and approval, and customs bonding.

Stage 1: Application submission

Applicants must submit a complete proposal to the concerned STPI director (based on the region or city of operation). The process can be initiated through the STPI online application portal or by filing physical forms as per the prescribed format.

The application must be accompanied by the following documents and supporting details:

  1. The application form must be duly completed in the prescribed format.
  2. Project report, including:
    • Company profile and promoters’ background
    • Details of proposed business activity and export projections
    • Estimated foreign exchange earnings and outgo
    • Infrastructure and manpower requirements
  3. Company incorporation documents such as the Certificate of Incorporation and the Memorandum & Articles of Association.
  4. Company board resolution or authorization for signing the application.
  5. Import-Export Code (IEC) issued by the Directorate General of Foreign Trade (DGFT).
  6. Lease deed or ownership proof of the premises proposed for operations.
  7. List of capital goods intended to be imported or procured locally.

Upon submission, the STPI office issues an acknowledgement and assigns a unique application number for tracking the status of the proposal.

Stage 2: Evaluation and approval

Once the application is submitted, it is examined by the director of STPI. During this process, the STPI may request additional clarifications or invite the applicant to present the project proposal. The evaluation primarily focuses on:

  • Export potential and foreign exchange earnings
  • Technical and financial soundness
  • Background of promoters
  • Employment generation and innovation potential

If the proposal meets the eligibility criteria, the Director issues a Letter of Permission (LoP), which serves as the primary approval to operate under the STP/EHTP Scheme. The LoP typically includes:

  • Details of approved activities
  • Location and validity (usually three years, renewable)
  • Conditions relating to customs bonding, net foreign exchange, and reporting obligations

Stage 3: Customs bonding and operationalization

Following receipt of the LoP, the unit must complete customs-related procedures to be recognized as a bonded premises under Section 58 of the Customs Act, 1962, enabling duty-free import of capital goods and inputs. 

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This involves:

  1. Executing a Legal Undertaking (LUT) with the jurisdictional Development Commissioner or STPI authority.
  2. Obtaining private bonded warehouse status from the Customs Department.
  3. Installing physical security and monitoring measures (CCTV, access control) and maintaining stock registers.
  4. Undergoing inspection by STPI and customs officials.

Once the customs bonding and verification process is completed, the STPI issues a Green Card, an official recognition of the unit’s operational status under the STP/EHTP Scheme.

Post-approval compliance and reporting

Once registered, STP and EHTP units are required to maintain ongoing compliance throughout their operational cycle. Key obligations include:

  • Submission of quarterly and annual performance reports to STPI detailing exports, imports, and employment.
  • Maintenance of bonded inventory records and facilitation of periodic customs audits and reconciliations.
  • Renewal of LoP upon expiry, subject to satisfactory performance and adherence to compliance.

In addition, all units must achieve positive Net Foreign Exchange (NFE) within the first five years of operation. NFE is calculated as:

NFE = Foreign exchange earned — Foreign exchange spent

Failure to meet NFE norms may result in withdrawal of incentives or potential exit from the STP/EHTP scheme.

Exit and de-bonding procedure

A unit may exit or debond voluntarily after fulfilling its export obligations and settling dues. The procedure involves:

  • Submission of a de-bonding application to STPI.
  • Inspection and certification of stock and capital goods by customs.
  • Payment of applicable duties on unutilized or depreciated capital goods.
  • Issuance of a de-bonding certificate, allowing the company to operate as a normal DTA (Domestic Tariff Area) unit.

Strategic advantages for startups and foreign investors

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The STP and EHTP schemes provide a strategic gateway for both domestic startups and international technology companies seeking to integrate into India’s expanding global value chains. For startups, the schemes offer cost-effective infrastructure, reduced operational overheads, and streamlined customs procedures, enabling them to scale export operations more efficiently.

Foreign manufacturers and IT service providers benefit from a simplified regulatory framework that allows the establishment of wholly owned subsidiaries with export-linked incentives. This reduces administrative complexity while providing access to India’s skilled engineering workforce and competitive production environment.

The schemes are particularly well-aligned with emerging high-technology sectors, such as semiconductor design, embedded systems, artificial intelligence software development, and IoT device manufacturing, where R&D intensity and export scalability are essential drivers of growth.

Gateway to India’s export driven digital future

STP and EHTP schemes continue to rank among India’s most business-friendly export facilitation programs, offering fiscal incentives alongside operational autonomy.

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Companies in the software and electronics sectors gain not only financial advantages by registering under these frameworks, but also access to a reliable regulatory environment that supports innovation-driven exports.

As India accelerates its digital transformation and expands its manufacturing capabilities, firms that align with the STP/EHTP ecosystem actively position themselves to participate in the country’s next phase of technology-led global growth.

Key takeaways

  • The STP Scheme supports 100 percent export oriented software development and IT-enabled services.
  • The EHTP Scheme facilitates the manufacture and export of electronic hardware and components.
  • Units approved under these schemes enjoy duty free imports, GST exemptions, and single window clearances.
  • Registration is granted by the Director of STPI through a LOP.
  • Eligible entities include startups, MSMEs, and subsidiaries of foreign companies engaged in software or electronics exports.
  • Units are required to be customs bonded and must maintain positive net foreign exchange earnings over five years.

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