National Policy on Software Products, 2019

Reading time: 8-10 minutes.

A national policy on Software products was passed by the Union Cabinet, chaired by Prime Minister Narendra Modi in 2019. It is implemented by the Ministry of Electronics and Information Technology. The government had allotted a fund of Rs. 1, 500 crore for a period of 7 years and aimed to create employment of 3.5 million by 2025.

The Covid-19 pandemic brought a halt to India’s economy. After the lockdown the officials of MietY are ready to revamp the economy. They intend to propose a 5000 crore detailed use to the finance ministry for the Software Product Development Fund (SPDF) and deploy those into daughter funds. The ministry aims to invest funds from its home capital leading India on its way to become “Atma-Nirbhar”. These daughter funds will in turn invest in the software products startup.

Salient features of the policy

  1. Indian software registry – to protect their innovation using intellectual property
  2. Single window platform – address concerns over policy
  3. Tax incentive – set off tax on the investment made in Research and development.
  4. Government procurement – a way to include these start-up in government area and create a market
  5. Encouraging Entrepreneurship – introducing incubator for at least 10000 product startup, setting a fund of 1, 000 crore, an outlet of Rs. 500 crore to support software educational bodies, setting up a sector to promote design and development.
  6. Creating 3 million skilled people – in collaboration with over 1, 000 educational institutions.

How/why was it introduced?

Looking at the talent we have in India and the massive strides on the digitalization we have made in the past 5 years the current figures which show that the IT industry contributes to the National GDP of the country, have a potential to increase many folds. The National policy on Software Product shoves India to develop and progress from services to products. Such that the IT product become an equitable partners in the revamping IT economy. It is not that without introducing the policy there would have been no product based IT industry but by introducing the policy it will accelerate the growth with more precision and labor. The policy aims at providing both the money and opportunities to private startup.

Developments around it

  1. The share of the Indian company in the global software product market will increase thereby helping increase exports growth.
  2. Motivating entrepreneur to develop software products will be a big boost to the start-up eco-system in the country and may go a long way in tackling the brain drain issue which India faces.
  3. It is hoped that the general condition of the software and IT infrastructure in India improves thereby making networks across the country more secure.

Relevant legal provisions

Often India, referred to as an IT superpower but that’s not true. There are much more forceful and majestic IT nations out there. India is a country which is at best the software outsourcing economy. We are not product oriented rather we are simply outsourcing by coding a western country design.  The policy will nurture new and innovative design. This shift aims that the Intellectual property remains in India. According to NASSCOM’s Strategic Review 2019 the growth in the domain product of IT industry was largest in 2019.There is a need for protecting innovative pieces and ideas with relevant tools.

The Intellectual Property regime is one such tool which aim at protecting these software’s.

  1. Copyright Law: This covers the artistic, literary and dramatic work which are unique and original. The software’s fall under the literary work making them copyrightable. For the piracy of software, which is an original work of intellect the offender is liable to pay punitive as well as compensatory damages.
  2. Patent law: The software is per se not patentable but if there are other things like ‘ancillary to’ or ‘developed thereon’ the computer programme is patentable. A profusion of cases show that patents are granted if the covers the part of technical effect.

Probable way forward

  1. India being a service oriented country contributes little by way of software products. It is rather a software importer nation. This policy aims to make India self-reliant and rather contribute to the export of software services. If we look at the banking market, it comprises of services. The services have led to the success of banking products. Which means basically that the productization of services. It’s not about growing only but also protecting the services from external shark companies from acquiring us.
  2. The formulation of National Software Products Mission will monitor the whole policy and ensure that corrective measures are taken. This will help in revolutionize the sector.
  3. The Ministry of Corporate Affairs should look into creating market access to the startups via this policy because that is what they lack. The ecosystem of small startups with Research and Development funding in Artificial Intelligence and ML will create a pool of many startups. This ecosystem can leave a trail for other larger startups outside the ecosystem of software products to follow. This example can henceforth be extend to other start up arenas as well.


The vision in the policy is very clear to provide incentive to software sector startups which will create an ecosystem of startups who could collaborate together to formulate bigger products. It seems to be a part of “Make in India” movement aiming to increase employment and make India sustainable. It brings along with it mentoring and other market access too.  The government however should keep in mind that the It sector and Cyber industry are dynamic in nature. They are never static and are in a constant state of flux and therefore amends the policy from time to time keeping such changes in mind. Also, the legal protection provided by law also faces many loopholes like not covering non-literal works such as design, structure, and composition. By the time the creator gets the relief he has only incurred losses. The stealing and misuse of software products constantly reminds us that with more and more startups establishing there is a need to provide a sense of security by providing legal protection.

The main concern is that this policy aims to create 10, 00, 000 skilled IT professionals and 1, 000 leaders. With a similar aim UPA government in its previous policy aimed to create 5, 00, 000 cyber security professionals and even after the passage of more than 10 years it has not been able to create even 1000 professionals.

At the end it is important to have a policy which is implementable in reality and not just papers. It should be stable to the disruptions generally faced by the new startups. This will enable to create directly and indirectly job opportunities by creating a software hub under the Digital India Program.

Author: Aarcha Gupta from Symbiosis International (Deemed University).

Editor: Silky Mittal, Junior Editor, Lexlife India.

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