Punjab's upcoming information technology (IT) promotion policy will offer value added tax (VAT) refund on equipment and machinery installed by entrepreneurs, apart from incentives like VAT retention and property tax rebate to them. The IT policy is part of the upcoming industrial policy of the state.

Punjab's principal secretary, IT, A R Talwar said there is not much investment that goes into setting up of new IT units and the focus is more on putting together human resource. Therefore, the state government has thought of these steps to incentivize setting up of new IT companies.

Speaking on the sidelines of the annual IT event jointly organized by Chandigarh administration, Punjab government and CII (northern region( on the theme 'Thinking ahead of the curve through innovation', he said the upcoming IT policy was looking at promotion of both software and hardware components of IT industry in the state.

"Whereas the focus will be on Mohali and Amritsar for software generation, hardware industry will be supported across the state. VAT refund on equipment will be given on products that are bought from within the state," he said.

The policy gives special emphasis on electronics system design and manufacturing (ESDM) sector in view of the fact that India is emerging as a favourable destination for chip design and embedded software and there is immense potential for the same. The new policy for ESDM sector with special package of incentives is aimed at projecting Punjab as a global ESDM hub.

It was in Mohali that an STPI centre was set up in 1998 when IT was still considered a novelty. Exports from Mohali and Chandigarh have gradually picked up and crossed Rs 1,500 crore in 2012, which is a milestone for a Tier-II destination. During the financial year 2010-11, export from this region was Rs 1,565 crore.

Whereas Rajiv Gandhi Chandigarh Technology Park (RGCTP) hit hurdles following controversy over land acquisition and sequent allotment, Punjab has an edge as IT companies don't face any restrictions pertaining to building by-laws as is the case in Chandigarh.