IT SEZ Updates: 29/05/09

 

UNITS IN IT SEZ HAVE NO BASIC AMENITIES YET
Santosh Patnaik, Visakhapatnam
The Hindu

Even after two years of its establishment, the units at Rushikonda IT Special Economic Zone are devoid of basic amenities like regular power, public transport and drinking water supply.

Though the APIIC got a shot in the arm when the protesting units agreed to adhere to the SEZ norms by surrendering their outright land purchase agreements and converting them into lease, the units, which include Symbiosys and Kennexa, now in operation, are trying to convince all those who matter to get basic facilities. Compared to other IT SEZs in the country, the much-hyped facility at the picturesque Rushikonda developed on two hillocks are not even having minimum required facilities.

“It’s an irony that the government, at the time of issuing the gazette notification had pledged to make it a world-class IT hub,” regrets a first generation investor.

The Visakhapatnam IT Association, which is running from pillar to post to make the SEZ a leading hub for IT and IT- enabled services, wants constitution of a ‘city infrastructure promotion committee’, comprising the Collector, DC, VSEZ, STPI, APIIC, APSRTC, EPDCL, GVMC, VITA and the VUDA, for coordinating activities and moving towards the common objective of showcasing Vizag as a gateway to South East Asia. It also wants allocation of marketing budgets for the same. IT entrepreneurs feel that the Visakhapatnam airport should be connected to international destinations by launching services to Singapore, Dubai, Colombo, London and other places. VITA secretary Shyam Kumar Kolluru said that the government should declare Duvvada to Anandapuram as IT Corridor.

IT SEZ Updates: 28/05/09

 

TATAS TO RAISE $1 BILLION FOR REALTY ARM
Mumbai
The Economic Times  Mint  The Times of India (Mumbai edition)  

Tata Sons plans to raise $1 billion from overseas investors by December 2009 for its real estate arm Tata Realty and Infrastructure (TRIL). Kishore Saletore, chief financial officer, TRIL, said,“We are in talks with overseas investors and we would be raising $1 billion for realty and infrastructure projects. TRIL plans to develop infrastructure and real estate projects of around Rs 20,000 crore within three years.”

Though the company officials refused to share any details about any specific land parcel of the group company that is being considered for any project. However, a senior official hinted that a project in Mumbai might come up soon as “Mumbai has always been special to the Tata group.” TRIL is also developing a 25 acre IT/ITES SEZ at Chennai whose cost is around Rs 3,800 crore.

 

 

AUDIT OF MEGA PROJECTS, IT PARK ON
Chandigarh
The Tribune

The controversial mega projects and the Rajiv Gandhi Chandigarh Technology Park continue to be under the scanner of the Ministry of Home Affairs (MHA).

A team of the MHA, headed by Sanjeev Mishra, chief controller of accounts and deputy secretary, is continuing with the special audit for the allotment of land to the IT Park projects and the status of other mega projects - Medi City, Film City and Theme-cum-Amusement Park.

Complying with the April 1 MHA directive, the Chandigarh administration had transferred the records of various projects to the team for the audit. The mega projects, which are currently under the CVC scanner, had already generated a lot of dust for alleged irregularities in the allotment of the land to them and IT firms in the IT Park.

The audit involves issues of inadequate compensation to farmers on land acquisition, complaints about exemption, violations where land was sold to private buyers or companies with reference to prevailing rules, allotment of land to IT Park projects and the status of the mega projects.

The April 1 directive had asked the administration to put on hold further land acquisitions under the Land Acquisition Act.

 

 

LAND PROBLEMS NOT TO MAR BENGAL IT SECTOR PROSPECTS
Kolkata
Business Standard

Despite the slowdown and the poll debacle state IT minister is still upbeat about attracting investments in the IT sector.

Realty major DLF, after pulling out from the Rs 33,00 crore Dankuni township project, has sought denotification of the IT/ITeS SEZ it proposed to build on 25.89 acres in Rajarhat on the northern fringes of Kolkata. Infosys and Wipro are yet to get possession of land sought for its IT SEZ. The Rajarhat SEZ was notified on June 23, 2008.

One of the main reason as mentioned in the website of BoA for de-notification of the (Rajarhat) SEZ was slowdown in the economy and liquidity crunch in the overall industry. Debesh Das, state IT minister however was confident about attracting investments this year. Speaking on the sidelines of an interactive seminar organised by the Indian Chamber of Commerce, Das said, “Many big IT players are still interested to come to Bengal, all the IT projects will happen. No one has formally decided to pull out.”

Till date no IT projects have been stalled because of land issue. “We have every intention to give land to Infosys Wipro, ICICI, all who have approached us. It will take some time though,” he pointed out. He, however, failed to mention any timeline.

It is to be noted that the state had signed back-to-back MoUs with Infosys and Wipro and promised both companies 90 acres each at Vedic Village in April last year. But land was yet to be allotted to both the companies.

“However, the growth in employment in the IT sector this year would be a bit slackened by the current downturn, it might be less than 30 percent,” the minister added. In total 30 IT companies have come to Bengal this year till date, mainly export oriented.

The Rs 6 crore venture fund launched by the State IT department in 2007, might be raised by another Rs 2 crore or more this year.

 

 

STATE INVITES FRESH EOIS FOR JAGDISHPUR
Kolkata
The Economic Times (Kolkata edition)

The West Bengal government has invited fresh expressions of interest (EoI) from Indian and overseas developers for the proposed Rs 1,500-crore IT hub in Jagdishpur, some 15 km from Kolkata airport.

The state’s decision comes after Forum-ETA — a consortium of Rahul Saraf’s Forum Projects and Dubai-based Emirates Trading Agency — backed out of the project due to inordinate delays in acquiring the necessary 336 acres.

Talking to reporters here on Wednesday on the sidelines of a conference organised by Indian Chamber of Commerce, state IT minister Debesh Das said: “We have just invited fresh EoIs for the Jagadishpur IT hub. Webel will vet the EoIs and finalise the partner.”

Though the state government had issued the land acquisition notice for the Rs 1,500-crore project in September 2008, there has hardly been any progress.

It is still not clear whether, in the coming months, the Left Front government at all will pursue land acquisition, which has been identified as the principal reason behind the CPM’s unprecedented drubbing in the just concluded Lok Sabha polls.

IT SEZ Updates: 27/05/09

 

DLF, MUNDRA SEZ PLANS TO BE REVIEWED
New Delhi
The Economic Times  The Financial Express  The Hindu  

The board of approval for special economic zones (SEZs) is scheduled to meet on June 2 to take up a host of cases, including Adani group’s proposal to double its power generation capacity at Mundra port SEZ in Gujarat, DLF’s proposal to de-notify four of its SEZs and several proposals to set up SEZs.

As per the agenda, 21 requests for extension of validity of formal approvals made by companies—including NIIT, HCL, L&T and Orientcraft, which had been considered and granted extension for one year while the BoA was not meeting— would be considered for formal clearance. The BoA will take up 19 proposals for setting up SEZs, three of them fresh and sixteen of them deferred in earlier meetings.

Besides these, proposals related to requests for authorised operations and appointment of co-developers will also be taken up.

IT Real Estate Update: 26/05/09

 

STPI WITHDRAWAL MAY HIT INFOSYS, WIPRO NET PROFIT
Bangalore
The Economic Times (Delhi edition)

Top Indian software exporters—Infosys and Wipro—have cautioned investors about a potential impact on their profitability because of higher tax rates, as the country’s over $40 billion IT industry prepares to cope with removal of tax holiday under the Software Technology Parks of India (STPI) scheme due to expire in March 2010.

“Our net income would decrease if the government of India imposes additional taxes or withdraws or reduces tax benefits or other incentives,” India’s third-biggest software company, Wipro, said in a recent regulatory filing with the US Securities and Exchange Commission (SEC). Indian exporters have made significant tax savings under the STPI scheme during past few years.

For instance, these tax incentives resulted in a decrease in Infosys’ income tax expense to the extent of $325 million and $282 million for fiscal 2009 and 2008, respectively.

“Certain of our STP units have already completed the tax holiday period and for the remaining STP units the tax holiday will expire by fiscal 2010,” Infosys said in its regulatory filing with SEC.

“In the event that the Government of India or the government of another country changes its tax policies in a manner that is adverse to us, our tax expense may materially increase, reducing our profitability,” Infosys added.

Experts such as Partha Iyengar, head of research at Gartner India say any ambiguity around extension of STPI scheme could impact India’s attractiveness as an outsourcing destination.

“STPI is an important and critical issue to be addressed; hopefully the new government will do it soon. They need to rationalise the SEZ scheme and provide more clarity on tax incentives. Many of our customers are not sure if they should move their captive operations to SEZs because of lack of clarity,” he said.

The Special Economic Zone (SEZ) policy of the government provides five year tax holiday for the IT units, followed by gradual taxation after the fifth year. “There have been demands to impose strict conditions which need to be complied with before an economic zone developed by a private entity is designated as special economic zone. If such regulations or conditions are imposed it would adversely impact our ability to set up new units in such designated special economic zones and avail ourselves of tax benefits,” Wipro added in its SEC filing.

 

SMART CITY: TECOM DEMANDS ILLOGICAL, SAYS SARMA
Kochi
The Pioneer

The prospects of the materialization of the Rs 15-billion Smart City Kochi IT park project became bleaker with more adverse statements coming from the Kerala Government, facilitator and joint venture partner, against Tecom (Technology and Media Free Zone), Dubai-based promoters.

Even as the Tecom authorities stood irked by the Government’s earlier statements, Registrations Minister and chairman of the Smart City Kochi company fired another salvo against the Dubai firm by saying that he suspected it was putting forward newer demands owing to its financial difficulties in the context of the global recession.

Chief Minister VS Achuthanandan had earlier invited flak from the company for making such an allegation. Tecom was remaining firm in its position that it would not do anything to set up the project, envisaged to provide employment to 90,000 in ten years, unless and until freehold right was given to it on 12 percent of the 246-acre project area.

Sarma said on Monday that the Government would in no circumstance consider any demand which was outside the clauses specified in the framework agreement signed with the company for installation of the IT park project. He said nobody should think that the Government could be pushed to a spot through bargaining techniques.

The Minister alleged that the project was getting delayed because Tecom was putting forward newer and unacceptable demands. He said that the demand of freehold over land could be considered but not until the finalization and approval of the master plan of the project.

IT SEZ Updates: 25/05/09

 

AKRUTI CITY ANNOUNCES 900 CRORE INVESTMENT IN CITY
Nilanjana Ghosh Choudhury, May 25, 2009
DNA (Pune edition)

Mumbai-based Akruti City Ltd on Thursday announced that the company would invest Rs 900 crore in different commercial, residential and IT park projects in Pune.

Akruti City Ltd business unit (sales) chief Mayur Shah said that its proximity to Mumbai and being an integral part of the knowledge corridor, Pune was a vibrant place to be in. "Akruti's unique design elements and its eye for detail has found wide acceptance among the discerning people of Pune," he said.

In the residential category, one of their first projects in the city was 'Akruti Countrywoods', which was launched in April this year. Located on Katraj- Kondhwa link road, this is a township project spread over 60 acres.

"Our next project is Akruti Chambers near Swargate. The work on the project has begun in June 2008. It is equipped with all the modern amenities. The next in line is Akruti Sankul, on Tilak Road, the work on which commenced in February last year. With a mechanized car parking, it has shops, office spaces and residential apartments with a total saleable area of 19,304 sq ft. The second phase of the Hinjewadi IT park will be ready by 2011.

SOPS SOUGHT TO AVOID SEZS’ DE-NOTIFICATION
Nayanima Basu, New Delhi, May 25, 2009
Financial Chronicle

With growing requests for de-notification of SEZs by major realty developers, the export promotion council for EoUs and SEZs (EPCES) has urged the government to grant income tax exemption and assign infrastructure status as demanded by the developers to check delays in implementation of these zones.

In a letter to the ministry of commerce and industry, EPCES has urged the government to solve these issues at the earliest to avoid more de-notification requests.

DLF is seeking to surrender four of its SEZs due to the economic downturn and cash crunch. Others such as Reliance and Unitech are seeking extension of deadline beyond the permitted three years.

“The government needs to address some of the issues such as removing the anomaly in section 10 AA, declaring SEZs as infrastructure projects, extending benefits of focused market scheme to exports from SEZs and access to domestic tariff area based on duty forgone basis,” L B Singhal, director general of EPCES, said.

He also said if these long-pending demands were not addressed urgently, there could be further delays in implementing some big SEZs and developers would have no option but to withdraw from the projects. At present, companies such as Infosys, Wipro and Tata Consultancy Services (TCS) that have not floated separate entities to promote units in SEZs do not enjoy 100 percent tax exemption.

Section 10 AA part VII of the Income Tax Act stipulates that profits from an SEZ unit need to be taxed in proportion to the unit's contribution to the company's turnover.

For example, if an SEZ unit exports 50 percent of the company's total turnover, then the exemption on its profit will be calculated on only 50 percent and not 100 percent as per the SEZ Act.