IT SEZ Report: 12/06/09

 

IT HABITAT DEAL ‘SHADY’
Chandigarh
The Tribune

In the backdrop of the prime location of the IT Park in the vicinity of Raj Bhavan, Sukhna Lake and Golf Club, the Chandigarh administration has diverted the IT habitat from its stated goal of constructing 2,500 flats for IT professionals to an elite township for the wealthy, a representation to the central government has stated.

A representation to P Chidambaram, Union Home Minister, by MN Sharma, first chief architect of Chandigarh, Justice SS Sodhi, former Chief Justice of Allahabad High Court, ML Sarin, former advocate-general, Punjab and Haryana, Nek Chand, creator-director of Rock Garden, and Madhu Sarin, author and urban development planner, stated that the administration used its excuse of “lack of specialisation” to justify awarding the project to Parsvnath Developers.

“Though the administration has a specialised agency -- Chandigarh Housing Board (CHB) -- which had constructed over 45,000 units housing over 25 percent of Chandigarh’s population, the administration is on record saying that it does not have the requisite experience to execute such a specialised project to construct about 2,500 residential flats for people working in the park,” the representation stated. Parsvnath later floated the high-end Prideasia on the land meant for the IT habitat.

It noted that the 123-acre habitat was conceived to provide living spaces for IT professionals. This was presented to Parliament as the raison d'etre of the IT habitat as was clear from a report of the parliamentary standing committee on the demand for grants (2007-08) of the Ministry of Home Affairs.

Lisiting various acts of omission and commission of the administration, the representation claimed that in the contractual documents, the administration did not specify that the habitat apartments were being developed and priced in a manner that people working at the IT park would be able to afford them.

“The administration withdrew it to determine the selling price in consultation with the developer by stating during the pre-bid conference on February 7, 2006, that the selling price would be determined by the developer,” it stated.

The representation alleged that while the administration was telling Parliament that this project was for people working at the IT park, it was manipulating project guidelines so that the private developer would be able to maximise his profit by developing an elite housing project for the wealthy.

WORK ON RS 50,000-CRORE NANOCITY PROJECT HALTED
Abhijit Prashar, Chandigarh
The Pioneer

Work on the much-hyped Rs 50,000 crore Nanocity project near Chandigarh has hit a dead-end as Parsvnath Developers, one of the major stakeholders in the project, have developed cold feet and no longer want to work on the project.

In June last year, Parsvnath Developers had taken 38 percent stake in Nano City Haryana Ltd and announced that it would invest Rs 400 crore as equity and debt for the project. The proposed project was to be developed on 11,138 acres of land and was scheduled to be completed in 10 years. But even after three years of negotiations, the project is yet to see the light of day.

In November 2006, HSIIDC and Nanoworks Developers had signed a joint venture to set up the city in Panchkula, just outside Chandigarh. A site for the project was identified and the joint venture announced with much fanfare. Now, three years down the road, the project is yet to have even started with basic acquisitions.

Sources in the industry say that with the receding real estate market, the financial health of Parsvnath Developers had taken a major hit. It is reported that the company’s profit margins have shrunk from Rs 2.5 crore to less than Rs 60 lakh in less than two years. Also, the company’s other major project Pride Asia, in collaboration with Chandigarh Housing Board (CHB) at Rajiv Gandhi Information Technology (IT) Park, is in the midst of a controversy over failure to clear existing dues.

 

IT SEZ Real Estate: 10/06/09

 

TAX SOPS FOR EOUS, STPIS TO STAY TILL 2013
Deepshikha Sikarwar & Amiti Sen, New Delhi
The Economic Times

The forthcoming Union Budget may extend the corporate tax holiday enjoyed by export-oriented units and software parks by three more years, as the government looks forward to clearing the air for companies in these segments reeling under a demand slump in key Western markets.

The sops are valid till March 31, 2010, but the government wants to send out a clear message to the 2,000 export-oriented units (EoU) and 8,000 IT firms operating out of software technology parks of India (STPI) campuses, said a government official on condition of anonymity.

“If the sops are extended on a piece-meal basis, it will not encourage fresh investments in such units. Investors will be interested in infusing funds only if they are assured that the tax exemptions would continue for some time,” he added.

The commerce and industry, and IT ministries are pitching for a three-year extension. The official said there was pressure from the industry, which is reeling under the impact of the global financial slowdown, particularly in countries such as the US, which are India’s major markets.

If the tax holiday is not extended in this Budget, the entities currently enjoying these tax benefits will have to begin provisioning for tax outgo in the current financial year itself.

Various sections within the government do not want these entities to come under further financial pressure, particularly at this juncture when economic recovery in the developed world seems still far away. “At a time when most countries are trying to provide all possible support to their industry, especially the export sector, it does not make sense for us to withdraw a tax sop,” the official said.

The exemptions, given under sections 10(A) and 10(B) of the IT Act, cost the exchequer about Rs 15,974 crore in 2007-08.

The extension of tax holidays to STPIs was contemplated earlier as there are a number of IT special economic zones in the pipeline where the companies could relocate to.

The financial slowdown watered down that argument as many firms shut shop. It was also pointed out that relocation is easier for big IT companies, but not for smaller companies which dominate the sector.

TECHNOPARK TO LAUNCH MEGA IT COMPLEX
Thiruvananthapuram
The Financial Express    

The Technopark here, which boasts of being the country’s first technology park, has finalized plans to launch what park officials claim would be the single largest building complex in the country offering space for IT companies.

The 3-million sq ft building complex will come up on a 25-acre campus at the special economic zone plot adjacent to the existing Technopark campus near here. Technopark CEO Merwin Alexander said 18,000 IT professionals could operate from the complex.

Work on the building, to be completed in three phases, is scheduled to begin in September; and the first phase of construction involving 1 million sq ft is expected to be ready for occupation by July 2011. The first phase will also feature a car-parking facility that can accommodate 1,200 vehicles.

Technopark general manager K V Rajendran said the first phase had an outlay of Rs 240 crore and that talks were on with a consortium of banks to tie up funding for the project. He said Technopark would also go for green certification for the block of buildings.

Technopark officials said the building, conceived by architect Hafeez Contractor in association with its consortium partner Iyer & Mahesh based here, would be an iconic building for Technopark.

Technopark presently has an electricity sub-station for power supply to the new campus and for the adjacent campuses of Infosys and UST Global, while other infrastructure needs including water supply, waste treatment and approach road from the highway are being readied.

Officials said Technopark was also developing the remaining land in the newly acquired 92-acre Phase-III campus, which could be offered on lease to private developers.

BOA TO TAKE UP DLF’S REQUEST FOR METRO LINK
New Delhi
The Financial Express

The Board of Approval (BoA) in the commerce ministry, which will meet on June 17 for the second time within a month, will take up the request of realty major DLF to allow the proposed metro rail to pass through its SEZ in Gurgaon.

The BoA, headed by the commerce secretary, will also consider the application of realty firm K Raheja Universal for de-notification of its IT/ITeS SEZ in Navi Mumabi. The firm has sought to surrender the SEZ citing economic slowdown. The DLF Cyber City Developers has requested the BoA to grant permission to the proposed metro corridor to pass through its SEZ in Gurgoan. “...Since the project is on the advance stage of approval from the Haryana government, they (DLF) have requested to grant permission to pass the proposed metro corridor through Cyber City SEZ,” the BoA agenda said.

IT PARK’S TROUBLES JUST WON’T END
Pradeep Sharma, Chandigarh
The Tribune

Taking note of the disturbing impact of continuing development of the IT park on infrastructure, ecology and farmers, eminent residents, including Nek Chand, creator-director of Rock Garden, have urged the Union Home Ministry to scrap Phase III of the IT park which was “in violation of the city’s master plan”.

In a representation to P Chidambaram, Union Home Minister, MN Sharma, first chief architect of Chandigarh, Justice SS Sodhi, former Chief Justice of Allahabad High Court, ML Sarin, former advocate-general, Punjab and Haryana, and Madhu Sarin, author and urban development planner, questioned the rationale of developing the Phase III when Phases I and II were running several years behind schedule and were yet to function to their potential.

None of the five signatories to the representation have any “vested interest” related to the acquisition of land for Phase III or in any other part of the city. The Tribune had recently highlighted the sorry state of affairs at the IT park.

 

IT SEZ News: 09/06/09

 

ITPL GETS NOD TO BUY BACK BUILT-UP SPACE IN STPI
Moumita Bakshi Chatterjee, New Delhi
 Business Line

The Government has cleared a proposal by Information Technology Park Ltd, Bangalore, to buy back built-up space in its IT Park project, from various STPI clients. The application where Information Technology Park wanted to buy back space from clients in the commercial property was approved by Foreign Investment Promotion Board (FIPB) after the Department of Industrial Policy and Promotion (DIPP) said that such a buyback of space is separate from real estate business (where foreign direct investment is currently prohibited) as the buyer himself had constructed the property.

In doing so, DIPP has also drawn a clear distinction between the latest proposal and an earlier application by Keppel Purvankara Development, which had sought a nod for sale of 1.5 acre unused land back to Puravankara Projects Ltd; that application had been turned down as FDI norms do not permit sale of undeveloped plots.

KPDL is a joint venture between the Singapore-based Keppel Land and Indian firm Puravankara Projects Ltd for the development of integrated township projects in Bangalore. KPDL had acquired certain vacant plots (including the 1.5 acres) with a view of undertaking a construction and housing project on a parcel of 62 acres. The project, however, did not materialise, and since KPDL cannot use a small portion of land for any FDI-compliant project, the company proposed to sell the ‘unused’ land of (1.5 acres) at the “current price”. The FIPB then had noted that FDI in real estate is prohibited and that purchase or sale of land would be categorised as a real estate activity.

This latest proposal by Information Technology Park, Bangalore came up for discussion in the February and April meetings of the Board. Information Technology Park Ltd is an Indian joint venture with FDI. It focuses on development, leasing and sale of software parks as well as business parks.

Tax sops’ expiry
The IT park in question has a built-up space of 2.16 lakh square metres, of which the space sold to STPI clients is pegged at 57,400 sq m. The company, had in the past, sold space to customers who were primarily STPI units.

However, since the Income Tax incentives under the STPI scheme is slated to expire on March 2010, many units have asked the builder to buy back the space from them and are instead concentrating on expansion in SEZ units.

The developer now plans to buy back the space and rent it to other units.

PLANS FOR IT-SEZ IN HOSUR APACE
Chennai
The Hindu

A formal notification for the setting up of an Information Technology Special Economic Zone by ELCOT at Viswanathapuram in Hosur has been issued by the Central government.

Information Technology Minister Poongothai Aladi Aruna on Monday told reporters at Hosur that the IT-SEZ would be spread over 177 acres and ELCOT would construct a Rs.14-crore complex measuring 50,000 sq ft.

Tenders to erect the building and other basic infrastructure have been floated and construction would start in a couple of months. Expressions of interest would be invited from IT majors for land allotment.

“Once the IT park comes into being, around 10,000 educated people will get employment in the region. As there is a huge demand for software and IT-enabled services, the State government is developing eight IT parks in Tier-II and Tier-III towns in the State,” she said.

Accompanied by officials of NASSCOM, and ELCOT, Dr. Aruna visited the State’s first Panchayat Business Process Outsourcing-cum-call centre at Sanasandiram in Krishnagiri district and inspected the functioning of the Tamil Nadu State Wide Area Network at the Collectorate.

Dr. Aruna also inaugurated the Recruitment Processing Outsourcing unit at Uthangarai with 60 seats. Currently it employs around 30 persons.

This centre, functioning in association FOSTeRA, will undertake resume mining and reverse process outsourcing functions and inform U.S.-based firms about the availability of skilled workers.

The IT Minister visited a couple of rural Common Service Centres in the district that are offering Business to Citizen (B2C) services, such as railway ticket booking and airline booking.

Government to Citizen services will be introduced in the next 25 days.

FACILITIES AT NEW IT PARKS TO BE READY BY JANUARY
Madurai
The Hindu

Infrastructure for the IT Parks being set up in Madurai would be ready by next January.

P. W. C. Davidar, State IT Secretary, would inspect the works next week to speed up construction activity and complete the works as per schedule.

“We have identified the contractors and entrusted the work to them. The infrastructure for IT parks in Madurai should be ready by January 2010,” Davidar said on Sunday.

Two IT parks are coming up here- at Vadapalanji and Ilandhaikulam. The Electronics Corporation of Tamil Nadu (ELCOT) is developing the IT parks.

He said that the contractors have been told to expedite the works fast and a spot inspection would be done by him during next week.

According to him, some works could not be undertaken in the last few months because of the code of conduct for elections but since that is over now, it would be done swiftly.

Asked whether IT companies are willing to set shop in the context of global economic slowdown, the Secretary said that “these parks are Special Economic Zones and they will be attractive for the companies. I do not see any reason for companies not coming forward.”

About the participation of Satyam Computers which was allotted about 50 acres of land in Madurai IT park, Davidar said that Tech Mahindra which acquired stake in that company will have to take a call.

Among the companies that were allotted land in Madurai IT Parks were HCL Technologies, Sutherland Global Services and Satyam Computers.

IT PARK TO TURN BIGGER
Chennai
Deccan Chronicle

Olympia Tech Park, promoted by Eveready Industries India Ltd and Khivraj Tech Park Pvt Ltd, will soon have one more office floor at its existing building in Guindy.

Spread over 1,35,000 sq feet, the floor, once operational, can house around 1,400 to 1,500 employees. “This would be the ninth floor office space. The park currently has eight floors accommodating nine companies and around 13,000 employees,” noted Ajit K. Chordia, director, Olympia Tech Park.

“We have received the clearance from the Airports Authority of India to construct the ninth floor. We are waiting for final approval from Chennai Metropolitan Development Authority. Once we get the green light from them, we would commence work,” he said.

He pointed out that construction would commence by September or October this year and be ready for occupancy by July 2010. The entire work would involve investment of around Rs 10-12 crore.

Asked whether IT companies were ready to pick up office space during these tough times, he said he had been receiving enquires for additional space from existing customers.

“Verizon is aggressively hiring and ABN Amro is also looking at doubling its headcount. So there is need for space,” Ajit K. Chordia said.

 

IT SEZ Parks News: 08/06/09

 

NO TAX BREAK TO SEZ UNITS IF OVER 20 PERCENT CAPITAL GOODS SECOND-HAND
Jayant Singh & Gunjan Pradhan Sinha, New Delhi, June 8, 2009
The Indian Express

In an attempt to finally resolve any misgivings about the use of second-hand or used capital goods while setting up an SEZ unit, the government has issued an instruction saying that a company can now bring in as much second-hand capital equipment to a new special economic zone unit as it wants. The SEZ unit, however, will not be eligible for tax exemption if the ratio of used equipment exceeds 20 percent of the overall capital investment. This is the third time the government has issued such a notification pertaining to the treatment of second-hand capital goods used in SEZs with respect to tax exemption under the Income Tax Act.

In its instruction dated May 27, the commerce ministry outlined the guidelines for procurement of used capital goods from domestic tariff area (DTA) to SEZ units. Apart from clarifying that the developer is free to transfer as many second-hand capital goods as he wants, it also stated that prior approval of the Development Commissioner of that particular zone would be required. That, however, is just a formality, according to Vikram Bapat, executive director with international consultancy PricewaterhouseCoopers (PwC). “This instruction is important especially for old IT companies setting up IT/ITES SEZs across the country, who might want to consolidate their existing software and technology parks (STPIs) — on which they’ve reaped tax benefits for the past 8-10 years — with their new SEZs,” he added. “Given that these STPIs have already been suffering in the face of the ongoing global recession, it only makes sense to ease the cost burden of these companies by allowing them to transfer their existing capital goods from their STPIs, which are a part of the DTA to their SEZs.” These SEZs will, however, still be able to avail of service tax benefits, if not income tax.

The government hadn’t stipulated any guidelines for the use of second hand capital goods when the SEZ Act had first come into being. It was only in August 2006 that it introduced a rule saying banning any use of second hand capital goods in SEZs. That rule, however, lasted only a year and the government issued another clarification in October 2007 saying that the Income Tax Act, in its Section 10AA, already deals with the treatment of used capital goods and hence the earlier rule was invalidated. According to Section 10AA of the IT Act, used capital goods would be allowed only if they did not exceed 20 percent of total capital goods. Hence, prior to this notification, used capital goods were only partially allowed in SEZs.

PRIORITY TO IT PARKS: MINISTER
Nalgonda, June 08, 2009
The Hindu

Minister for Information Technology, Youth Services and Sports Komatireddy Venkat Reddy vowed to develop Information Technology infrastructure and harness the potential of the industry at an optimum scale to usher in accelerated development with a thrust on the rural areas.

Speaking to the media persons on the occasion, the Minister said that top priority will be accorded to develop I-T Parks.

Stating that the district administration has already sent proposals for setting up of an I-T Park near Dhandu Malkapur, he mooted another IT Park in the district particularly in Narkatpalli mandal close to the district headquarters.

“Development of IT infrastructure holds the key to transfer the fruits of information technology to the rural areas”, he remarked. He said that the government will protect the interests of the employees of the Satyam computers.

IT PARKS MOST HIT BY RECESSION
Chennai, June 08, 2009
Deccan Chronicle

Though the other realty segments have shown positive vibes, the Information Technology space segment is still reeling under pressure and many IT parks are still waiting to be occupied. Realty majors who cater to the IT segment are crossing their fingers and hoping that the forthcoming budget would have something for this embattled segment.

“Nearly 6 million sq ft IT space is waiting to be occupied in Chennai alone. The slowdown in the IT sector, sluggishness in the market and failure to extend the Software Technology Parks of India scheme beyond 2010 are some of the reasons for these parks going dry,” noted Prakash M. Chella, president, Confederation of Real Estate Developers’ Association (CREDAI) – Tamil Nadu.

Chella further elucidated that slow infrastructure development and over-supply of space were also reasons for IT parks going vacant. In 2006-07 most developers started constructing IT parks and by the time the buildings were up, the sector was falling, he noted.

However, Ajit Chordia, director of Olympia Technology Park, said his park was houseful and companies were demanding more space. “In fact, we will be constructing another floor in Olympia Technology Park which will be ready for occupancy in June 2010,” he added. He said realty developers have constructed IT parks without analysing the demand.