IT Sez Real Estate News: 2/7/09

INFRASTRUCTURE DEVELOPMENT APACE IN MADURAI IT PARKS
Madurai
The Hindu

The Electronics Corporation of Tamil Nadu (ELCOT) has decided to start construction on an area of 50, 000 square feet in the proposed information technology parks at Ilanthaikulam and Vadapalanji on the outskirts of the city.

Addressing a meeting organised by the Madurai zone of Confederation of Indian Industry (CII) here on Wednesday, Santhosh Babu, Managing Director, ELCOT, said that tenders had been finalised for construction work and built up space would be offered for local entrepreneurs in the special economic zones.

The space to be provided by the ELCOT could also serve as an incubation centre for big companies.

The Vadapalanji IT park, where land had already been apportioned for IT majors, would have space for both SEZ and non-SEZ companies. On the plea of CII members that small IT companies which concentrated only in the local market should be given space in the SEZ, he promised to take it up with higher officials.

Development of infrastructure in the Madurai IT parks had gathered momentum, the MD said. Now compound walls, roads and ducts were being put in place. This would be completed by September at Ilanthaikulam and November at Vadapalanji, where the available land was yet to be leased out fully. Dr. Santhosh Babu, who had earlier inspected the ongoing work at both places, said that infrastructure development was taken up at a cost of Rs 22.43 crore. Provision had also been made to apportion small areas, starting from two acres, for small companies.

Replying to members’ questions, Dr. Santhosh Babu encouraged them to present their products to ELCOT, which, in turn, would recommend them for use by other government departments and agencies.

On the rate the ELCOT would fix for space in the IT park, he said that the organisation was not looking at profits but was keen to develop the IT industry in a tier two city like Madurai. He also welcomed the idea of having common infrastructure facilities for small and medium IT companies.

IT SEZ News: 1/7/09

GOVT MAY EXTEND STPI TAX BENEFIT FOR ONE YEAR
Prabhakar Sinha, New Delhi
The Times of India

The government is likely to extend the tax benefits on exports earnings of the information technology (IT) units, operating from the Software Technology Parks of India (STPI), to March 31, 2010 in Budget. The scheme was expired in March 2009.

Under the STPI scheme, export incomes are exempted from tax under Section 10(A) for the first 10 years of operations. But as the clause is effective only till March 31, 2009, those units, which were set up after 1999-2000, are not able to avail this benefit.

As India's export is down in February, March and April 2009 by around 33% (year-on-year), the commerce ministry fears that withdrawal of the tax incentives on exports earnings will affect the sector badly.

Total exports achieved by the units from STPI were Rs 2,02,580 crore in 2008-09 as against Rs 1,80,155 crore in 2007-08, showing a growth of over 12 percent.

A senior commerce ministry official said the extension of tax break to STPI units is very crucial. He said the ministry has recommended extending the benefit by three years till 2011-12. But, as the finance ministry wanted to discontinue the tax concession to STPI units and extend the same to units operating from Special Economic Zones, he said that ultimately, the extension might be realized for only one year till 2009-10.

The finance ministry and commerce ministry are divided on the issue. The commerce ministry wants tax break on exports from STPI should continue andsuch facility should not be allowed for software companies in SEZ. But, the finance ministry wanted to discontinue the STPI facility and allow the same in the SEZ.

But, the official said if the facility is discontinued before a company completing 10 years of operations with tax concessions, their profitability would be affected. This will make their export pricing uncompetitive. The government had announced its policy in 1997 to discontinue it from 2007-08. As many companies opened their units in STPI for tax benefits, the benefit was extended to 2008-09.

As government has allowed 15 years tax holiday in SEZ, software companies have shifted their focus to start operations from SEZ only. Therefore, the IT industry wants that till a large number of SEZ facilities become operational, the government should continue the STPI benefit.