Bengal tries to lure IT firms
Incentives not enough, say firms and observers; work on for better package: Govt
The West Bengal government's effort to attract information technology (IT) companies might not suffice, feel analysts and observers from the sector.
It is offering a maximum of 50 per cent property tax waiver for 12 years and a higher floor to area ratio (FAR) for companies in the segment to either expand or commence operations. While maintaining its stand of not granting Special Economic Zone status.
“These cannot match the incentives given under an SEZ status”, a senior executive from the IT sector told Business Standard.
Tapati Ghose, partner at Deloitte Haskins & Sells, is of the same view. “A state like West Bengal definitely needs to provide special status to IT firms to draw in investment and generate employment,” she told this newspaper. However, she notes, while benefits under state levies — stamp duty, property tax, sales tax, entry tax — are possible, those on customs duty, excise duty, service tax and income tax, all central levies, are not. So, too, for central sales tax.
To avail of these, IT majors Infosys and Wipro have been asking for SEZ status to either commence operations or extend these in the state.
Cognizant Technology Solutions is also trying to harness the SEZ possibilities. While its operations at Salt | Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units | 100% I-T exemption on export income for SEZ units under Section 10 AA of the IT Act for first 5 years, 50% for next 5 years thereafter & 50% of ploughed back export profit | Exemption from minimum alternate tax under Section 115JB of the I-T Act Lake here do not have an SEZ status, the company’s operations at the suburb of Bantala do. To expand while safeguarding its SEZ status, it had opted to take on lease 15 acres from Bengal Shapoorji Developers, subsidiary of the Shapoorji Pallonji Group, in the Rajarhat area. It appears an expansion plan at the Bantala SEZ has been stalled on grounds of pollution issues | External commercial borrowing by SEZ units up to $500 mn in a year without any maturity ban via recognised banking channels | Exemption from central sales tax | Exemption from service tax | Single window clearance for
central and state level approvals | Exemption from state sales tax and other levies as extended by the respective state govts — the SEZ there is meant primarily for the leather industry but land for IT companies has also been allotted in the area.
In a recent development, Infosys, which has been demanding SEZ status to commence operations in Bengal, had paid ~50 crore to the West Bengal Housing Infrastructure Development Corporation (WBHIDCO) to take possession of a 50-acre plot in Rajarhat which it had formally purchased in 2009, during the Left Front regime. Firhad Hakim, the state's urban development minister, recently said a delegation from Infosys had taken possession, after paying ~50 crore, in addition to ~75 crore it had earlier paid for the lot. However, both Infosys and WHIDCO would not comment; the latter declined to also do so on land allocation and applications by any IT company.
In August this year, Infosys had moved the Board of Approvals for grant of SEZ status for a 20.14 hectare lot in South 24 Parganas but the state government would not agree. The latter is firm on no new SEZ status being granted to any company.
“West Bengal will not modify its SEZ stance but is working on an alternative package to attract investments in IT which will generate employment in the state,” a cabinet minister told this newspaper.
Wipro, also lobbying for SEZ status, is considering opening a second campus in the state. “The proposal is under consideration,” a senior company official said. Adding, however, that SEZ status was needed to start new operations anywhere in India.
Back in 2009, during the Left regime, Wipro had approached the state government to set up a second campus at Rajarhat, on a promise by the then chief minister for SEZ status to the facility.