West Bengal tries to lure IT firms, industry wants SEZ status

Govt is offering a maximum of 50% property tax waiver for 12 years and a higher FAR for cos

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% 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 a 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, 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 Lake here do not have an SEZ status, the company's operations at the suburb of Bantala come under SEZ. 

To expand while safeguarding its SEZ status, it had opted to take 15 acres from Bengal Shapoorji Developers on a lease, a subsidiary of the Shapoorji Pallonji Group in the Rajarhat area. 

The expansion plan at the Bantala SEZ has been stalled on grounds of pollution issues. 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 Rs 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 Rs 50 crore, in addition to Rs 75 crore it had earlier paid for the lot. Both Infosys and WHIDCO refused to comment on the issue. 

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 did 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," said a cabinet minister .

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 the promise of SEZ status for the facility from the ex-CM. Based on this, the company purchased nearly 50 acres from WBHIDCO after paying Rs 75 crore. However, after the Trinamool Congress, opposed to SEZs, swept the 2011 elections, the future of the project became uncertain.