Bengal government may subsidise EPF, ESI for first five years to retain Wipro, Infosys

At a time when the West Bengal government is going all out to provide sops to keep Infosys and Wipro in the state, the administration is planning to offer an extended version of the 2009-incentive scheme for the information technology (IT) sector in the compensation package.

According to officials in the state IT department, as part of the 2009 incentive scheme, the sop is currently available for all IT companies looking to set up or expand base in Kolkata.

The scheme, which is aimed at providing incentives to the IT industry, for the first five years — of the project life, the state government will provide subsidy to the employee provident fund. Besides, for the first five years, the state government will bear 50 per cent of the expenditure on employee state insurance (ESI) scheme as well.

Also, for parts of the operation that create employment in the enterprise segment and not the voice business process outsourcing (BPO) segment, the government will bear 70 per cent of the ESI cost.

The scheme, which is in operation already, mandates that units that are being set up away from Kolkata will be entitled to 75 per cent ESI benefit from the state government for the first five years.

“However, it is part of the mandate of the scheme that its purview and application can be substantially enhanced and widened based on the nature of the project, especially in the case of special projects like Wipro and Infosys are pegged to be,” said the IT department official.

According to Wipro, the scheme could be part of the overall package that is being worked out to compensate Wipro and Infosys for not being given special economic zone (SEZ) status.

“The scheme could be part of the larger consolidated package that is being worked out. It is a work in progress and is likely to take final shape over the next few weeks, especially once the Budget makes it clear where we stand,” said Partha Sarathi Guha Patra, vice-president and head-corporate affairs, Wipro.

Wipro and Infosys have 50 acres each in Rajarhat which has been given to them at Rs 1.5 crore an acre at a total cost of Rs 75 crore. While Infosys had paid the total amount, Wipro has paid Rs 25 crore. At current rates, the cost of the land is pegged at Rs 600 crore.

The problem with the projects is rooted in the refusal from the Trinamool Congress-led state government to send SEZ recommendation. The reason for this is in turn to be found in the TMC opposition to SEZs per se, which is enshrined in the party’s election manifesto.

However, without SEZ, both Infosys and Wipro, the second and fourth largest IT service providers in the country, had said that their respective campuses become financially unviable.

To retian them and prevent a re-run of the Nano-Singur episode, the state government is trying to put together a compensation package. However, the package is bound to put further pressure on the dire straits of the state finances, which are reeling under debt of Rs 1.92 lakh crore. Each of the two projects is expected to create employment in excess of 15,000 people.