'New IT SEZ rules ignore SMEs'

Former IT secretary of Karnataka, and chairman and CEO of Brickwork Vivek Kulkarni has strongly criticised the Centre's new IT SEZ policy for not supporting small and medium enterprises (SMEs).

The policy helps only large IT firms, which want to convert their facilities into an SEZ and enjoy a 15-year tax holiday, he said.

The SMEs, which function out of facilities within the city limits will not be able to enjoy the 15-year tax holiday, unlike companies like Infosys, which can convert their facilities into an SEZ overnight, he told reporters here on Wednesday.

"The new SEZ policy stipulates a minimum of 50 acres for IT firms to set up an SEZ. Small companies obviously cannot own 50 acres. Nowadays a good part of the business can be done even from home. Nobody needs to go to a huge 50-acre campus to do business. The STPI scheme is flexibly structured and that is how there is a huge increase in IT exports," Kulkarni said.

According to him, the SEZ policy has to be made more flexible. "Let those who can set up an SEZ do so. Those who cannot, their investments should be protected if they make their employees work from home and still earn dollars. The objective is to earn dollars because it is an export zone," he said, outlining what should be the guiding principle.

Kulkarni said that anybody earning foreign exchange should get a similar 15-year tax concession like the big companies which have set up SEZs.

"Small companies will have to depend on real estate firms for the facility and if anybody has to develop 50 acres he can't do it in the cities," he pointed out.

If you go out of the city what will happen to the existing facilities in the cities? "So we are asking for a level playing field. Otherwise, exports of bigger companies will go up and smaller companies' exports will fall. And small companies are the ones who employ more per dollar of investment," he said.

He further added, "We have put forward our grievances to STPI, which has promised to take up the matter with the Centre. I am sure that the issue will be taken up by many associations, because it is something which will hurt everyone and has to be corrected. Finally, the country has to live on small companies in terms of employment."