India proposing investment regions, townships for IT industry

June 10th, 2008 - 1:26 pm ICT by IANS  

By Fakir Balaji
Bangalore, June 10 (IANS) India is proposing to set up separate investment regions complete with integrated townships for the “planned growth of the knowledge industry” because the booming IT sector in major cities is straining current infrastructure and adding to inflationary pressure. “A blueprint has been prepared to build IT investment regions for planned growth of the knowledge industry. The central government will partner with states to provide infrastructure and attract investments in allied sectors to build integrated townships with facilities to work and reside,” Jainder Singh, the union IT secretary, told IANS in an interview here.

Haphazard growth of the IT industry in Bangalore, Hyderabad, Chennai, Pune, Mumbai, Kolkata and NCR (national capital region) comprising Delhi, Gurgaon, Noida and Faridabad has put enormous pressure on infrastructure, civic amenities, transportation and public utilities.

With demand for land, power, water, roads and utilities to meet the needs of the industry increasing, the seven cities are struggling to provide support infrastructure and other amenities.

“Though efforts are being made by state governments to decongest cities by asking the industry to explore tier-two and tier-three cities for homogeneous growth, the competitive nature of the industry in a global market and scope for attracting huge investments require long-term and integrated solutions,” Singh said on the sidelines of a technology summit, organised by the industry body Nasscom (National Association of Software and Services Companies).

There will be full-fledged facilities to set up IT offices, residential quarters for employees, schools, malls, post offices, multiplexes, hospitals, parks and recreational facilities. All this is aimed at cutting commuting time and increasing productivity.

“We hope to kick-start the process in the next six months. We have worked on the nitty-gritty of the plans in consultation with the user industry for implementation on public-private partnership (PPP) mode,” Singh said.

“It is for states to come forward to provide land, water, power and utilities. The central government will provide connectivity, be it roads, highways, railways, bandwidth and allied infrastructure within its purview to build knowledge townships,” he said.

There will be no tax benefits for IT firms in the proposed regions. It will be up to states to offer incentives or concessions to woo investors or existing firms to relocate or expand their operations in the regions.

“The firms, however, will be eligible for tax benefits or incentives if they are set up under the special export zone (SEZ) or STPI (software technology parks of India) policies,” Singh pointed out.

Admitting that skill-based education and infrastructure were the twin challenges faced by the industry that has the potential to make India a global hub for IT services and back-office operations, Singh said his ministry was working with the human resources development ministry to churn out talent pools for building a strong knowledge workforce.

“Skill-based education will be introduced by changing the curriculum. Besides expanding capacity to meet the demand for skilled workforce, we will give more freedom to educational institutions to ensure a regular supply of talent pool for the knowledge industry,” Singh added.

A joint study by Nasscom-A T Kearney on “location roadmap for IT-BPO (business process outsourcing) growth” has identified 50 locations across the country with potential to set up the regions.

At the same time, cities like Bangalore and Gurgaon are projected to grow by 2.5 times in capacity and opportunity to meet the future demand.

“The Indian BPO industry is maturing and rapidly spreading - both in business and geographically, employing 700,000 professionals and generating $11 billion in fiscal 2007-08,” Nasscom president Som Mittal said.

“There is a potential for a five-fold growth for the BPO sector in the next five years. We have identified 50 cities and towns which are poised to become IT-BPO destinations, provided the stakeholders, including the states, provide the infrastructure for building the ecosystem,” he said.

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