Saturday, July 07, 2007

SIR SEZ new success shortcut for small IT cos


TNN[ WEDNESDAY, JULY 04, 2007 02:14:25 AM]

NEW DELHI: IT special economic zones (SEZ) may find a new anchor. The
government is considering setting up special investment regions (SIR)
where the IT SEZs could be housed to enable small and medium IT
companies avail benefits from both the schemes. Under the SIR scheme,
the government would provide basic infrastructure such as roads and
power while the SEZ scheme would provide for tax benefits.

While large companies such as Wipro, HCL and Satyam have proposed to set
up SEZ projects, the government's focus is now on the small and medium
sectors. As an incentive to the sector, infrastructure facilities would
be provided by the Centre and the concerned states. The companies would
also be eligible under section 80 1(A) for tax holiday for
infrastructure projects.

"Given that most of the production of the IT companies would be
exported, the SEZ advantage to the companies would be huge," a source
close to the development said. The SIRs would also encourage private
investment in urban infrastructure by way of assured market and
complement the concessions such as viability gap funding offered under
the public-private partnership (PPP) policy.

The reason why the government is keen to make the SEZ scheme co-terminus
with the SIR scheme is to prevent a trade-off between the advantages
from both and to ensure the success of the SIR scheme. Already,
2,586-hectare area has been notified for IT SEZs.
"In the absence of an integrated scheme, the companies will have to
choose between quality infrastructure and tax benefits. Although the
latter may be more lucrative from the export angle, smaller companies
may lose out on infrastructure advantages," the source said.

As far as the integration with the software technology parks is
concerned, the source confirmed that if the software technology parks of
India (STPI) scheme is extended beyond 2009, then an STP in an SIR can
avail benefits under both STPI and SIR schemes.

According to the proposed SIR policy, the Centre would provide external
physical infrastructure linkages such as national highways, railways
including mass rapid transport systems, airports and state-of-the art
telecom network.

The states would identify the site and make available local
infrastructure such as good quality power, bulk water supply, smaller
roads, sewage, effluent treatment plants etc, as well as facilities for
health and education and other social infrastructure.


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