Riding on sops to compensate for the lack of a Special Economic Zone (SEZ) status, information technology (IT) major Infosys is set to mark its entry in West Bengal.
Its plan is to invest Rs 100 crore and build a campus on a 50-acre lot that can employ up to 1,000 people. The state government, in a Cabinet meeting on Friday, cleared the proposal whereby a "mixed development" model has been offered to the company.
Partha Chatterjee, the state's parliamentary affairs minister, said after the meeting that of the 50 acres granted, 49 per cent will be on lease and used for IT purposes. The other 51 per cent will be freehold land; it may be used for any purpose Infosys deems fit. Industry departments officials say freehold land implies the ownership has been transferred and, hence, the company has an option to sell that part if it wishes.
Earlier, when land was formally allotted to Infosys in November 2011, a 99-year lease for the entire 50-acre lot was agreed upon. Chatterjee claimed the earlier Left Front government's agreement with Infosys was that 75 per cent of the land would be used for IT and IT-enabled services. The other 25 per cent could be used as the company deemed fit. "However, Infosys had asked for conversion to freehold land, to which the Cabinet has consented," he said.
Infosys has already paid Rs 75 crore for the lot in Rajarhat, on the fringes of the state's capital, for the campus. It is estimated the current market value of the land given is at least Rs 1,000-1,250 crore.
The company was offered land at a concessional rate in 2010 by the West Bengal Housing Infrastructure Development Corporation (WBHIDCO) as a 'special case'. It was felt the IT giant's entry would lead to skilled job creation. During 2006, under the former Left Front regime, Infosys co-founder, Narayana Murthy had expressed a desire to open a campus in the state. However, the project faced problems in land pricing and the former Chief Minister Buddhadeb Bhattacharjee had to eventually step in to get the allocation done at a concessional rate in the WBHIDCO area.
The company's expectation, then, was to operate under SEZ status. However, the same year, the Mamata Banerjee-led Trinamool Congress government, which was against the grant of any SEZ status, came to power. Although the company pursued with the state authorities the SEZ status idea, the new government didn't consent. That put the project in a limbo. The same thing happened with another IT giant, Wipro, on it request for a second campus in the state.
This year, at an event organised by Nasscom, apex association of the IT sector, Banerjee said that after March 31 this year, by the rule, no new SEZ licences could be issued.
The state government discussed benefits other than SEZ status with these companies and things were worked out. In December last year, the state government got the West Bengal Municipal Corporation Bill enacted, which provides a maximum 50 per cent exemption in property tax for land or buildings used exclusively for IT and IT-enabled services, for a period of 12 years.
Wipro
At the moment, while the government has offered conversion of leasehold land to freehold for Infosys, a similar proposal hasn't been given to Wipro for a second campus.
"Proposals for the second campus have been given by the state government but it doesn't include conversion of leasehold land to freehold land," said an official in Wipro.
Industry officials say the government might be testing the sops with Infosys and is likely to come up with benefits similar to those offered for Wipro.
Earlier, Rishad Premji, chief strategy officer at Wipro, during a visit to the city, had said the company was in talks with the government to come up with "newer opportunities and proposals other than SEZ".