Will STPs gain from SEZ?

PUNE: From the Commerce Ministry, Revenue Ministry, the Communists, farmers to even Sonia Gandhi, everyone is talking about SEZs or Special Economic Zones.

Meanwhile, the Software Technology Parks of India (STPI) are grappling with their own issues.

Union Minister for Communications and Information Technology Dayanidhi Maran had demanded that new IT and ITES Special Economic Zones (SEZ) should be brought under the STPI, (read that in light of the recent 94 new IT SEZs approved by BoA (Board of Approval).

STPI is in all support of this proposition. P. Venugopal, director, STPI, Maharashtra, explains the rationale of this demand, "We are just echoing the industry's demand. For the past few years, the growth trend and the action under STPI accompanied by the vision ahead adduces this argument." He cites peripheral support as STPI’s value addition. "Apart from the development support, there are many comfort areas that STPI takes care of: Internet bandwidth, plug-and-play facilities, seed capital, recovery management and disaster management, etc. In fact, it was STPI that pioneered and excelled in the concept of plug-and-play facilities on a pilot basis, which is now the rhetoric in the so many IT parks by private players that have mushroomed in Pune."

With 40 companies registered this year so far (that entails a strong SME mix), he expects to touch a target of 100 registrations for Pune this year. Last year Pune's exports showed a growth of 48 per cent outsmarting Mumbai in software exports. But would the optimism prevail in the ensuing years of Sunset Clause that comes into effect in 2009-10? And is that goading STPI's rush to smaller cities? "Yes, we are working on 47 new locations after due diligence and discussions with the respective State governments," he says, denying apprehensions of the flight of big IT majors to SEZs due to non-availability of erstwhile tax sops. "We just want to realize the full and untapped potential across India by touching a larger base," he asserts.

At the same time, he seconds Maran's demand of extension of the ten-year tax holiday granted to STPI after 2009 too. "It's the industry requirement again. Export-oriented firms should have a level playing field, whether they are in a SEZ or not."

In addition to the proposed extension of sops, he opines that further simplicity in processes would also be desirable in the light of the Sunset clause.

Drawing comparisons between SEZs and STPs may be tempting but as Venugopalan explains, "We should see it in the light of the extension of present STP policy. An SEZ has more focus on freedom, exemptions, no-licence, custom-bonded area in a walled environment. For STPs, the custom bonding happens after an initial STPI permission only. But in terms of incentives to exports, industries should be accorded a level playing field in both cases."

Refraining from commenting on the sizzling SEZ debate that entails revenue loss, uneven development, SEZ caps, farmer interests, etc, Venugopalan advises, "The whole SEZ factor is taking a very different dimension today. It is shifting daily, from one concern to another. While some of these apprehensions may be real, some may be not. In either case, people have to be taken into confidence by government officials and industry both."

On the issue of land acquisition and ignoring the interests of farming community, he rules out any déjà vu between SEZs and STPs, "Both are totally different turfs. While SEZ is a walled area confined to a stipulated region, STPI can be spread anywhere and land availability thus, is not an issue there."

Maran also sees a lot of traction ahead on the area of incubation centers and seed capital as revealed in the last few weeks to the media. Venugopalan is in accord again, but clarifies, "The planned trajectory would not happen immediately, we may start with Bangalore and then move from one center to another before it comes to Pune. It would be a need-based support."

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