IT companies in AP get 'real' blow
With polls in 2009, Andhra Pradesh government decides not to allot land to IT companies at throwaway prices.
By K V Ramana, TNN |
HYDERABAD: Elections are slated for 2009, but the ruling party has started preparing for it. Bidding good-bye to the era of large-scale land allotments to IT companies, that too at throwaway prices, the AP government has decided to halt the process.
“The government doesn’t want to be seen doling land to big companies , it would rather be seen building houses for the less privileged ,” averred analysts.
“The government doesn’t want to be seen doling land to big companies , it would rather be seen building houses for the less privileged ,” averred analysts.
| Industry sources are of the opinion that the government move to stop allotting land to IT companies will result in helping SEZs that have already been approved. About 36 IT SEZs are likely to come up in the state with the government itself developing seven of them. All these SEZs together would create about 80 million sft in the first phase. |
“It is not that potential IT investors won’t be given land, but only a few acres not the hundreds of acres that have been given out to them in the past three years,” a high level source told TOI. For the records, the government will not stop alloting land but will hitherto insist on strict conditionalities . In the past, land was allotted on the condition that every acre of land given away should generate 333 jobs. And even these conditions were observed more in breach. But now the government proposes to give out an acre of land only on the promise of say 1,000 jobs. To formalise the process, the IT department has begun a process of consultations with industry.
“With this, a company promising to employ 10,000 people will only be eligible for 15 acres of land, and not the hundreds of acres they used to commandeer in the past,” a source said. Government sources also point out that there is no land available for allotment to IT companies anywhere in the vicinity of Hyderabad. Already about 200 companies are waiting for land allotment with a total demand of about 4,000 acres.
Analysts said companies are also trying desperately to get land in the upwards of 10 acres with the sole objective of seeking special economic zone (SEZ) status for their campuses, which will insulate them from taxation post-2009 . Presently, IT companies enjoy tax holiday for 10 years, but this provision will lapse post-2009 .
However, industry sources are of the opinion that the government move to stop allotting land to IT companies will result in helping SEZs that have already been approved. About 36 IT SEZs are likely to come up in the state with the government itself developing seven of them. All these SEZs together would create about 80 million sft in the first phase.
“There is pressure on the government from the real estate developers and SEZ promoters to divert these companies to their campuses . They are investing significant funds in developing SEZs and unless the government stops allotting land, the companies will not look at the option of leasing land in these zones,” a source said.
“With this, a company promising to employ 10,000 people will only be eligible for 15 acres of land, and not the hundreds of acres they used to commandeer in the past,” a source said. Government sources also point out that there is no land available for allotment to IT companies anywhere in the vicinity of Hyderabad. Already about 200 companies are waiting for land allotment with a total demand of about 4,000 acres.
Analysts said companies are also trying desperately to get land in the upwards of 10 acres with the sole objective of seeking special economic zone (SEZ) status for their campuses, which will insulate them from taxation post-2009 . Presently, IT companies enjoy tax holiday for 10 years, but this provision will lapse post-2009 .
However, industry sources are of the opinion that the government move to stop allotting land to IT companies will result in helping SEZs that have already been approved. About 36 IT SEZs are likely to come up in the state with the government itself developing seven of them. All these SEZs together would create about 80 million sft in the first phase.
“There is pressure on the government from the real estate developers and SEZ promoters to divert these companies to their campuses . They are investing significant funds in developing SEZs and unless the government stops allotting land, the companies will not look at the option of leasing land in these zones,” a source said.
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