SIR SEZ new success shortcut for small IT cos
IT 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.
By Priyanka Talwar & Neha Kohli, TNN |
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.
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.
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.
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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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