Incentives for IT/ITeS: FSI hike, incentives to cover more beneficiaries

FSI hike, incentives to cover more beneficiaries.

Written by Sandeep A Ashar | Mumbai | Updated: June 17, 2015 2:02:18 am
it, ites, it firms, it parks, infomation technology, it township, it office, devendra fadnavis, bjp, mumbai it township, mumbai news, india news Tax waiver and concessions for animation, gaming, visual effects, and comics industry have been proposed under the policy.

The Maharashtra government on Tuesday extended sops to technology parks and IT-enabled financial services to keep pace with investment in information technology (IT) sector in states like Karnataka and Andhra Pradesh.

The BJP-led Devendra Fadnavis cabinet approved the new policy for IT and IT-enabled services (ITeS), which includes floor space (FSI) incentives and lower power tariff. In a first, it also allows perks given to technology parks to be granted to data centre operations.

Fadnavis announced perks for builders and developers setting up ‘Integration Information Technology townships’, which will be tagged as smart cities. Fadnavis said these would function on the ‘Walk to Work’ concept with residences permitted inside integrated townships. The proposal includes capital incentives for BPOs in rural and semi-urban areas, and fiscal incentives for skill training for these.

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Tax waiver and concessions for animation, gaming, visual effects, and comics industry have been proposed. “It is unfortunate that despite presence of Bollywood in Mumbai, the animation industry has been forced to look south. We are keen to arrest this,” Fadnavis said.

Maharashtra accounts for 20 per cent of the country’s IT exports, and Fadnavis government’s policy to encourage IT/ITeS is the fourth such exercise since 1998.

The 2009 policy that expires on June 30, 2015, allowed 100 per cent additional FSI in cities. The Fadnavis government increased it to 200 per cent allowing developers of such parks and services to construct up to three times the plot size.

Government agencies have been raising the issue of misuse of sops granted to IT/ITeS parks. Additional Chief Secretary (Finance) Sudhir Shrivastav had in an official communication remarked “it was inappropriate to grant extra FSI till a thorough assessment of gains from benefits doled out previously was made.”

The chief minister said he had ordered a detailed report on misuse of perks and added that the new policy had in-built measures to prevent misuse.

“To avoid diversion, our new policy proposed to stringently penalize those violating norms. If the user for an IT park is found to be non-compliant, the new policy proposes a fine equal to 0.3 per cent of ready reckoner rates per day,” Fadnavis said.

Between 2003 and 2015, the Maharashtra government provided letter of intent to 465 IT/ITeS parks, mostly in Mumbai, Pune, Navi Mumbai, Thane, and Pimpri Chinchwad, involving 12.83 million sq ft of built-up space. In official communications, Shrivastav remarked, “This means the government extended 6.4 million sq ft of FSI incentive to such projects since 2003. On a conservative land rate estimate of Rs. 5000 per sq ft, the benefit passed on to developers is Rs 32,000 crore.”

Fadnavis justified extra FSI saying lease rentals and property rates in Mumbai and other urban agglomerates were comparatively higher than in other states.

Apoorva Chandra, Principal Secretary, Industries department, said the average rentals for IT spaces in Chennai and Hyderabad were Rs 40-45 per sq ft, whereas in Mumbai they had breached the Rs 100-Rs.110 mark. Sources confirmed that the state urban development (UD) department also had reservations about extra FSI, arguing that the Industries department had moved another proposal for providing an ‘exit option’ to IT park projects that failed to take off. Fadnavis confirmed that the government was considering an exit policy for “seven to eight” such projects in Mumbai. The department proposed that such projects be permitted to change usage on payment of premium.

Fadnavis said the new policy will lend more clarity on who are eligible for benefits. All services tagged as IT/ITeS by the Central Board of Direct Taxes (CBDT) would now be eligible. Sources said this would widen the ambit and cover data centres and back office operations.

Fadnavis also said the government had formulated a ‘list’ of what’s not permissible in IT parks such as hotels, theatres, malls, houses for sale, hospitals, educational institutes with the exception of IT training centres, to plug “grey areas” that allow misuse.

The government said for Mumbai and areas in MMR, additional FSI will be available for a premium of 30 per cent over ready reckoner rates, whereas it would be available at 10 per cent rates in other pockets. For developers setting up IT parks in Naxal-infested pockets, no premium would be collected.

Other Cabinet Decisions

State appoints legal officer
The state cabinet on Tuesday appointed Rohit Dev as Associate Advocate General. Dev was acting as an Assistant Solicitor General for the Union government immediately before this assignment. Sunil Manohar had stepped down as Maharashtra’s Advocate General last week.

WB aid for cyclone mitigation
The state cabinet on Tuesday approved a Rs 312 crore plan for cyclone risk mitigation, which is part funded by the World Bank. Mumbai, Raigad, Ratnagiri, and Sindhurdurg have been identified as ‘cyclone risk’ districts. Chief Minister Devendra Fadnavis said the project will involve building of cyclone shelters, developing an early warning system, setting up mitigation bunds, and shifting electricity cables in high-risk areas underground.

Push for railway line in Naxal belt
Pushing for infrastructure upgrade in Naxal-hit belts in Maharashtra, the state cabinet sanctioned Rs 234.64 crore as its share towards the much-delayed Vadsa-Desaigunj-Gadchiroli railway project. The Centre will contribute Rs 234.64 crore to the 52 kilometre project, scheduled for completion in five years.

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