BY D M DESHPANDE / The Navhind Times
After a long wait, the state government has come out with an IT policy which, though not comprehensive, can be said to be a good beginning. The thrust of the policy is on establishing an IT park and exempting IT units from labour and environment laws. The policy proposes a four pronged strategy to promote IT industry in Goa. It aims to exempt certain important acts from the purview of the IT sector. These are Goa Pollution Control Act, Factories Act, Contract Labour Act, Maternity Benefits Act, Minimum Wages Act and Shops and Establishments Act.
Further, the government would provide a single window on-line clearance to the IT sector firms intending to start business in Goa. The policy contains incentives to woo investments in the state. It is proposed to give employment subsidy of Rs 15,000 per employee for an IT unit for a period of two years with a maximum limit of Rs 75 lakh per year per unit. Since the subsidy is aimed at boosting employment of locals, it would not be available, perhaps, if an outsider is employed by a firm. A further incentive of 5% subsidy is proposed to be given to those units which begin their operations in the state before December 2006.
There are further goodies offered in terms of buildings in the proposed IT park. A 25 per cent subsidy on power consumed for an initial period of two years or a 25 per cent capital subsidy on in-house power backup power plant subject to maximum of Rs 10 lakh. There is a subsidy of 25 per cent on water consumption for a period of five years. Then if you want to train your worker in reputed institutions, you can get a subsidy of Rs 2,000 per person.
The policy has outlined special treatment to those projects which involve an outlay of more than Rs 50 crore. A similar facility is available to those firms which employ more than 1,000 persons in case of IT and 1,500 in case of the ITES (IT enabled sector). A red carpet welcome awaits the top twenty industrial houses (as per NASSCOM annual listing) for opening their branches or offices in the state.
There is no doubt that these measures are well intended and the government is sincerely trying to convert the state in to an IT hub. But all these measures may not be enough to attract a lot of IT players. It is worthwhile recalling the observation made by Aziz Premji sometime back; he said that Goa lacks basic infrastructure for IT industry.
The IT policy does little to address these issues. There is mention of increasing the bandwidth by laying down optic fibre network in the state. Good network of roads and port facility is fine; but they do not make up the full infrastructure. There are hardly any facilities of transport or otherwise for firms which may work during night shifts. Cost of living is high and educational facilities do not measure up to the best in metros. Shortage of trained labour is an important drawback. At the same time, Goans are going in hundreds to Mumbai, Bangalore, Pune etc. to work in call center jobs.
Considering the labour costs in IT industry, subsidy of Rs 15,000 per employee is a pittance. Nor will the state do well or succeed in arm-twisting the IT units to employ only the local persons. Appropriate skill sets and willingness to work hard are foremost considerations for IT firms. A whole lot of other subsidies announced will not make up for some of the inherent deficiencies.
The number one state in the country has missed the IT bus whereas several other states have gone way ahead in developing both software and hardware IT industry. It is rather strange that the state government is contemplating to undertake a study of IT parks elsewhere in other states after the announcement of IT policy.
If the state government is serious about developing IT industry, it must focus on the basic infrastructure. It has to invest in education, both higher and primary level. There is a need to revamp the education system to the needs of modern industry. Large IT parks are to be developed at cheap costs and other requisites such as connectivity and electricity taken care of. Other than tax incentives on par with other competing states, there is no need to give any other subsidy for development of IT industry. Without these basics, very few IT firms would look at the state seriously for long-term investment.
www.goa-world.com archives links:
http://goagovt.nic.in/ditit/docs/itpolicy.doc
From Fun and Feni to IT
http://www.dqindia.com/content/special/101051102.asp
Information Technology Policy of Goa
http://www.indiainbusiness.nic.in/indian-states/goa/goaitpolicy.htm
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