The West Bengal government is likely to allow IT major Infosys to set up an IT SEZ at Rajarhat after being convinced that SEZ doesn?t impact state taxes but rather gives it additional revenue through a share of foreign currency earned by an exporting company within the SEZ.
Mamata Banerjee before assuming power had said in the manifesto she would not allow SEZs in the state, despite SEZs being a Union subject. But with Infosys chairman emeritus NR Narayana Murthy, also the chief mentor of the state?s IT committee, asking the state to fulfil certain conditions before setting up its campus, the state is likely to review its earlier decision.
State IT, Industry and Commerce minister Partha Chatterjee told Fe that the government would lay emphasis on development of IT projects and would facilitate IT companies as much as it could. ?We are against SEZs in principle but then we will have to weigh the gain and loss of having SEZs in the state,? Chatterjee said.
Industry department sources said that chief minister Mamata Banerjee wanted a clarification on the revenue impact the state would have in allowing Infosys functioning as an SEZ. But both the state finance department and the Union commerce ministry have clarified that the state doesn?t lose anything on taxes.
An industry within a SEZ gets central excise and customs duty exemption and 100% income tax exemption for five years from the commencement of operation and 50% IT exemption for another five years if the unit has been set up on or after April 1, 2006. The company also gets dividend distribution tax exemption under Section 115O of the Income Tax Act and exemption from Central Sales Tax (CST) on inter-state purchase of goods.
All these are central taxes and so the state has nothing to lose on account of revenue. Instead a company within the SEZ, which is bound to export 74% of its production, will have to share a percentage of its foreign currency earning with the state, determined by the Exim Bank time to time and industry to industry, a finance department official said.
Wipro, which already has a campus at Salt Lake, and is looking for a second campus at Rajarhat, gets all the tax benefits because of its SEZ status. Infosys was looking for the same benefit and wanted the state to provide a level playing field with other IT companies, an IT department official said.
He said the inter-ministerial board of approval (BOA) headed by Union commerce secretary Rahul Khullar was holding back Infosys? application for SEZ status since it did not get the green signal from the state.
A state has nothing to do other than providing land in regards to granting SEZ status.
Mamata Banerjee is opposed to SEZs on the suspicion of land grab and lenient labour laws. But the state has already handed over 50 acres to Infosys for R75 crore with the land deal completed last October. The government has built the link road up to the Infosys site and has also created sewerage facilities and extended power lines, which Infosys demanded before paying for the land, Chatterjee said.
So if the government allows Infosys to get SEZ status it will not lose anything in the land front. On the lenient labour laws, SEZs doesn?t enjoy any special relaxation. Only the governing of the law shifts from the labour commissioner to the development commissioner.
So working conditions would not vary from conditions prevailing in other major IT companies. Therefore, the state would not lose anything if it allowed Infosys to function as an SEZ, IT department officials said.
Infosys has promised to invest R250 crore and create 20,000 jobs, a crucial requirement for the state at present.