IT companies in Tamil Nadu have put to rest the long-stretched debate on whether IT could keep its lustre even in smaller cities. For, they are now taking India?s IT story, so far scripted by metro cities, to tier I and II locations. With Tamil Nadu chief minister M Karunanidhi launching IT SEZs in Madurai and Tirunelveli on Saturday through video conferencing, the state has taken the first step to break away from the clich? that ?IT happens only in big cities?. The state government is persuading IT firms to make smaller cities their second home. Currently, close to 95% of big and small IT companies in Tamil Nadu are located in Chennai.
Bangalore and Chennai, a veritable home to majority of IT companies, share common woes ? narrow roads, lack of drainage facilities, absence of storm water drainage system, limited and skewed transport connectivity.
Waking up to the ills and in order to shift the IT buzz from Chennai to tier I and II cities, the Tamil Nadu government , through its public sector undertaking Electronics Corporation of Tamil Nadu (Elcot), has identified 7 locations with a total investment of Rs 700 crore to develop SEZs. The new locations are Coimbatore, Madurai I and II, Tiruchi, Tirunelveli, salem and Hosur.
With these new locations, the state has been wooing IT bigwigs like Infosys, Cognizant and Wipro into tier I cities, making availability of airports, rail connectivity, engineering colleges, large number of local tech graduates as a selling point. Growing IT exports from tier-I and tier-II cities have provided the state government with a shot in the arm. Tamil Nadu?s total IT exports stood at around Rs 36,765 crore in 2009-10. IT exports from smaller cities were around Rs 909 crore in FY09-10, somewhat double of Rs 445.34 crore posted in the pervious fiscal. Taking note of the growing export numbers registered by tier-I and tier-II cities in the state, IT behemoths, including Tata Consultancy Services (TCS) and Wipro, have taken 5 acre and 10 acre, respectively at Coimbatore. Elcot has reserved additional 5 acre each for TCS and HCL Technologies.
On its part, the government has tweaked the SEZ norms to facilitate smaller firms moving into these locations. ?We have now changed norms for SEZ classification. Companies can now occupy premises as small as one acre to build their delivery centres. Coimbatore churns out 19,000 engineering graduates and 44,000 non-engineering graduates every year, a kind of on-the-platter feed for knowledge-based IT, BPO and KPO industries?, said Elcot chairman Santosh Babu.
The small-town boom has proved to be a blessing in disguise for most SME IT companies as tax benefits under STPI comes to an end in 2012. ?With the likely end of tax holidays on STPI units, small companies had to shift to SEZ facility. But with the prohibitive per square feet land cost in Chennai, we are left with no other alternative but shift to other low-cost, no-tax locations?, said a member of Nasscom Emerging Forum on request of anonymity. There are around 8 mid and small tier companies that haven taken SEZ lands in Tiruchi. According to a Tamil Nadu IT ministry statement, the tier-I and tier-II cities in the state are superior to internationally known business locations like Singapore and Malaysia in terms of cost of functioning. Tamil Nadu IT secretary WC Davidar said, ?We are now getting frequent enquires on our 7 new locations in tier-I and tier-II cities. There are lot of skill-building activities undertaken under the auspices of Tamil Nadu ICT academy to hone the much-required talent for the IT companies in the state?, he added.
