KOCHI: Kochi’s IT ecosystem is expanding rapidly beyond special economic zones (SEZs) and the removal of various sops, including tax waivers, is to mainly explain the trend, say industry insiders.
The expansion to Kerala’s semi-urban and rural areas and beyond traditional SEZ parks is a strong reflection of the improvements in local infrastructure and the availability of highly skilled talent, says Jijimon Chandran, CEO & founder of Acsia Technologies and chairman of the Confederation of Indian Industries (CII), Thiruvananthapuram zone.
“Other benefits, such as tax holidays in SEZs, are also over. This approach also aligns with our vision to build a more vibrant and inclusive tech ecosystem across the state,” Chandran said.
Companies took to SEZ parks primarily for the tax waivers, indicated Susanth Kurunthil, CEO of Kochi Infopark. “However, those have now been taken away. Some sops, like exemption from GST if firms build their own infrastructure and customs duty waiver, still exist. But these benefits aren’t that important for IT companies,” says Kurunthil.
Another put-off is the administrative hassles that companies face in SEZ parks. “They have to steer past many compliance criteria. Paperwork has to be filed and all of this, while eating into their time, increases unnecessary workload,” he said.
While SEZs focuses solely on export, IT firms today see India as a big market and hence are keen to expand within the country, too.
“Now, SEZ rules prevent that. Infopark has two non-SEZ spaces, besides the one in the co-developer project Carnival Infopark Phase I. The Thapasya building offers plug-and-play layouts ranging from 500 sqft to 12,500 sqft and warm-shell options from 2,500 sqft. While Vismaya is also a multi-tenanted facility with each floor dedicated to one company. The ground floor is fully dedicated to commercial services like shops, banks, ATMs, clinics, financial services etc. Our non-SEZ property has big IT companies like Tech Mahindra, TCS, UST Global, etc," Kurunthil said.
Various benefits are being offered in the government’s industrial parks located outside SEZs, said Minister Industries and Law P Rajeeve.
“Facilities such as single-window system and legal help, besides attractive incentives that go a long way towards making doing business easy, are offered in these parks. For entrepreneurs setting up spaces, these industrial parks are very beneficial and this might be what is attracting them to these facilities,” the minister said.
However, Sachin Tikekar, president and joint MD of KPIT Technologies, said, “We are in that phase where SEZ parks don’t offer many benefits. Moreover, it doesn’t make sense because these places are away from the city, where availability of talent becomes a challenge.”
Affinity for urban spaces
Employees also prefer to be closer to urban centres. The economic benefits are now not clear and we have to look at other parameters, including connectivity to airports, availability of hotels, IT infrastructure, and uninterrupted power
