Pitching Hard for Knowledge Based Industry

By GovernanceToday
In Chhattisgarh
June 3, 2015
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Knowledge-Based-IndustrySince its inception, the state of Chhattisgarh has made rapid progress which is reflected in its growth. The gross state domestic product (GSDP) of Chhattisgarh is expected to reach US$ 46.8 billion in FY 17 from US$ 29.2 billion in FY 14. The state has seen huge investments coming in various heavy industries like steel and cement. Chhattisgarh is one of the only few states in the country that have surplus power and which are profitable in terms of utility-based electricity. What is not very much known is that the state has also put in place one of the most innovative, investor friendly and rewarding IT/ ITeS Investment policy with a vision of establishing an information society consisting of informed, active and responsible citizens which is the basic tenet of a true democracy.

The government of Chhattisgarh has initiated the ‘Make in Chhattisgarh’ policy in line with the “Make in India” initiative of the government of India. The policy to promote investment in Electronics and IT/ ITeS related sectors is a part of this broad policy. This policy focuses on incentives on capital investment and working capital financing, IT infrastructure development along with Capacity Building of work force. Further, an online single window is being setup for facilitating the investors and for timely providing various incentives/concessions under the policy.

The fourfold objective of this policy is to encourage investment in Electronics and IT/ITeS sectors in the state, develop Naya Raipur and other major cities of the state as IT Hub and Electronic Manufacturing Cluster, skill development of local youth as per the needs of these sectors, and the development of IT Hubs/IT Park by providing incentives to potential investors.

What makes Chhattisgarh better?

The state offers some unique advantages compared to other states for investors. First and most important, the state is developing Naya Raipur as the first Smart City of India with an area of 237 sq. k.m. Already an investment of Rs 5,000 crores has been made in the project and a further Rs 10,000 crore investment is lined up. And the results are starting to show. An IT Tower is fast coming up as Plug & Play infrastructure for IT/ITeS industries. IT Incubation Centre and Startup Village are also proposed in this city. Further, an entire sector of the city has been earmarked for establishing electronic Manufacturing Cluster.

Secondly, the state offers sound and efficient infrastructure for investors. Chhattisgarh is a power surplus state and offers power at a rate which is over 30 percent cheaper than other states. Further, reliable supply of electricity obviates the need for power backups. Both these factors reduce cost of operations a lot. Because the state is located at a stable place with regard to natural calamities, it offers best location for setting up Data Recovery Centres/ Data Centres in the cities of Naya Raipur, Raipur, Bhilai-Durg, Bilaspur and Korba cities.

Third dimension of the state’s attractiveness is the good quality human resource. Any knowledge based industry thrives on the availability of enough number of rightly qualified people. In this regard, the state boasts of premier educational   institutes such as Indian Institute of Management (IIM), Indian Institute of Technology (IIT), National Institute of Technology (NIT), Indian Institute of Information Technology (IIIT), Hidayatullah National Law University (HNLU) and All India Institute of Medical Science (AIIMS). The state has 50 engineering colleges, 25 polytechnics and 118 ITIs which all ensure the availability of technically qualified manpower for various technical sectors.

Institutional Arrangement

Chhattisgarh Infotech& Biotech Promotion Society (ChiPS) is the nodal agency for the electronics, IT/ ITeS and is the single agency which caters to all the needs of the investors in these sectors. It is also the single point of contact between investor and the state for receiving investment proposals and release of necessary sanctions and approvals and their monitoring. CHiPS has been mandated to enter into appropriate MoU with investors on behalf of the government of Chhattisgarh, allot space to MSMEs and IT/ ITeS units and take other appropriate steps for effective implementation of the policy. Additionally, CHiPS is the agency to develop appropriate manpower skills and competencies to ensure adequate quality manpower for the industry in association with training and skill development institutions.

Incentives Galore

The state has provided incentives which cater to the specific needs of investors in the IT/ITeS sector. First and foremost, units established in the state eligible for incentive up to 50 percent of the fixed capital investment excluding the cost of the land (with maximum limit of Rs 1.5 crores per unit). Furthermore, the units are eligible for reimbursement of 75 percent of the total annual interest payment on term loan and working capital with maximum limit of Rs1.1 crores per annum for a period of 8 years from the date of commercial production.

Land cost is one of the biggest investment for any investors. Easing the burden, the state has allowed rebate up to 80 percent of the land premium for units set up in notified areas. Also, units are entitled for 100 percent exemption from payment of Stamp Duty on direct purchase/lease on allotted land. Apart from this, if the property is transferred to another IT unit on sale or lease during policy period then the property transfer will also be entitled for 100 percent Stamp Duty exemption.

Besides these incentives on land acquisition, units established in the state are entitled to 100 percent exemption on CST and Entry Tax, for a period of 10 years from the date of commencement of production or the date of introduction of the GST, whichever is earlier. All of these steps are geared to bring down the cost to set up business in the state.

The thrust of the government is to encourage investments in high tech areas which is in line with the goal to create a knowledge based society. The overall attempt is to put in place an ecosystem which incentivizes the investment by providing right operating environment with efficient physical infrastructure and quality human capital. The state’s growth has been remarkable over last many years. The state is now looking set to repeat its stellar performance in high tech IT/ITeS sectors as well.

Advantage Chhattisgarh

  • Naya Raipur is the first Smart City of the country and an upcoming I.T Hub
  • Higher return on investment
  • Sufficient supply of rightly trained manpower
  • Power surplus state offering cheap electricity
  • Situated on East-West corridor
  • Excellent social infrastructure

Innovative financial incentives

  • Incentive for Fixed Capital Investment up to 50%
  • Interest Subsidy of up to 75% for a period of 8 years
  • Up to 80% rebate on land premium
  • Rebate on Lease/Rental Space
  • Exemption on Stamp Duty and electricity duty
  • 100 % exemption on CST and Entry Tax

Incentives for MSMEs

  • Reimbursement of 50% expenditure on ISO–9000, ISO-14000 or other similar national/international certification, with a maximum limit of Rs 7 lakhs
  • Reimbursement of 50% expenditure on technical patents on the name of unit, with a maximum limit of Rs 10 lakhs. The Unit can avail this incentive for maximum of 2 technical patents per unit per annum
  • Subsidy through reimbursement of 30% of the total charges paid towards availing internet bandwidth from ISP, with a maximum limit of Rs 3 lakh per annum.

Educational infrastructure

  • Universities: 19 (Dec 12)
  • Colleges: 681
  • MBA Colleges: 24
  • MCA Colleges: 10
  • Engineering College: 50
  • Polytechnics: 43 (2013-14)
  • Medical Colleges: 5
  • Institutions of Excellence: IIM Raipur, IIT (announced in 2014), AIIMS Raipur