Rescue woes

When a disaster strikes, organisations get into recovery mode, involving IT systems, data and work space, as part of disaster recovery and business continuity planning (DR/BCP). After successfully recovering IT systems and data, organisations often face a crisis where they have no place to work from. In such cases, the IT systems or the recovered data become practically useless. So, companies now realise workplace recovery should also be an integral part of any successful DR/BCP strategy.

This is precisely where the work area recovery (WAR) service is required. This type of service provides a fully-managed alternate workplace for employees to work from in case their production workplace is disrupted. A typical WAR site includes a full-fledged office with desktops, LAN, conference and server rooms, swipe card security, CCTV surveillance — everything employees need to resume work immediately.

The ministry of commerce has issued detailed guidelines on setting up DR/BCP centres for IT/ITeS SEZs. While the guidelines are of immense help, some additional points could be considered.

First, the current guidelines restrict DR/BCP centres to be set up within the legal entity via a ‘branch model’. This could pose a challenge for outsourcing such WAR services to experts, which may be more cost efficient and effective. This is graver in the case of standalone SEZ units without a branch and, hence, would need to invest in an in-house DR/BCP centre. Such a model is not viable for MSMEs.

Second, the guidelines say DR/BCP centres can be set up by an SEZ unit at other ‘bonded’ locations such as software technology parks (STP) or export-oriented units (EOU); however, to ensure business flexibility, the Government should also allow such centres to be operated from domestic tariff area units (DTA) if its fears misuse of the SEZ scheme.

Next, a closer look at the subsequent guidelines issued in October 2013 in the context of STP units suggests that the guidelines of February 2013 are not replicated for STP units, which means a SEZ unit can set up a DR/BCP in STP but an STP unit cannot set up a DR/BCP in an SEZ. The Government should adapt similar and refined guidelines for STP units as both are ultimately governed by the commerce ministry.

Fourth, the guidelines clarify that SEZ units can provide to offer end-to-end services through a DR/BCP site for third-party overseas clients, but, typically, the overseas clients entrust responsibility to an Indian GIC, who, in turn, wants to get DR/BCP support from professional service providers operating from India and front-end their overseas clients.

We all know that the intention of the commerce ministry behind introducing SEZ/STP regulations was to promote exports.

The guidelines are issued to secure the SEZ units critical business processes which can suffer disaster and uncertain events, impacting exports of India. However, enough — yet controlled — flexibility can be the mantra for the Government and the guidelines could be amended to accommodate that.

The writer is tax partner at EY India. With inputs from Gaurav Trilokchandani. The views are personal

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