Small and medium IT cos unable to follow suit
Taking a cue from the withdrawal of tax benefits under the STPI (Software Technology Parks of India) scheme, large IT companies having STPI notified units in West Bengal have started expanding operations into special economic zones (SEZs). The trend, however, is not so apparent among the IT SMEs (small and medium enterprises).
Information available with the STPI, Kolkata, shows that IT majors such as Genpact, Tata Consultancy Services (TCS), HCL Technologies and Cognizant have set up facilities in SEZs during the last one year parallel to their STPI operations.
Tax benefits
While units in SEZ enjoy tax benefits, tax holiday for units under STPI scheme expired on March 31 this year. Industry sources said the decision to move to SEZ was prompted by the possible expiry of tax benefits for STPIs.
TCS and Genpact did not respond to queries from Business Line. In an emailed response, Mr R Chandrasekaran, President and MD, Global Services, Cognizant, said: “All of Cognizant's newer facilities are in SEZ which are entitled to certain tax incentives for periods up to 15 years. We expect to continue to locate most of our new development centres in these areas.” Cognizant's Kolkata units offer consulting, enterprise applications, IT infrastructure and business process solutions.
Another IT major, Capgemini India Pvt Ltd has discontinued with its STPI membership. The company had opened its facilities in the SEZ nearly a year ago. However, company sources did not respond to queries from Business Line.
SME Reluctance
Meanwhile, procedural hurdles and high capital cost involvement are turning out to be a major deterrent for SMEs to take advantage of the SEZ scheme.
Brishti Research Service Pvt Ltd is the only SME which had set up SEZ operations, alongside its STPI unit.
According to Mr Kalyan Kar, managing director, Acclaris India, the existing guidelines do not allow straight-jacket relocation of a STPI unit to SEZ. Simple transfer of assets and employees are not possible under the rules. Moreover, in case of small IT companies, moving to a SEZ would mean going to a specified area at a designated higher cost.
Acclaris India currently has a STPI – Kolkata membership and operates and is an integrated technology and services IT firm.
While units in SEZ enjoy tax benefits, tax holiday for units under STPI scheme expired on March 31. Industry sources said the decision to move to SEZ was prompted by the possible expiry of tax benefits for STPIs.