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Kolkata! India's new IT hub
Ishita Ayan Dutt
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July 13, 2005

For sceptics who refuse to accept West Bengal's growing IT prowess, here are a few eye-openers:

If it still doesn't silence the critics, here's some more. Hinduja TMT [Get Quote] has evinced interest in setting up a software development centre in Kolkata. Ashok Hinduja, chairman Hinduja TMT, dropped by to meet West Bengal chief minister Buddhadeb Bhattacharjee recently. A team from the company will now evaluate the prospects in the city.

If the IT industry observers are to be believed, the state government deserves credit for encouraging IT companies to set up base in the state. In its new avataar, the Left Front government has turned 'right' to woo foreign direct investment in all earnestness, they claim.

Companies say that the government, led by the state chief minister and his team comprising IT Minister Manabendra Mukherjee and IT Secretary G D Gautama, has worked relentlessly to make the IT and ITES dream a reality for West Bengal.

Investment flow

Not surprisingly, Bhattacharjee has been certified as the best chief minister in the country by none other than Wipro captain Azim Premji. The belief in the state government runs through the Wipro office in Kolkata too.

Indu Khattar, general manager and head of Wipro operations in the city, says: "We have full faith in the government. It has supported us in all possible ways."

It's not difficult to see why IT is big in the state today. West Bengal announced its IT policy in 2000.

However, in the last two years, the state's IT department has held some 50 roadshows across Hyderabad, Bangalore, Chennai, Mumbai and Delhi. International roadshows in Sweden, Germany and London were organised by the state IT department and Webel, the nodal agency for IT investments in the state.

With companies responding to West Bengal's invitation, Sector V in Salt Lake (the sole IT hub in the city) in Kolkata is already bursting at the seams.

The state government's search for more space ended at Rajarhat as the next IT hub where West Bengal Housing Infrastructure Development Corporation was sitting pretty on 7,000 hectares of land for allotment in the residential/commercial and industrial space.

Within no time Rajarhat has become the hotbed of real estate investments with companies like DLF, Keppel Land, Unitech group and Singapore-based Ascendas making their debut. The first phase of DLF's Rs 280 crore (Rs 2.80 billion) IT project will be operational this month.

Several IT parks with project costs running into Rs 1,000 crore (Rs 10 billion) to Rs 1,500 crore (Rs 15 billion) have been announced in Rajarhat alongside a host of peripheral projects in the housing, entertainment and retail spaces. This is part of the IT department's initiative to create infrastructure for the proposed investments.

In anticipation of the huge investments flowing in, the state cabinet has given the nod for allotment of another 500 acres off Rajarhat for the IT and ITES sector.

The project will be nearly three times bigger than the existing electronics complex at Salt Lake and it will boast of double the space reserved for technology firms at Rajarhat. The hub will be developed through a collaboration between Webel and a private partner.

IT industry observers point out that the deluge of investments was not the only consideration behind announcing the new IT hub. Rajarhat land prices had gone through the roof with Hidco demanding for Rs 2.16 crore (Rs 21.6 million) per acre which sent companies, including Wipro, knocking the chief minister's door to hammer down the prices.

The West Bengal's long-term goal is to find a place in the top three IT states of India and contribute 15 to 20 per cent of the country's total IT revenues. The state IT department projects nearly 175,000 employees in the IT sector and 210,000 employees in the ITES sector. Currently there are 29,000 employees across 200 companies.

Infrastructure bottlenecks

With the IT sector pumping money into the state, the economy is upbeat. In the last five years, the state has been growing at 7.2 per cent a year. Automobiles have grown from 450,000 to 950,000 and consumer spends are up. On the aviation front, the city expects five million passengers by 2015 and is conducting feasibility studies for a new airport.

While the economic indicators have everything going for Kolkata, it is way behind its IT peers -- Bangalore, Chennai and Hyderabad in terms of software export numbers.

Though software exports are up -- Rs 2,600 crore (Rs 26 billion) in 2004-2005 from Rs 1,740 crore (Rs 17.40 billion) in the previous year -- it is still lower than those clocked by Haryana (Rs 5,000 crore), Tamil Nadu (Rs 8000 crore), Andhra Pradesh (Rs 5,650 crore) and Karnataka (Rs 19,400 crore. Yet, West Bengal has come a long way since 2000 when the state's software export was between Rs 200-250 crore (Rs 2-2.5 billion).

The state has some catching up to do on the infrastructure front. Frequent bandhs for instance, can spoil the IT party. Says Yogesh Verma, DLF Info City Developers (Kolkata): "Bandhs send the wrong signals. All the efforts are washed away by a single bandh." Verma should know as he's responsible to market the Rajarhat IT park project.

The state IT department, however, argues that the IT and ITES sectors have been declared public utility services and on any bandh day, stickers for company vehicles are available to prevent disruption of operations.

Yet others complain that lack of co-ordination between the IT department and the state departments is creating roadblocks.

Ashish Kumar Sen, executive director of the US-based business process outsourcing outfit Acclaris, says that the implementation process in Kolkata is slow. Poor road, supply chain and transportation infrastructure are the other nagging issues.

But the government is keen to make amends. The urban development department is inviting expressions of interest for creating basic infrastructure for Sector V in Salt Lake in partnership with private parties.

The government may be making the rights moves, but for a state playing the catching-up game, promises need to be translated to reality at lightening pace. Or else, the critics will continue to gab.

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