The Hindu : Andhra Pradesh News : Is IT really booming in city of destiny?

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Tuesday, Jul 29, 2008
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Andhra Pradesh

Andhra Pradesh

Is IT really booming in city of destiny?

Sumit Bhattacharjee

Only two companies start their operations
Authorities accused of creating problems

VISAKHAPTNAM: In 2005, three hills overlooking the picturesque Rushikonda Beach were allotted to various IT companies. About 300 acres were assigned to 23 companies, covering the three hills. The idea was to create a replica of the Silicon Valley. The thought was noble but what’s the outcome? After five years, only two companies have started their operations in a scaled-down level.

“Had it been China, the hills would have been booming with activity with full-scale operations. There are more bottlenecks than facilities,” says Chief Executive Officer of Sankhya Technologies B. Gopi Kumar. Government’s attitude seems to be the main bottleneck.

“The city is being given a step-motherly treatment by the government. There are hardly any senior officers, politicians or bureaucrats posted here to take up the cause on a war- footing,” says Bulusu Murali Manohar Rao, president of Visakhapatnam Information Technology Association and director of Sankhya.

Naresh, chief executive officer of Symbiosys Technologies, points out that in the present scenario where the economy is being tightened and there is a cut down in the billing, two-tier cities like Visakhapatnam should be the right choice for big IT entrepreneurs.

“The authorities concerned should take proactive steps to make best use of the scenario,” he says.

The entrepreneurs allege that instead of being proactive, the authorities are bent on creating problems for the IT firms.

They claim that the land on hill No. 2 was allotted to them on an ownership basis. It was sold to them at the rate of Rs.10 lakhs to Rs.40 lakhs (depending on the location) per acre in 2005. A sale agreement to that effect was executed between the companies and the Andhra Pradesh Industrial Infrastructure Development Corporation (APIIDC). The IT firms had also paid a registration fee of 7 per cent on the value.

Subsequently, APIIDC has asked them to cancel the agreement and execute a new lease agreement, as the land has been converted into SEZ (special economic zone). The companies now have to pay a lease rent for the space allotted.

“This development has left many of us in a state of flux. We have invested a lot of money and now we are not sure of our status. How can they now change the status? Moreover, as per SEZ rule 5A, APIIDC has to provide infrastructure to all the companies on a plug and play basis. So far, they have done nothing. We have paid Rs.18 lakhs per acre to VUDA for the development of basic facilities like roads, street lighting, basic power and water. Not a single facility like power (high tension lines), bandwidth, required amount of water, drainage and public transport have been provided by the APIIDC. They did not even bother to provide the basic facilities to the construction workers like toilets and drinking water. We did all the construction, braving all odds, and paid for the street lighting to VUDA. In China, all SEZs are sold on a plug and play basis and that’s why they are progressing rapidly. By bringing the units under the SEZ fold, the companies are not in a position to even sub-lease,” says the CEO of an IT firm.

Lack of office space and basic infrastructure are holding back many of the top companies.

“A couple of big players like Oracle are in dilemma now. While the city’s new look airport is yet to be fully operational, Hyderabad has got a new airport, within the same time. This indicates the government’s intentions,” says Sastry Pullela of Xinthe Technologies.

Commenting on the allegations, Zonal Manager of APIIDC, D. Haranatha Reddy, says that a few companies themselves have asked for the SEZ status to enjoy the benefits of SEZ. “Moreover, it was only a sale agreement and ownership status was not accorded. We agree that there are a few bottlenecks like air connectivity, residential and recreational facilities and we are working on them. Compared to the other two-tier cities, we are doing much better,” he says.

Official clarifies

A senior IAS officer in Hyderabad clarifies that the sale agreement was made prior to the enforcement of the SEZ Act, and now all the IT firms have to comply with it. The officer has also alleged that a few firms are trying to make use of the potential land, which has gone over Rs. 6 crore per acre into real estate ventures.

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