Maharashtra’s new IT policy: impetus to realty business

Maharashtra has recently unveiled its third amended IT /ITeS policy. It was first drafted in 1998 and later re-promulgated in 2009.  The new policy announced in August 2015 incorporates industry best practices from different countries and claims to help in the growth of technology focused geographies and parks like Bandra Kurla complex (BKC) and Hinjewadi. Till date, within Maharashtra contours, only Pune and Mumbai have a fair pie of the IT growth story. The new policy will surely give impetus to tier 2 and tier 3 cities of Maharashtra and bring them on the radar of large IT companies who would like to set up their base in these cities. These cities can be cost-effective for companies and also give the local talent pool a taste of the corporate professional world.

The new IT policy is in sync with the ‘Digital India’ and ‘Make in India’ campaigns rolled out by the Prime Minister. The latest policy has amended some ambiguous statements and indeed provides a clearer picture regarding some incentives. The clarity on the establishment of BPO’s in areas with low HDI’s in the new policy is a good example of aforementioned amendments.

Key Differences between the 2009 Policy and the latest Revised Policy

The new incentives have been drafted after taking into consideration the difficulties faced while implementing the old policies. There have been a number of provisions and incentives that have been adopted in the new policy that will facilitate the expansion of the IT industry. One of the most important provisions is the additional FSI that is permissible under the new policy which enables the developers to lease out the additional built up space at affordable rates.

The establishment of Critical Infrastructure fund is a key area where the new policy differentiates itself from the old one. The 2009 policy focused on the development of IT/ITES sector in specific locations such as Aurangabad, Nasik and some other districts with low HDI. The new policy is aimed at developing the sector throughout the state as opposed to specific locations. Unlike the old policy, the 2015 policy is more specific about the subsidies and the incentives regarding the promotion of BPO’s in the underdeveloped parts of the state.

The introduction of policy on IT/ITES customized Integrated Townships is an important area where the latest policy differentiates itself from the old one. The latest policy provides fewer options for development under the ‘support services’ category. The penalty payment regulations to prevent the violations and abuse of additional FSI and permissible built up area have been laid out in the latest policy.

What’s in it for IT companies?

They get exempted from paying stamp duty and local body tax/ entry tax. They get power at industrial rates, which is lesser than what the commercial sector pays. The property tax will be charged at residential rates and concession on Value Added Tax (VAT).

 What’s in it for Maharashtra?

Maharashtra currently ranks second to Karnataka in IT exports. We can expect this new IT policy to bring about a radical change in the IT sector and help Maharashtra bag the first position within the country in terms of IT investment.

What’s in it for the real estate industry?

In the present scenario of soaring demand for IT/ITeS office spaces and shortage supply, we expect significant supply to hit the market in the time that lies ahead. This should bring in a demand-supply balance thereby giving boost to realty office space business and also have a ‘ripple down benefit’ to residential real estate sector.

The policy thus comes as a major relief during a time when real estate industry seems to be going through a difficult time. We hope the policy helps real estate sector win back its old glory!

The scoop

The increased FSI, which has already caught the attention of a number of developers is a very important change introduced by the new IT/ITES policy. The establishment of critical infrastructure fund will certainly prove beneficial in developing the infrastructure required for the IT parks. The incentives provided regarding the establishment of BPO’s in the underdeveloped areas of the state will prove beneficial in alleviating poverty and reducing unemployment. The concept of Incubation centres can pave way for spurt in IT/ITES entrepreneurship across the state.

 

About the author

Sourav Kumar, General Manager, Investment Services, has over eight years of work experience in various facets of alternate investments such as sourcing, analysing proposals and structuring and executing deals across real estate asset classes.



 

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