Why Infy, Wipro will not set up campuses in West Bengal

The Trinamool Congress government in West Bengal may fail to attract information technology majors Infosys and Wipro (for its second campus in the state).

And, the fact that the Union finance ministry is considering more incentives for special economic zones (SEZ) is adding to its woes.

The finance ministry has been indicating it might relax SEZ norms to cut the country's current account deficit (CAD).

Though Infosys had paid Rs 75 crore (Rs 750 million) for a 50-acre plot in Rajarhat, it is yet to start work there, as it hasn't secured the government's nod for an SEZ. Chief Minister and Trinamool Congress chief Mamata Banerjee has ruled this out.

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Wipro already has a campus with an SEZ status in Kolkata. Though it had planned another campus in the state, it didn't receive an approval for this.

It was expected each of the two campuses would involve an investment of Rs 700-800 crore (Rs 7-8 billion) and create employment for about 15,000 people.

During the Left Front regime, when Buddhadeb Bhattacharjee was chief minister, Tata Consultancy Services (the country's largest IT service provider), secured 40 acres in Rajarhat.

It also received SEZ status for the campus. TCS started work on this site in December 2012. It is expected in the next couple of years (once the two phases are complete), the campus would employ about 16,500 people.

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To boost exports, the Centre is considering various steps, including promoting SEZs. With imports continuing to rise, the trade deficit in these months has risen significantly, exerting pressure on CAD.

When an area is notified as an SEZ, businesses don't have to pay income tax for the first five years. For the next five years, they have to pay half the tax on income. SEZs also have different labour laws.

Recently, Infosys co-chairman S Gopalakrishnan said to be competitive in the current market conditions, SEZs would be an important criterion.

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When contacted, Infosys said, "We will schedule a meeting with West Bengal commerce and industry minister Partha Chatterjee at a convenient time to explore the way forward and look for an innovative solution."

However no time frame has been fixed for this.

Earlier, Partha Chatterjee had told Business Standard there was no further communication from the state on this issue.

Gopalakrishnan had said, "Every government, every political party has its policy, its platform. We respect that. Having said that, promoting industry is important. The IT industry is projected to grow 10-11 per cent. So, there is no pressure to expand."

Owing to the silent period before its fourth quarter earnings, Wipro didn't reply to queries sent by Business Standard.