The decks have been cleared for the establishment of Microsoft Corporation's first ever permanent development centre in India with the Rajasekhara Reddy government today deciding to honour in toto the agreement inked by the previous regime with the global software giant, with respect to the provision of land and other facilities in Hyderabad.

Microsoft, which started its development centre in Hitec City in 1999, plans to set up a permanent development facility in a sprawling 42.25-acre land near Hitec City. In fact, the proposed permanent development centre is the corporation's biggest facility outside the US and the first one in the country.

The centre, to be set up with an investment of Rs 50 crore (Rs 500 million), promises to provide employment to over 2,000 software professionals in a period of seven years.

The state cabinet, which met here today, has approved the remaining clearances with regards to agreement on the proposed development centre concluded in 2003. The entire land would be transferred to the company by the government at a price of Rs 50 lakh (Rs 5 million) with all the concessional provisions, the Mohammed Ali Shabbir information and public relations minister told the media.

The concessions offered to the Microsoft centre include Rs 20,000 rebate on each job created, reimbursement of 50 per cent of stamp duty on the first transaction and all the infrastructural facilities at the doorsteps that includes the laying of the road connecting the development centre with the Old Bombay highway.

The road alone will cost the government about Rs 15 crore (Rs 150 million) that includes the cost of land acquisition, around Rs 2 crore (Rs 20 million) on power lines, about Rs 50 lakh (Rs 5 million) on drainage facilities among others.

Later speaking to the media, chief minister Y S Rajasekhara Reddy clarified that there was no condition put forward to Microsoft or to any other software company on making it compulsory to provide employment to only locals.

"We have only requested them to provide employment to the locals and that is it," he said while replying to a query.