Nasscom slams West Bengal Govt. for scrapping IT township project

Last week, West Bengal government announced that it "cannot proceed" with the proposed Kolkata Link IT township project near Rajarhat in North 24 Parganas district after allegations of irregularities in the allocation process rattled the state government.

The government's decision came seventeen days after an irate mob set on fire Vedic Village, a spa resort near Rajarhat. An initial probe into the incident has revealed that land sharks had illegally obtained the land for Vedic Village from poor farmers "at gunpoint" thereby infuriating the local villagers and triggering a clash between them and the local goons. Following the violence, illegal arms were also seized by the police from the Vedic Village and its promoter Vedic Realty's Managing Director Raj Kishore Modi was arrested on charges of involving the land mafia in procuring land from farmers. Rattled by the incident, the state government decided to put a brake in its ambitious 1600-acre township project billed as the state's second software hub.

Later, state housing minister had offered 10 acres of land each in an alternate location in Rajarhat to Wipro and Infosys but his offer found no takers as it was much less than the 90 acres of land each of the two IT majors were supposed to receive for setting up IT SEZs.

The latest development comes as a personal blow to Bhattacharjee, whose government is taking its baby steps to industrialization. In early 2007, the state government said it would move a proposed chemical hub from Nandigram in East Midnapore district after 14 died in a violent clash between police forces and local villagers. West Bengal was also hit by the high-profile exit of carmaker Tata Motors last year, when violent farmer protests prompted Tata Motors to shift a Rs.2000 crore plant to produce the world's cheapest car out of the state. Bhattacharjee also suffered the worst political setback of his career in the Lok Sabha elections earlier this year in May.

Expressing disappointment, Nasscom president Som Mittal said the state government should have been more proactive in acquiring land for the IT projects and should "re-prioritize" its land allocation policy for IT projects in the state, as they can create a lot of downstream economic activity.

"It is unfortunate that the project had to be shelved. It had taken West Bengal a long time to build its reputation as an IT destination," Mittal said. "We are disappointed, but we are not giving up. At this juncture, we feel that both the state and the central governments should play a positive role to find alternate ways to accommodate these large IT companies. It is very important to give priority to large IT companies (like Infosys and Wipro) which are willing to expand their presence in the state, and ensure a sustainable atmosphere for (their) operations."

According to Mittal, the latest development in West Bengal will discourage other IT firms to invest in the state. "This incident has happened at a time when the industry is witnessing a single-digit growth of 4-7 percent. We will be back when the industry is on a growth path," he added.

Mittal, however, believes it is a "temporary setback" for the state government and expressed optimism that it will find a solution to the problem. "The state should be able to come up with a solution. I am hopeful that within 6-8 months, the government will be able to allocate alternate land for Wipro and Infosys. The state government has the right intent to promote IT industry in the state,â?? Mittal said.

"There is need for trust and confidence in the minds of the industry. It will be really sad if after all the efforts of the state government to create an industry-friendly environment we have to look for land elsewhere," he added.

Besides Mittal, Kiran Karnik, former chairman of Nasscom also lashed out at the state government, saying it "has messed up" the land distribution process. "It is not only the Vedic Village incident, but we had a similar experience in Singur and Nandigram," Karnik said.

"West Bengal, despite having a positive government, has faced many issues in the past two years and losing two big trendsetters (Infosys and Wipro) who would have been followed by more companies is a setback to the state's image," Karnik said.

However, according to Karnik, it is not just about losing Infosys or Wipro. "It is not just about missing out on Infosys and Wipro but the state's inability to keep a commitment and that is a major setback for the industry," he said.

V.V.R. Babu, chairman, Nasscom (eastern regional council), also criticized the government of neglecting the IT sector in the state. "We know that land has been given for real estate projects in New Town and Rajarhat. But the state government should realize the importance of IT in the economic growth of a state and should reprioritize land allocation programs for large IT companies," Babu said.

"The Government has enough land. It has land in Rajarhat township but it is meant for real estate. Government has to choose whether it wants employment by offering land to IT companies or just make buildings," he said.

Nasscom's outburst came barely days after Finance Minister Pranab Mukherjee lamented over the development in his home state. "It (the decision to scrap the IT township project) is unfortunate. If Infosys and Wipro had invested in West Bengal, it would have sent a good signal. Because the IT industry generates a lot of jobs. Between them, Infosys and Wipro might have generated between 5000 and 10,000 good jobs," Mukherjee said.

Besides Mukherjee, Kevin McCole, COO, UK India Business Council, believes that West Bengal's image as a pro-industrial state has nose-dived after the latest setback. "There is a negative perception among investors in the UK regarding investments in Bengal at present. If we ask a business delegation to come to West Bengal and invest, they ask us - is this the state from where Ratan Tata had to pull out his project," McCole said.

"The situation has become worse after the Vedic Village incident in which Infosys and Wipro had to pull out. The situation here (in India) may not be that grim but from London they form that opinion," he said.