An unfriendly policy for software technology parks (STP) and high property taxes seem to have driven IT companies away from the city, including, recently, a large multinational looking for 6 lakh sq. ft.
The Pune Municipal Corporation (PMC) has not received a new proposal for setting up an STP since April 2008, confirms city engineer Mr Prashant Waghmare. The main reason for this, says Mr Atul Chordia, Chairman, Panchshil Realty, is the high rate of municipal tax coupled with the octroi which makes the proposition unsustainable for companies looking for 20,000-50,000 sq. ft. The earlier single-window clearance system has changed and prospective clients need to go through multiple clearances to boot, a process that can take four to six months to complete, he says.
Sops withdrawn
Though Dr Anand Deshpande, Chairman and Managing Director, Persistent Systems, believes that withdrawal of concessions to STPs is probably why no new applications have been received, Mr Chordia points out that many companies look for space within city limits because of employees' preference. “These smaller projects serve as incubators for larger facilities which can then be located in SEZs (special economic zones),” he says.
Ever since the State Government revised the IT policy of 2003 and withdrew the concession of a flat property tax rate of Rs 2.60 for STPs, taxes have risen to a minimum of Rs 4.50 and can go up to Rs 9 a sq. ft, depending upon the locality, Mr Vilas Kanade, Deputy Commissioner, Property Tax, PMC, said. The new rules came into effect from April 1, 2010.
High Tax
In comparison, rates in Banglaore, Hyderabad and Chennai are Re 1, 80 paise and 50 paise respectively, while no tax is applicable in Gurgaon, Chordia points out, adding that IT companies have termed Pune as user-unfriendly.
The head of a medium software company in Pune agrees that for some reason the PMC is depriving the IT community of benefits due to them. “The start-up scenario is good but can be more vibrant,” he says.
Every lakh sq. ft creates 1,000 jobs a shift, says Mr Chordia, terming the move to not give IT firms more benefits short-sighted, and in effect a case of killing the golden goose.