Kerala finally wakes up to IT reality

Kochi: Keralas recently-announced new information technology (IT) policy promises a package of major incentives to the IT industry and ensures freedom from the rigours of labour laws.

The policy incorporates what is described as "the first tailor-made regulatory framework for the IT industry," wherein software companies will be deemed as establishments under the Kerala Shops and Commercial Establishments Act with several exemptions from the provisions of the Act. IT industrial units will be allowed to have three-shift operations with permission for women to work on night shift.

Flextime and tele working will also be allowed. The IT industry will be treated as a public service utility under the Industrial Disputes Act, reducing the scope for employees agitations. The government will permit self-certification by the IT industry in respect to nine labour laws.

Under a comprehensive scheme aimed at creation of employment, the policy specifies incentives up to 40 per cent of the fixed capital investment for fresh investment in the coming four years. (This may be reviewed after two years). The standard investment subsidy for software, hardware and IT-enabled services (ITES) will be 20 per cent, subject to a ceiling of Rs 25 lakh. The subsidy will go up on the basis of employment levels.

The 40-per cent subsidy, subject to a ceiling of Rs 40 lakh, will be available to companies employing a minimum of employees in the software or 125 employees in the hardware industry or a minimum of 500 employees in the ITES industry for a minimum of 12 months.

The existing companies going in for expansion will be eligible for the concession. The policy proposes an early-bird incentive of Rs 50 lakh for those companies investing before 30 June 2002, provided that they employ a minimum of 250 persons for at least 12 months.

The policy, which aims at a minimum annual growth level of 100 per cent in IT, says Kochi will be developed as an international media and information and communications technology hub with facilities matching the best available worldwide.

The proposed hi-tech park and IT corridor are to come up in Kochi, the landing point of two submarine cable networks. The policy proposes a private park scheme that will allow the private sector to build IT infrastructure of specified standards and get various concessions. The floor area ratio for buildings of IT software units will be fixed as five against the earlier 1.5.

The government will endeavour to promote Kerala as a favoured ITES destination in this part of the world and to aggressively market ITES as the states core competence. The state information infrastructure, to be set up in two years, shall endeavour to provide robust and seamless connectivity to the industry across the state. Schools and colleges and panchayats will be linked and the infrastructure will be used to serve the tourism industrys communication needs.

Service providers within the state will be urged to maintain and transparently share quality of service data with their consumers. The minimum grade of service shall apply irrespective of the location within Kerala. This will prepare the state for an era when voice-over-Internet protocol communication shall be permitted in India.