Kerala tech: Wants lower rent and taxes
By Yasmin Ahmed

Kerala once watched from the galleries when Cyberabad and the Silicon Valley of India in its neighborhood overtook everyone as dominant tech centres. No longer so! Kerala is a hot destination of IT services now. The capital city of Thiruvananthapuram and the metro-city of Kochi have huge technology parks with almost all prominent IT companies making a beeline to Kerala.

Kerala can now proudly claim to have a booming tech sector employing tens of thousands on many mission critical projects.

The IT Industry in Kerala is estimated to employ a workforce of over 60,000, which includes both highly-skilled professionals as well as non-technical personnel, with Techno Park employing approximately half of this workforce. The IT Industry in Kerala had an approximate annual turnover of 305 million US $ last year, with Techno park contributing about 245 million US $.
 
The global economic meltdown has begun to impact Kerala's IT Industry. The magnitude of impact and its timing will vary between companies. However, the growth rate of the industry is likely to be seriously impacted for the next 1-2 years. In particular, the year 2009 is expected to be the most impacted period.

GTECH, The Group of Techno park Companies, founded in 2000, represented by the CEO’s of the companies in Techno park, is the apex organization of companies in Techno park. The GTECH mission as mentioned in their web site is to promote the cause of the community of IT companies in Kerala, with specific emphasis on the overall development of the state.

Recently the GTECH made out a charter of demands on the Government of Kerala with a view to initiating corrective action to help IT survive in the current melt down and maintain the competitive advantage. The GTECH put forth the view that the industry will be forced to take a series of steps in order to tide over the slowdown. The steps that may need to be taken include reduction in operational expenses, reduction or stagnation of remuneration, reducing employee intake, and in rare cases, termination of services of personnel.

The GTECH affirmed that these measures may only be necessary for a limited period, and that the industry will continue to contribute to the economy of Kerala in a significant manner, even during this period. The IT and ITES industries have to compete globally, and therefore must have parity in operational costs to retain the global competitive edge. The Government of Kerala should act immediately to ensure that the administrative regime in the Government-run IT parks must be enabling and competitive vis-à-vis other IT destinations in the country.

Here is a list of the specifics demanded by GTECH as quoted from their press release.

-  No additional taxes or duties on the industry at this time.
-  Include representatives of Techno park companies in governance bodies such as the PIB.
- In order to sustain the current levels of Business, the following specific steps needed to support the IT and ITES Industry:
- Re-examine the rental regime in the Government-run IT parks and ensure the rentals are harmonized with the recent trends in other metros, a rental reduction of about 25% is warranted to retain competitive advantage.
- Restrictions on electricity consumption is removed and the recent tariff hike reversed, as electricity is the only and most vital raw material consumed by the industry
- Treat Techno Park as an Essential Service, as has been done in West Bengal, so that events such as hartals and bandhs do not disrupt the functioning of companies
- When new legislation or legal frameworks are to be created, do it with industry participation
- A mechanism to examine compliance of companies to the applicable laws be instituted within Techno park itself and that the Government does not go public or to the media with such issues in the context of any one or more companies.
- The current policy regime of the IT Department be suitably modified so as to enable Techno park companies that possess certain minimum requirements to take up e-Governance projects for the State of Kerala and its parastatals.
- Government of Kerala should take up with the Government of India in order to extend the STPI Scheme by 3 more years.
- The concessions made to Special Economic Zones be made available to the Techno Park as well.
- Sales tax be withdrawn on computer software.