SemIndia, Infosys may sign MoUs with Andhra today

The Andhra Pradesh government and SemIndia Limited are going ahead with formalising the $3-billion Fab City project deal, effectively bringing down curtains on the neighbouring Karnataka government's efforts to poach the prestigious project.

According to reliable sources, the state government and Vinod K Agarwal, head of SemIndia, are expected to sign a memorandum of understanding (MoU) to this effect here on Thursday.

Karnataka chief minister Kumaraswamy recently said that his government would try its best to win over the project, even after the Union IT minister and SemIndia had announced the Andhra capital as the ideal location for Fab City.

The icing on the cake for Andhra is Bangalore-based IT major Infosys' plans to unveil its expansion plans in Hyderabad the same day. Sources close to the development told Business Standard that the IT major and the Andhra government might sign an MoU tomorrow.

The state government is expected to allocate 600 acres of land to Infosys in the multi- product IT SEZ near the upcoming international airport, which may be almost half the size of the proposed park.

Infosys founder Narayana Murthy, who met the chief minister here in August 2005, disclosed his intention to focus more on Hyderabad for the company's future expansion plans. It seems that the importance of Hyderabad in the company's future plans grew bigger and bigger after August last year when the Andhra government doubled the land area sought by Infosys.

Coming to SemIndia, besides providing 1,200 acres of land, which would be treated as its nominal equity in the Fab City project, the state government is also expected to agree to provide electricity at the rate of around Rs 2 per unit, considered the cheapest-ever as the average industrial tariff is Rs 3.50 a unit.

It may be recalled that the Fab City promoters sought 50 mgd of water free of cost, a complete relief from state taxes and VAT for 15 years, free waste treatment plants, complete labour flexibility, declaration of SEZ status, among other incentives.

The government is said to have agreed to supply water to the project on cost-to-serve basis as in the case of power supply.

The other incentive package for the period proposed by SemIndia could cost the government about Rs 2,626 crore. The government is also expected to include a provision for allotting additional land in case the fab operations expand beyond the present area.

Meanwhile, Mohandas Pai, chief financial officer and member of the board of Infosys Technologies Limited, is expected to sign the MoU on land allotment with the state government.