AP cabinet okays new IT policy

A one-time subsidy of Rs 50 lakh for the first five medium IT and ITeS companies that will come up in the Tier-II cities, providing free space in IT parks for five years to the institutes engaged in high-end research and a one-time subsidy of Rs 15 lakh to smaller firms are among the several new features which form part of the new IT policy that would come into effect from April 1, 2005 in Andhra Pradesh.

The new IT policy formulated by the state government with special focus on small and medium enterprises, development of Tier-II cities and IT education was formally approved by the state cabinet which met here on Friday. The subsidies and incentives provided in the new policy will approximately cost over Rs 110 crore a year, government sources told Business Standard.

The rebate of Rs 20,000 on each job created by the IT and ITeS companies, which the government originally planned to discontinue, will continue to be available in the next financial year too. Power subsidy, which is 25 per cent on the energy consumption, has been removed.

But all the IT and ITeS operations will be shifted to the industrial tariff in future from the existing commercial tariff. This will again benefit the companies as the industrial tariff is much lower. The 100 per cent reimbursement of stamp duty will continue in the new IT policy.

According to sources, incentives and other facilities will be finalised across the table by the government to the mega IT and ITeS companies which invest over Rs 50 crore and employ about 1,000 people each. Other features include an incentive of Rs 2 lakh for each patent filed by any company in Andhra Pradesh and Rs 2 lakh for quality certification.

The IT companies which provide employment to 250 people and the ITeS companies which employ 500 people are eligible for the early-bird subsidy of Rs 50 lakh each in the identified Tier-II cities in the state. IT companies employing 100 professionals and the ITeS companies which provide employment to 200 people are eligible to avail a one-time subsidy of Rs 15 lakh each.

A subsidy of 25 per cent on industrial tariff to the companies with a turnover of up to Rs 10 crore (minimum turnover of over Rs 1 crore) and a 50 per cent exhibition subsidy with a maximum limit of Rs 10 lakh along with the preferred allotment of land for setting up own facilities will be available.

The government has also decided to pay Rs 2,000 per candidate trained in the IT and ITeS to the institutes from April 1, 2005, in a bid to improve the talent pool in this sector.

An 80-square kilometre knowledge park with a net availability of over 14,000 acres of land near Hyderabad, declaring the proposed IT hardware park with 5,000 acres near the city as special economic zone are among the other initiatives proposed in the IT policy.

"Development of IT infrastructure, talent pool, development of entrepreneurship in the IT sector and special incentives to small and medium enterprises in the IT sector form the major thrust in the new policy to promote the IT industry in Andhra Pradesh," a senior government official said.