IT Pipedreams

Weak political resolve and poor policy initiatives derail the development of the IT sector in Madhya Pradesh. if only the Government would go full throttle in wooing the sector's big players, the trickle could turn into a torrent of investment, writes India Today's Ambreesh Mishra.

Former chief minister Digvijay Singh is indignant that his government's information technology initiatives had been shelved by the BJP Government. But technology has a mind of its own. It can work wonders if deployed in a proper framework. Or it can turn into a long unfulfilled dream, as is the case with Madhya Pradesh.

If the award-winning Digvijay-era e-governance initiatives like Gyandoot and Headstart are floundering, it's hardly because the BJP Government is wreaking vengeance. While Gyandoot was poorly designed, Headstart was based on a utopian presumption that the cheap open-source software platform of Linux was the answer for mass IT-based education. Now most Gyandoot kiosks are shut and Headstart survives only where the operators were smart enough to switch to Windows for its excellent support system.

But that's only half the story behind the state's rank in the 2005 e-readiness assessment report for the states. Since the report accorded heavy points for software and ITES exports and BPO operations, Madhya Pradesh's low rank was almost a given because investment in IT sector is still a pipedream.

The only functional IT hub in the state – Indore's Crystal IT Park – has barely received the response its promoter, the Indore Audyogik Kendra Vikas Nigam, was hoping for. Since its launch last year, the Rs 85-crore park spread over 21 acres of land has failed to find many takers and the State Bank of Indore that had funded the project is pressing hard for the recovery of its loans.

Barring Impetus, an Indore-based company and a private telecom operator, none has shown interest in the park. Experts are not surprised by its fate. Touted as a hi-tech building providing office space to software and BPO industries, the park, according to MPAKVN officials, had some basic flaws like low floor-to-ceiling height that no respectable IT company would brook.

It's not that companies don't want to invest. TCS has been interested in investing in Indore for over a year now. However, Government officials admit, there's no Government land available in the over-crowded city which is in four-km vicinity of airport, as laid down in the state's new IT policy. TCS officials favoured a plot right opposite to IIM, Indore, but the land, under possession of the Industry Department, is caught in litigation. Indore district officials say they are now looking to acquire land in Indore. Meanwhile, the hunt is on for suitable land in Bhopal for TCS as well.

Problems concerning land perhaps form the biggest hurdle in fast-tracking IT investments in the state. India Today had last year published a detailed account of how the Government's own arm, the Bhopal Development Authority (BDA), had almost derailed an IT Park on Badwai Hills near the airport. Failure to identify a suitable chunk of land, which according to the IT policy is over 100 acre within four-km of the airport, resulted in innumerable delays to begin with.

In Gwalior, the initial plan was to develop an IT park in Delhi's counter-magnate city. But the fitful progress of the counter-magnet city and its distance from the main city led to a search for alternatives. IT Department officials found almost all the Government land was in control of local politicians and under litigation. The
officials have now zeroed down on a plot of land right opposite the IIITM. It's barely 1.5 km from the airport and four km from the railway station. Claims the MD of the State Electronics Development Corporation, Anurag Shrivastava, "We're in possession of 25-acre land and will shortly take possession of 25 acres more."

But district officials aren't sure if the project would be hassle-free. The right of way for the plot had to be found through private land owned by a local strongman who has a criminal record, including a murder case. Although the state Cabinet cleared a land-for-land deal for his plot, he is still refusing to budge. Recalls a Gwalior district administration officer, "When IIITM was coming up, the local mafia arm-twisted the builders for getting lucrative supply contracts. Without law and order, no respectable company would open shop here." If it were to fail, the state would miss the chance of benefiting from the SEZ status accorded to the
Gwalior IT Park in December last.

In Jabalpur, there is another peculiar problem. The mechanism for fixing the price of land has led to some strange results. While Government land in Bhopal city fit for IT companies is about Rs 196 per sq ft, it's an exorbitant Rs 290 per sq ft in Jabalpur. "With its far inferior human resource base and high-priced land, how can
Jabalpur hope to attract any company beats me," says Praveen K. Singh, an executive with a private telecom giant, who has worked for IT companies in Bangalore.

Admits IT Minister Kailash Vijayvargiya, "There are problems. But every effort is being made to ensure that IT companies find the state an attractive destination for investment." The lack of investor interest can be gauged from the fact that at the recent Khajuraho investors' meet, there was just one IT company, Bhopal-based Netklink, that evinced an interest in making investment in the state.

The state compares poorly when it comes to inherent advantages like trained manpower, history of technology centres and the likes enjoyed by cities like Bangalore. However, weak political resolve to develop Indore into something like Hyderabad has also played its part. Besides, poor policy priorities have also played their part. The state's first IT policy of 1999 failed miserably because of its insistence on things like technology-neutrality and thrust on such provisions as Government IT projects for those companies who invest.

The new IT policy has tried to break free from the shackles. As a result, there is no one-size-fits-all formula. For instance, investment destinations in the four metros of the state are being treated under different formulae. In Gwalior, the thrust is on equity participation of the Government with private developer. In Bhopal, the land is being allotted directly to companies. In Jabalpur, bids are being invited from infrastructure developers who can later sell the plots to companies individually.

"We're trying to be flexible," says Shrivastava. It's also yielding some results, at least in Bhopal where BPO major Genpact, the Indian arm of global giant GE, will be allotted 50-acre land shortly. Likewise, the allotment process for another NASSCOM star Aegis in Bhopal is also underway.

But the competition is stiff. If Bangalore, Pune and Hyderabad have their obvious advantages, states like Uttaranchal are beginning to offer free land. While the state's own policy offers cheap land with add-ons like generous FAR provisions, stamp and registration duty waivers and property tax at domestic rates, it's still likely to be tough going. If only the Government would go full throttle in wooing the sector's big players, the trickle could turn into a torrent of investment.

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