Financial Daily from THE HINDU group of publications
Tuesday, Mar 14, 2006
Financial Daily from THE HINDU group of publications Tuesday, Mar 14, 2006 |
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Info-Tech
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Infrastructure Government - Politics States - Kerala Columns - Random Walk A requiem for Smart City? K.G. Kumar
The repercussions of the ensuing elections to the State Assembly on one potentially path-breaking project in the State's information technology (IT) sector are quite unfortunate. Specifically, the concerns relate to the proposed Smart City project at Kochi. The Election Commission has directed the State Government not to sign the final agreement with the Dubai Internet City (DIC) before the forthcoming elections, to be held during the last week of April and early May. The Smart City, which DIC would have developed at an investment of Rs 1,500 crore, was envisaged as a self-sufficient facility, spread over an 1,000-acre zone, for IT, ITES and business process outsourcing (BPO) companies from around the world. The DIC claims to be "a strategic base for companies targeting emerging markets in a vast region extending from the Middle East to the Indian subcontinent, and Africa to the CIS countries, covering 2 billion people with GDP $6.7 trillion." The DIC is basically a free trade zone backed by the Middle Eastern country's government. It was built with an initial investment of $400 million. It offers foreign companies 100 per cent tax-free ownership, no currency restrictions, easy registration and licensing and protection of intellectual property. Not all these attractions could have been guaranteed at the Kochi Smart City, to be sure. Yet, had the project fructified, it could have substantially changed the face of Kerala's IT industry. As of now, apart from the limited success of the State's first electronics park - Technopark in Thiruvananthapuram - Kerala has little to showcase in terms of blue-chip IT companies. The Smart City held out the promise of changing that dismal record. Nonetheless, there is really no need for Kerala to feel utterly despondent. Whichever government comes to power after the imminent elections, it will have to deal with the Smart City project, since several rounds of talks have already been held with the DIC officials, not to mention a memorandum of understanding. Even a government that is opposed to certain provisions of the proposed project can use the opportunity to re-negotiate the deal. There are also other reasons for Kerala not to feel desperate. Even stronger, more established IT destinations like Karnataka have been found wanting and have attracted the ire of veteran business persons. Thus, recently, Kiran Mazumdar-Shaw, Chairman and Managing Director of Biocon Ltd, India's largest biotech firm, and arguably India's richest businesswoman, said that the future expansion of her Bangalore-based company would not happen in Karnataka as the State Government was showing distinct signs of slackness in supporting the industry. Claiming that infrastructural woes were impeding the growth of Bangalore, Kiran Mazumdar-Shaw said, "Today, Hyderabad, to some extent, has overtaken Bangalore. Even US President George W Bush went to Hyderabad (during his recent visit to India). He didn't come to Bangalore. That was largely as a result of Bangalore's failing infrastructure." If such a stalwart as Kiran Mazumdar-Shaw can blame as IT-savvy a State as Karnataka for an "ineffective" bureaucracy and a "very confused" ruling coalition, surely Kerala need not write off its hopes. If the best can do wrong, there must be hope for lesser mortals. Or, to use another cliché, when the going gets tough, the tough get going. As long as software development and call centre operations remain two of the Indian economy's fastest growing sectors and as long as Indian programmers continue to command roughly one-sixth the $60,000 US average salary, world-class IT companies will head to this part of the world. And everyone knows that among the more salubrious places here is Kerala, with or without the Smart City. The writer can be contacted at kgkumar@gmail.com
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