Will Changed IT Service Definition Stem Property Misuse In Maharashtra?

In its reformed information technology (IT) policy, the Maharashtra government has broadened the definition of IT services, following a push for this from developers. The step comes as a surprise at a time when there has allegedly been rampant misuse of property in previous years.

The state government claims that the policies of the previous regime were severely misused, as many developers took advantage of tax benefits and construction rights meant for IT parks. And the new reformed policy aims to address that, it claims.

PropGuide takes a look at the reformed policy, what it says and what could be its likely impact.

What the new policy says

The reformed policy will now include business process outsourcing services, such as data entry, transcription, reconciliation, consolidation, coordination, proportion, processing review of documents, etc, along with financial backroom operations for companies and investment and private banks, disaster recovery, and IT development and support. It will also bring under its umbrella the ancillary office, including back offices of manufacturing companies and other services, and start-ups/companies with no direct customer interface but providing essential support to the electronic media. Virtually, every backend operation of any industry can now classified under the new state IT policy.

The floor space index (FSI) for IT parks has also been increased from 2 to 3, and developers in key cities like Mumbai, Navi Mumbai, Thane and Pune can use 20 per cent of the land for commercial and residential purposes.

The state govt's defence

The government claims that the policies of the previous state government were severely misused, with many developers taking undue advantage of tax benefits and construction rights meant for IT parks. The developers also sold large sections of the property to other industries.

Impact

Although the BJP-led government has ensured it will maintain a strict discipline in issuing spaces for IT parks, including industries that were earlier considered illegal may lead to problems. The new policy is expected to attract heavy investments from industries now included under the policy, but it will also cut down on the government's earnings, as these industries will also get tax exemptions. Besides, such investments will pose serious challenges to industries headquartered outside of Maharashtra, as they would not be eligible for any added benefits of IT parks.

The change in definition of IT industries is, however, poised to create a competition among states to attract investments.