Tamil Nadu government to rekindle IT Sector investments in the state

Tamil Nadu government after a long gap has announced Information Communication Technology Policy, 2018, offering a slew of incentives and exemptions to information technology and ITeS companies, MSMEs and start-ups. The new policy provides for various facilities and incentives to IT companies. These include standard fiscal incentives such as capital subsidies from ₹30 lakh to ₹1crore, an additional capital subsidy of 50 per cent over and above the eligible limit, an additional capital subsidy of 10 per cent and 25 per cent respectively for ‘B’ and ‘C’ districts, and electricity tax exemption for five years (from two years now).

There will be a structured package of fiscal Incentives on a case-to-case basis for investments of ₹200-500 crore and special incentive at B and C locations for setting up of Sewerage Treatment and Reverse Osmosis Plants.

Special Incentives for MSME units in B and C locations include free training through the Tamil Nadu Skill Development Corporation, a subsidy of 10 per cent on lease rentals at ₹2 lakh per annum, a tie-up with business analyst firms to evaluate them for taking them to global markets, and linking up smaller IT/ITES companies with bigger firms.

The State government is set to establish IT parks in Ramathapuram and Cuddalore districts and a Centre of Excellence for FinTech at the STPI in Chennai. A Technology Forum is likely to be setup by the government to promote growth in newer technologies such as Artificial Intelligence, Internet of Things, Machine Learning and Electronic Hardware Manufacturing besides creating more employment opportunities.

The policy also provides administrative incentives for IT/ITES Companies to get exemption from certain provisions of the Tamil Nadu Shops and Establishment Act, 1947 and the Tamil Nadu Industrial Establishment (National and Festival Holidays) Act, 1958.

It allows flexibilities in labour laws without compromising on labour welfare and permits women to work in three shifts, including the night shift, provided all security arrangement, facilities of rest rooms and safe transportation are arranged.

The policy will evolve mechanisms for ensuring the job security of IT professionals at the same time keeping in mind the interest of the IT industry. It also allows companies to self-certify on maintenance of statutory registers and filing of a single common annual returns, besides reimbursement of 50 per cent of the cost towards quality certification, market development assistance and relaxation of FSI to a maximum extent of 100 per cent in designated IT/ITeS Parks.

The policy envisages incubating investors and promoting research parks in the State via the PPP model. It also has plans to provide broadband connectivity to 12,524 villages with High Speed Optical Fibre Network spreading the Net to the grassroots level.

The government has long been passive in the state considering over one lakh graduates and one lakh diploma- holders pass out of 509 colleges of engineering and 522 polytechnic colleges every year !

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