Kolkata: The West Bengal government’s search for land that will see India’s tech giants Infosys Technologies Ltd and Wipro Ltd set up large development centres in Kolkata is in trouble. Again.
The government, which got a major black eye when it lost Tata Motors Ltd’s high profile Nano factory to Gujarat earlier this year, is set to miss a third deadline after already striking a deal with a real estate firm that agreed to acquire 600 acres for the state’s information technology department.
Under an innovative deal struck earlier this year, Vedic Realty Ltd, a real estate developer, was to acquire and transfer 600 acres to the state government for development of an IT park. Vedic had agreed to transfer the land free and, in return, the government had committed to build infrastructure, including a 7km road to connect Vedic’s 600-acre township, which is to be built beside the IT park.
The deal allowed the state to promise an allotment of 90 acres each to Infosys and Wipro in deals signed on 24 April with the state government committing to allot land within “a couple of months”.
Land trouble: A signboard indicating the plot has been acquired for the proposed IT park at Gazipur. A key problem is that land so far acquired is not contiguous, so it can’t be allotted to any firm. Indranil Bhoumik / Mint
The government has since missed the first deadline, following which the state’s IT minister Debesh Das said land would be allotted to the two companies by the end of October or early November. The government missed the second deadline as well, but said land was going to be allotted before 2008 was over. But, now, West Bengal is set to miss this deadline as well.
A key problem is that land that Vedic has so far acquired is not contiguous so it can’t be allotted to any firm, says Das. “It is becoming difficult to arrange for contiguous land,” he says. “Talks and negotiations are on with landowners.”
While agreeing, Vedic’s managing director Raj Modi says a bigger problem is the government hasn’t yet declared the site as a township, which means Vedic isn’t freed from various restrictions of the land ceiling Act. “The government is working on it, and we hope to get it sorted out very soon,” he claims.
Meanwhile, the government hasn’t pitched in with infrastructure either. It hasn’t completed acquiring land to build the 7km road connecting the IT park and the township and is likely to take a long time given market conditions.
“There are small gaps, but most of it has been done,” claims Modi. Adds Das: “We have to dig a canal to drain the (rain) water, which floods the area during the monsoons. There has to be arrangements for electricity as well.” He couldn’t say when this work will start.
At stake are claims by Infosys and Wipro that they will hire 5,000 and 10,000 employees, respectively, and invest Rs500 crore each in Kolkata.
Amid all this delay, land prices at the proposed IT park site have soared since April when the government signed its deal with Infosys and Wipro. Landowners, mostly farmers, are now holding out in the hope of further appreciation. According to locals, the price of land here has gone up at least six times within a year.
Aharzan Bibi, who sold 16 cottahs of land (1 cottah is roughly one-sixtieth of an acre) for Rs1.6 lakh last year, said her neighbour had recently demanded that Vedic pay Rs65,000 per cottah. Sheikh Abul Faraq, who sold 40 cottahs last year for Rs20,000 per cottah, is even more ambitious—he is now expecting Rs1.5 lakh per cottah.
Real estate experts say that while land prices have significantly softened across Kolkata, Gazipur, where the IT park is coming up, hasn’t seen much of a reduction yet.
Vedic’s Modi, while admitting his company is going slow because of overall economy, refuses to say how much land has already been acquired. “We need at least six months more to complete land acquisition, but we aren’t worried about that,” he insists.
Das insists the problem is not political even though Gazipur is a stronghold of the principal opposition party, the Trinamool Congress, which successfully pushed Tata Motors out of West Bengal.
The dramatic slowdown in business could also be helping reduce the pressure from the two firms for the project to get under way.
“We have capacity for growth in our current campus for next 12-18 months. We are hopeful that the state will resolve the land identified before that. Kolkata continues to be one of our key delivery locations,” says Wipro chief information officer Laxman K. Badiga.
Infosys declined to comment on the issue. It had previously expressed concern about the overall industrial climate in the state after Tata Motors made allegations against Trinamool Congress over the Nano project in Singur.
West Bengal had first offered land to both Infosys and Wipro who refused the Rs2 crore an acre offer as too expensive. Thanks to the barter deal with Vedic, the government was, at least on paper, able to offer the land at less than Rs1 crore an acre. Gazipur is an hour’s drive from the airport through what is now a winding, single carriageway.
Aveek Datta contributed to the story.