Maharashtra hikes FSI, offers tax holiday to woo the IT industry

  • Surendra P Gangan, Hindustan Times, Mumbai
  • Updated: Jun 17, 2015 16:22 IST

With an aim to boost the information technology (IT) sector in Maharashtra, the state government’s new policy, announced on Tuesday, provides a hike in floor space index (up to 200% of the base FSI) for IT and IT-enabled services (IT/ITES). The hike in the permissible FSI has been attributed to the loss of the industry to Bangalore, Chennai and Hyderabad.

The policy provides an FSI of 2.5 for the Integrated Information Technology Townships that are coming up on a minimum of 25-acre plots in the state. The townships will also enjoy global FSI, which may allow exploitation of FSI up to 8 or even 9 in some cases.

FSI is the ratio of the total permissible built-up area to the size of the plot. It is an indicator of how high a developer can build. The townships and other IT/ITES units have also been offered exemptions from stamp duty, electricity duty, property tax, octroi or LBT, VAT and works contract taxes.

To attract business process outsourcing (BPOs) in rural areas, the policy has the provision of a capital subsidy of 20% on capital investment, subsidy for training of employees and exemption from payments of security deposits or earnest money.

“Cities like Bangalore and Hyderabad have been luring the IT/ITES units by offering higher and unlimited FSI and the results were evident. To be competitive, we have offered higher FSI, which is up to 200% of the base FSI,” said chief minister Devendra Fadnavis, while unveiling the policy.

Fadnavis said the government was expecting an investment of Rs50,000 crore, the generation of about 1 million jobs and the export of Rs1,00,000 crore in the next five years. He said tax holidays given to the animation industry will help the government create job opportunities. He, however, said the government had also made stricter provisions for penalty and recovery in case of misuse of the FSI and benefits by utilisation for non-IT purposes. Fadnavis said the penalty will be 0.3% of the ready reckoner prices a day of the areas where the norms have been violated.

Apurva Chandra, principal secretary of industries minister, said the state lost the opportunity of attracting global players like Flipkart, which set up its unit with the potential of 20,000 jobs on a two-million-square-foot space in Bangalore, because of the absence of an attractive policy. “Likewise, Chennai and Hyderabad have the provision of higher FSI up to 3.25 and in some cases unlimited development rights,” he said. “To curb the misuse of the incentive FSI, we have made it compulsory to put up all the information about the units online.”

While allowing 20% of the built-up area for support services in the IT parks in big cities such as Mumbai, Navi Mumbai, Thane, Pune and Pimpri-Chinchwad among others, the government has prohibited commercial activities such as malls, theatres, residential apartments for sale to avoid the exploitation and misuse of the incentive FSI. In areas outside these cities, 40% of the built-up area has been permitted for support services.

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