Pune records fastest growth rate in IT exports at 11%

The factors responsible for this growth are largely fiscal incentives offered by the Maharashtra government to the industry, according to an official

Although Pune ranks third in terms of Information Technology (IT) exports from Indian cities, it has registered the fastest growth of 11% in IT and IT-enabled services (ITes) exports which grew from ₹34,400 crore in 2015-16 to ₹43,000 crore in 2017-18.

While Bengaluru continued to lead the country with IT exports of ₹1.52 lakh crore, Hyderabad registered exports of ₹51,500 crore which are reflective of the states of Andhra Pradesh and Telangana. The fastest growth, however, was registered by Pune at 11%, Sanjay Kumar Gupta, director, Software Technology Parks of India (STPI), said.

The factors responsible for this growth are largely fiscal incentives offered by the Maharashtra government to the industry, he added.

Gupta said that while the state generated ₹74,000 crore of software exports last year, of this, 34,000 crore came from Pune itself. Twenty five per cent of these exports were from financial companies which constitute a fast growing industry within the IT sector, he said.

The Maharashtra government under its STPI policy offers several incentives to IT companies. Chief among them is the single window clearance, discounted rates on property tax and electricity duty (ED) waiver. “STPI has aligned itself with the Make In India policy of the central government. We run incubation centres for startups and the state government also offers a waiver of ED for software companies,” said Gupta.

Further, the property tax for software companies is calculated at residential rates, and not commercial rates, he pointed out.

However, these issues need last mile gaps to be filled according to Vidyadhar Purandare, honorary secretary, Software Exporters Association of Pune (SEAP). Purandare said that although Nasscom (National Association of Software and Service Companies) states that Pune has 4.5 lakh IT employees, there is no single agency that registers software companies. While the Pune Municipal Corporation (PMC) collects property tax from 1,200 units in the Hinjewadi and Maan areas, there are some units that are not registered with the PMC, SEAP or any agency. “We need to have a one-point data collection,” Purandhare said.

“The rural panchayats often do not follow the property tax benefit rule, even though it has been approved by the state government and the local municipal body and charge commercial rates from such software companies,” he said.

There are some last mile issues also related to the waiver of electricity duty of six per cent for software companies. This benefit is passed on only if the sub-metre is in the name of the company. Problems arise when an IT company may rent or buy office space, but the builder or developer fails to transfer the electrical sub-metre to the company.

Citing an example, Purandare said, “A company with a one lakh sq feet office space in an SEZ may generate an electricity bill of ₹35 lakh per annum. Imagine the loss of 6% on this, as it cannot claim this benefit on account of the sub-meter rule. The industry, state government, local municipal body, all associations and rural panchayats must sit together and ensure that all policies formulated to promote IT and its exports, do not have such last mile gaps,” he said.

He noted that Karnataka leads in IT exports largely on account of the policies and industry participation. While Maharashtra and Karnataka started off with their IT industries around the same time, the difference was that Karnataka had Narayana Murty (an Indian IT industrialist and the co-founder of Infosys) spearheading the drive to make Bengaluru a leader in the IT industry, Purandare said.

“Pune, too, needs all stakeholders to come together and discuss how policy benefits can be passed on and what needs to be done to make Pune the No 1 exporter of IT and ITes industry,” he added.

According to him, Pune’s emergence as an auto, engineering, IT and educational hub can add significantly to its growth on the software front. “It can become an Internet of Things (IoT) hub given that it is No 1 in the auto industry, No 2 in IT and is one of the leading hubs for engineering and manufacturing companies. One can see the movement of some startups in the IoT space moving to Pune for the proof of concept as we have the auto sector here. If we can manage our traffic, labour and other infrastructure issues, we can beat Bengaluru. Investors after all will check all such issues before putting their money here,” he said.