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Even as the economy of West Bengal remains in limbo, Mamata Banerjee's government might well have fired another missive to stall industrial growth.

Information technology (IT) giants Infosys and Wipro, the second and fourth-largest IT service providers in the country, told Business Standard without special economic zone (SEZ) status, they would not start work on their respective campuses in Rajarhat.

Both companies have 50 acres each in the area located on the outskirts of Kolkata. While Infosys said it would have to stall construction until SEZ status came through, Wipro said they would not even consider a campus if the status was refused.

"We will have to wait for SEZ status before we start construction. If it does not come through, we will have to evaluate alternatives in terms of what we are being offered elsewhere," said S Gopalakrishnan, executive chairman, Infosys. He, however, said Infosys remains hopeful of the project. "Our agreement with the state government was that we would get all support for an SEZ," he said.

Tata Consultancy Services (TCS), the country's largest IT service provider, which also has 40 acres in Rajarhat, had acquired an SEZ status from the previous Left Front government. It has had the land since 2007 but is yet to begin construction.

Infosys has already paid Rs 75 crore, the entire cost of the 50 acres allocated to it in 2010. In January, the company said it hoped to start construction on the campus in the next six months. It has been planning to set up a campus in Bengal since 2004, but faced problems first with the price of land, and then with the Vedic Village land debacle in 2009. In November 2010, the company approached the then Left Front government.

On November 24, 2010, Infosys was allocated 50 acres in Rajarhat within hours of the government receiving request for land. Since then, the company has been waiting for the infrastructure, including the approach road to be upgraded. Wipro, on its part, which has paid 25 per cent of the cost of land, or Rs 19 crore, said without SEZ status, the campus would make no sense.

Each of the two campuses is expected to create employment in excess of 15,000 people at an estimated investment of Rs 700-800 crore.

When an area is notified as an SEZ, for the first years, businesses operating out of there SEZ have to pay no tax on income. For the next five years, they have to pay half the tax on income. Even labour laws are different.

"We will not come without SEZ status because in its absence we would face issues of scalability. Besides, the project will just not be financially viable," said a senior Wipro official on conditions of anonymity. Wipro founder Azim Premji, had met chief minister Mamata Banerjee on December 8. Although he was tight-lipped after the meeting, finance minister Amit Mitra had told mediapersons the company was quietly looking to make major investments in Bengal.
When approached government officials confirmed that while the administration would like to ensure all benefits to Wipro and Infosys, SEZ status was a problem.
"While we would like them to get benefits. But it is also a fact the government has a policy against SEZs. We are yet to send recommendations for SEZ status to the Centre. We will have to wait and see," said state IT secretary, Basudeb Banerjee.

Banerjee's Trinamool Congress (TMC), when in opposition, had opposed the now abandoned Nayachar PCPIR (petroleum, chemicals and petrochemical investment regions), which now stands scrapped. The party's manifesto clearly states, "there will be no SEZ in West Bengal".

"They should understand that an IT SEZ is different from a manufacturing SEZ, because of the nature of the export and the numbers we can employ within land constraints. In the Salt Lake campus, in 14-odd acres, we have 7,000 employees," said the Wipro official.

Wipro already has a campus in the Salt Lake Electronic Complex, while the Rajarhat campus is to be Infosys' first in the state.

Wipro's existing facility, too, has SEZ status.Till three months back, the administration had maintained there would be no problems with the SEZ status to Infosys and Wipro.

State IT minister Partha Chatterjee informed Business Standard that since both Wipro and Infosys had been given land, the SEZ recommendation should not be a problem. Officials close to the development, however, said Chief Minister Mamata Banerjee preferred to stick to her pre-election stand. When contacted on Monday, Chatterjee refused to comment.

Banerjee, incidentally, led the Singur agitation for return of land to the unwilling farmers, which ultimately led to Tata Motors to pull out its facility for manufacturing Nano from the state.