Information technology (IT) major Infosys is learnt to have laid down some tough conditions before Maharashtra Airport Development Company (MADC) before deciding to invest in Mihan-SEZ. MADC, badly in need of fresh investment in MIHAN, has been wooing Infosys. Infosys expects a relaxation in the terms that may require a change in state government's policy itself.
According to a press release, Infosys, instead of settling for 99-year lease given to others, has asked for a perpetual lease. MADC is helpless in this matter as it would require a change in government policy, sources in government said. At present, since MIHAN-SEZ land belongs to state government, it can be only leased and not sold. The investor too will have to only lease it further.
Land in SEZ is leased for 99 years, based on the logic that the government of the day when the lease term ends will take a call on extension. Infosys wants a perpetual lease that effectively amounts to sale of land, says sources. Infosys also wants a discount in the land rates. Currently MADC has fixed Rs 60 lakh per acre price for SEZ land. Infosys wants a 'better' price, citing competitive offers from other states like Madhya Pradesh.
The company has also demanded that the condition of consuming entire floor space index (FSI) within three years be relaxed. MADC offers a FSI of 1.5 but stipulates that if the entire space is not utilized within three years, the investor will have to pay an extra charge for the construction done later. The MADC rule on FSI consumption is not only meant to prod investors into starting full-fledged operations as early as possible but also as a deterrence against companies buying excess land and hoarding it.
The MADC board has not met after the recent round of negotiations with Infosys. The issue of FSI and land rates are within the purview of the company. However, only the state government can decide on lease conditions, a source said. Incidentally, MADC is headed by state's chief minister.
Recently Tata Consultancy Services (TCS), announced that it will expand its operations in MIHAN SEZ by building a new software development campus in Nagpur with an investment of Rs. 6bn in the first phase.
Express your thoughts in comment box below on the present policies of MADC / State Government & Infosys move on negotiating for investment in MIHAN SEZ.
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