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Apart from Vizag, Anantapur and Tirupati are also to be developed as IT concept cities, to offer a cost advantage and speedy execution for setting up IT companies.

The entrance to an IT park with tall buildings with glass windows Image for representation: Picxy/Prudhvi Chowdary
Atom IT Thursday, July 01, 2021 - 16:15

On June 30, the Andhra Pradesh state cabinet gave its approval for the new AP Information Technology Policy 2021-24, which includes several incentives for IT firms to set up companies and create employment in the state. The new policy, which will be in force retrospectively from April 1, 2021, to March 31, 2024, is expected to generate more than 55,000 jobs and indirect employment to 1.65 lakh people over the next three years. From setting up three different IT concept cities to providing a boost to remote working and gig economy opportunities,  here are some of the key features of Andhra’s new IT policy. 

Vizag and other IT hubs

Reviewing the IT policy a few days ago, Chief Minister YS Jagan  Mohan Reddy said that Visakhapatnam, the proposed executive capital of the state, will become a major hub for the IT sector in the future. The government plans to turn Vizag city into an attractive destination for IT companies through various incentives and business process reforms. As part of the infrastructure development measures to enable IT sector growth, Vizag will get an Integrated Technology Park consisting of an Emerging Technologies Research University, incubation centres, Centers of Excellence (CoE), labs, co-working spaces, State Data Centre (SDC), to be established by the IT,E&C (IT, Electronics and Communications) department. 

The IT Emerging Technologies Research University is intended to promote Vizag as a destination for IT education. The university will offer full-time and part-time degree/diploma programmes for fresh graduates as well as working executives, with a primary focus on applied research on IT and emerging technologies “in priority areas of interest to the state and its governance.”

Apart from Vizag, Anantapur and Tirupati are also planned to be developed as IT concept cities, to offer a cost advantage and speedy execution for setting up IT companies. This will be achieved by offering “the fastest approvals to reduce time to start operations, connectivity to airports and highways, availability of skilled manpower, world class IT driven common and social infrastructure, walk to work, plug & play IT office space, and co-working spaces”, the policy said. 

Business Process Reforms, exemptions and incentives for IT firms

> Faster approvals 

To reduce the complexity for IT companies in setting up operations, several reforms in land allotment, provision of infrastructure and permissions for commencement of operation have been proposed by the IT department, and a slew of measures have been outlined in the IT policy, which include the setting up of a comprehensive investment portal to handle all project applications, permissions and incentive claims.  

> Land allotment

The government will offer land, as well as plug-and-play office spaces (fully equipped workspaces available for instant use). IT parks in the state will be provided “all critical infrastructure till the boundary of the site”, according to the policy, and designated agencies will provide the infrastructure on the land sites “within 60 days from the purchase of land.” Floor Space Index (FSI) norms can also be relaxed within IT Concept Cities, Integrated Technology Park, and IT parks on paying a premium. 

> Incentives for creating jobs 

CM Jagan has stressed that the main objective of IT policy should be to bring good jobs to the youth in the state. The policy links several incentives to committed job creation. 

Companies will receive a one-time incentive of 10% of the annual salary for each job created in the state. The incentive is capped at Rs 50,000 for an entry-level IT job, Rs 75,000 for a mid-level job and Rs 1,00,000 for a high-end job. This incentive will be 5% higher for women/SC/ST/BC enterprises. CM Jagan said that these incentives will be given after an employee completes one year of work with a company.  

In the case of IT parks, as a land cost incentive, a one-time incentive of Rs 50,000 per job created will be granted to the developers as reimbursement on the land cost (capped at 60% of the land value). To avail this incentive, the developer will have to create the equivalent of at least 5,000 entry-level IT jobs within the IT park. Eligible IT firms and IT campuses which are allotted land by the government will have to employ at least 500 entry-level IT professionals per acre of land in three years (and in six years in the case of IT parks). 

> Exemptions for IT companies and IT parks

IT firms will be exempt from the purview of the AP Pollution Control Act (except in respect of power generation sets), and also from inspections under the following Acts and Rules, unless there are specific complaints — The Factories Act 1948,  The Maternity Benefit Act 1961, The AP Shops & Establishments Act 1988, The Payment of Wages Act, 1936, The Minimum Wages Act 1948, The Employment Exchanges (Compulsory Notification of Vacancies) Act 1959, and AP Employment of Local Candidates Act 2019. 

> Other measures for IT companies 

According to the policy, the state government will procure all IT requirements from companies or startups operating within the state as long as their products or services are of competent quality. Megaprojects, which create at least 5000 entry-level IT jobs or bring an investment of at least Rs 500 crore, will be further eligible for customised incentive packages. 

Focus on education, employability 

Apart from the IT Emerging Technologies Research University to come up in Vizag, the policy also calls for short-term measures like  Massive Online Open Classrooms (MOOCs) by the IT department, to enhance the employability of local youth. The Emerging Technologies Research University will help design such IT courses, to be taught as training programmes at skill development universities in the state by the Andhra Pradesh Information Technology Academy (APITA). Training institutes will also be offered a one-time incentive of Rs 10,000 for each full-time job facilitated within the state. 

Work from home 

The policy also stresses measures to strengthen the work from home ability for employees, by taking steps to provide high-speed internet in villages and setting up digital libraries and workplaces in every village panchayat in the next two years. The digital libraries/workspaces will have at least six computers and access to high-speed internet and will act as a secure workspace for IT professionals working remotely. They would also have essential software, video conferencing, printing and scanning facilities, and access to free knowledge databases like research and industry magazines, open-source interactive coding and development environment, and public datasets. 

The policy also offers incentives to companies allowing their employees to work remotely, with a one-time incentive of Rs 20,000 per job, to cover expenses related to remote working hardware, software, bandwidth costs, etc. This incentive will apply to  IT firms in Andhra Pradesh with employees working remotely within the state. 

Boost to gig economy, startups 

To boost freelance or gig-based work, the policy states that the IT department will create a platform for freelance IT workers to register to offer their services, along with 50% reimbursement of IT hardware cost including laptop and furniture. Startups will also be promoted through the new policy by offering “end-to-end support” like “plug and play office space, access to investors, mentors, talent pool, funds through venture capitals, private equity firms and other commonly shared services on a variable chargeable basis,” a policy note said. The government would also establish incubation centers and conduct hackathons and workshops for startups, it added.

The note also added that the IT, E&C department would be transformed into a revenue centre by centralising government procurement of IT service through the department. “The state would earn a revenue of Rs 783 crore over 10 years in the form of various taxes, while the direct employment alone is expected to infuse over Rs 2,200 crore every year, leading to the overall growth of the economy through multiplier effect,” the policy note said.  

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