Vizag giving up on goal of becoming an IT hub?

Several incentives promised by earlier government have failed to make an impact

July 01, 2019 01:19 am | Updated 07:34 am IST - VISAKHAPATNAM

An aerial view of the IT Special Economic Zone at Rushikonda in Visakhapatnam.

An aerial view of the IT Special Economic Zone at Rushikonda in Visakhapatnam.

Visakhapatnam was once billed as South India’s Silicon Valley in the making.

The city aspired to become a world-class IT hub along the lines of Bengaluru and Hyderabad, and had several factors working in its favour — a scenic coastline, excellent connectivity and a robust infrastructure. However, efforts to attract big-ticket software firms have proven to be futile.

Lack of a comprehensive ecosystem post-bifurcation is cited as the main reason for the lack of growth in the sector.

An IT Policy unveiled by the TDP government in 2014 had promised several incentives for the sector but failed in releasing the subsidies and amount towards reimbursement of certain expenses on time, dampening the spirit of investors. The IT Investment Region, promised at the time of bifurcation, did not materialise.

At the time of bifurcation, Hyderabad had an IT turnover of ₹60,000 crore as against ₹1,400 crore in Visakhapatnam. In the last five years, however, Hyderabad has increased its IT sector turnover to ₹1 lakh crore whereas the total volume of transactions by IT and ITES units in Visakhapatnam is estimated to have risen to a paltry ₹2,000-2,200 crore.

Uneven contest

The advantages for Hyderabad is the availability of a talent pool, presence of established premier institutes like IIIT and ISB, strategic location and better connectivity to all parts of the country compared to Vizag, cutting-edge healthcare facilities, and affordable education and housing. A buzzing nightlife and a large number of skill development institutes are also feather’s in Hyderabad’s cap.

However, the single biggest advantage that Hyderabad possesses over Visakhapatnam is the presence of a sprawling IT built-up space such as Raheja Mindspace, Cyber Towers, DLF IT-SEZ, GMT Aerospace and Industrial Park, Kohinoor IT Park and iLabs Hyderabad Technology Centre — offering software firms ‘plug and play’ office space.

Stark contrast

Compared to Hyderabad, the only decent built-up space created in the city was the Millennium Tower by APIIC at Rushikonda. Constructed on an area of four acres overlooking the sea, the ₹145 crore facility is an imposing structure. A Signature Tower was shelved after being deemed unviable.

An IT Data Recovery Centre for which a foundation stone was laid by Union Minister Nirmala Sitharaman at Visakhapatnam Special Economic Zone, Duvvada remained a non-starter. An IT Incubation Tower, a joint venture between Software Technology Parks of India (STPI) and Visakhapatnam Metropolitan Region Development Authority (VMRDA) for which the stone was laid in 2016 and funds were allotted by the Centre, also remained a non-starter.

Except attracting Conduent, a $6 billion American IT company, the hype created over bringing Google X, Microsoft and other big-ticket projects to the city remained on paper between 2014 and 2019. The uncertainties surrounding the establishment of a development centre of Franklin Templeton, an international asset management company, were brought to an end during the recent visit of Minister for Industries and IT Mekapati Goutham Reddy who held talks with the top brass of Franklin Templeton and its technology partner Innova Solutions.

Just before elections, the foundation stone was laid for Adani’s Data Technology Park, which has been envisaged at an investment of ₹70,000 crore. The project will come under review by the YSRCP government as it announced a relook at poll-eve decisions taken by the TDP regime.

The hype over making the city a Fintech hub could not attract many players with nearly a dozen firms who started their operations opting out of the city for want of comprehensive ecosystem required for a robust Fintech landscape.

To overcome the shortage of built-up space for ‘plug and play’ operators, under Designated Technology Park (DTP) policy, private and government buildings are being taken on lease, which included the VMRDA building at Seethammadhara, a software firm building at IT Special Economic Zone, Rushikonda and a new block of Tech Mahindra near Satyam Centre.

Way forward

Rushikonda IT Park Association vice-president O. Naresh Kumar said for encouraging startups, besides proper mentorship, access to finance from angel investors and venture capital firms should be ensured. He said release of incentives on time and transparency in decision-making, high-speed bandwidth, quality power at low rate and creation of at least three IT Parks with built-up space of three to five lakh sft were the need of the hour to boost the IT sector in Visakhapatnam. He also wanted development of integrated townships and a proactive and stable IT policy and promotion of tourism in a big way to attract Greenfield and Brownfield investors in IT.

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