Policy Resolution for Setting up of Information Technology Investment Regions (ITIRs) - 7(5) 2006-E - Indian Law

MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY (Department of Information Technology) POLICY RESOLUTION New Delhi , the 28th May, 2008 Subject: Policy Resolution for Setting up of Information Technology Investment Regions (ITIRs) No. 7(5) 2006-E-Infra.-Policy Objectives.— I. Over the last 5 years, India's Information Technology (IT) / Information Technology Enabled Services (ITES) industry has proven to be a significant economic growth engine. Total services exports have increased from US$ 25 billion in 2006 to US$ 31 billion in 2007 and it is projected that exports in the year 2010 would exceed US$60 billion. II. The demand for hardware will be fuelled by the high growth rate of the Indian economy, aspirations of the younger generation and the large middle class in India with increasing disposable incomes. At present, electronics production is only 1.7% of the country's Gross Domestic Production (GDP). It is expected to grow to 5% of Gross Domestic Production by the year 2015. III. To promote investment in the Information Technology (IT) / Information Technology Enabled Services (ITES) / Electronic Hardware Manufacturing (EHM) units, the Government has decided to attract major investment by providing a transparent and an investment friendly policy and set up Information Technology Investment Regions (hereinafter referred to as the ITIRs). These would be endowed with excellent infrastructure and investor-friendly policy environment. Such ITIR would reap the benefits of co-siting, networking and greater efficiency through use of common infrastructure and support services. Such a complex would boost, augment exports and generate employment. CONCEPT OF INFORMATION TECHNOLOGY INVESTMENT REGIONS 1. ITIRs would be specifically delineated investment regions with a minimum area of around 40 square kilometers planned for the establishment of Information Technology I Information Technology Enabled Services and Electronic Hardware Manufacturing Units (EHM Units) facilities along with the associated services and infrastructure. 2. ITIRs would be a combination of production units, public utilities, logistic, environmental protection mechanisms, residential areas and administrative services. It would have, processing facilities where Information Technology / Information Technology Enabled Services and electronic Hardware Manufacturing Units, along with associated logistics and other services, and required infrastructure will be located, and non-processing area, to include residential, commercial and other social and institutional infrastructure. The minimum processing area for the ITIR will be about40% of the total designated area. The processing area may or may not be contiguous. 3. ITIRs may include one or more Special Economic Zones (SEZs), Industrial Parks, Free Trade and Warehousing Zones, Export Oriented Units, or Growth Centres, duly notified under the relevant Central or State legislation or policy. All the benefits available under the relevant legislation or policy will continue to remain available to the said Zones or Parks, as the case may be, forming part of the ITIR. 4. ITIRs could cover existing settlements/industries and estates/services and would therefore benefit from and be complementary to the region. New integrated townships could also be set up in the ITIRs. The concerned State Government will notify the same under the relevant Act for proper planning and zoning to ensure coordinated development. (Note: The word 'State' as used in this document shall include Union Territory) 5. Each ITIR would have some large Information Technology / Information Technology Enabled Services and Electronic Hardware Manufacturing Units, who would play an important role in the establishment of ITIRs. The internal infrastructure of the ITIR will be built and managed by a Developer, or a group of Co-developers. The external linkages will be provided by Government of India and the concerned State Government. The users of external as well as internal infrastructure will pay for its use, except to the extent that the government supports the service through budgetary resources. ROLE OF THE CENTRAL GOVERNMENT 6. The Government of India (Gol) will consider under this Policy all applications for establishment of ITIRs and approve expeditiously such proposals as are found feasible. It will also constitute a High Powered Committee to ensure necessary coordination among Central Ministries and State Governments and also monitor the progress of environmental and other clearances, as well as development of ITIRs. 7. Government of India will ensure the availability of external physical infrastructure linkages to the ITIR including Road (National Highways), Airports, Telecom and Rail, in a time bound manner. This infrastructure will be created / upgraded through Public Private Partnerships to the extent possible. Central Government will provide the necessary viability gap funding through existing schemes. Wherever necessary, requisite budgetary provisions for creation of these linkages through the public sector will also be made. 8. In the case of ITIRs, creation of new Airport infrastructure could be considered in the Public Private Partnership model and in accordance with the Policy on Airport infrastructure. Wherever necessary mass transport connectivity could be provided to the nearest Airport. The State Government would have to set apart requisite Land for airport infrastructure in the ITIR. 9. Setting up of Educational facilities is most important. While the State Government would be responsible for setting. up most of the educational institutions, the Central government would also provide certain facilities. Higher educational and research facilities of relevance could also be set up in the ITIR. These may include a Indian Institute of Information Technology(IIIT) if feasible. IITs may be implemented in the public-private partnership made as per the policy of Ministry of Human Resource Development (MHRD). This will make for greater industry-research-academia interaction and give a boost to the concept of creating a true knowledge township. 10. Government of India will also support the State Government concerned, and its agencies, in the dissemination of information, with a view to promoting domestic as well as global investment in the ITIRs. ROLE OF THE STATE GOVERNMENT 11. The State Government would play the lead role in setting up of the ITIR. It would identify a suitable site (preferably non-agricultural land), prepare the proposal and seek approval as per prescribed procedure. Where there is an existing Legislation, the State Government would notify ITIR area under the relevant Act for the purpose of proper planning and zoning to ensure coordinated development. Where necessary the State Government would enact a Law, which would inter alia enable granting of all clearances/permissions by the Management Board of ITIR. 11.1 It would conduct a techno-economic pre-feasibility survey, through a suitable agency. Thereafter the State Government shall identify an area of not less than 40 square kilometers to be notified and developed as an ITIR. Based on the survey, the State Government shall commission a feasibility report that would inter alia address the following: (a) Demarcation of the proposed area; (b) Nature and extent of infrastructure required; (c) Land use pattern, i.e. dividing the entire area into specified land uses such as IT, industrial, commercial, residential, hospitals, schools, parks, roads etc. (d) Preparation of a master plan that would clearly identify the above uses with respect to specified plots of land and also include development parameters such as covered area, height restrictions and Floor Surface Integer (FSI). (e) The likely cost of land acquisition and of development of infrastructure. (f) Phasing of the entire plan into two phases where the first phase shall not exceed 20% of the notified area. The State Government shall notify the entire area of the proposed ITIR as eligible for conversion of land use in accordance with the terms specified therein. Conversion of Phase-I, however, will be taken up immediately upon selection of the project developer Either through existing legislation or through enactment of appropriate legislation, the notified land use for the entire ITIR shall be frozen. This is essential for ensuring that the land earmarked for roads and other public uses in the ITIR is not put to alternative uses, thereby rendering infructuous any part of the Master Plan. In other words, land reserved for various uses in the ITIR including for public amenities and roads would have to be kept free by law so that future development is not obstructed.. The development of an ITIR shall be undertaken in two phases viz: Phase I Phase I should be a well-defined project with specified rights and obligations to be discharged by the selected developer within a specified timeframe. This would require the developer to make investments in acquisition of land, building of infrastructure etc. The feasibility report and master plan should lay down the broad standards and specifications for creation of all common facilities so that these are built as expected. It should be clearly stipulated that the developer shall sell at least 75% of the saleable land to third parties within a period not exceeding five years. Failure should attract sufficiently effective financial penalties for the period of delay. This provision should be specialty enforced in respect of land earmarked for Information Technology (IT) use. The price for sale of land need not be regulated except in case of land to be provided for public amenities such as schools, hospitals etc or for a suitable proportion of land that would need to be reserved for economically weaker sections. Phase II Somewhat similar rights and obligations may be specified for Phase-II also. However, greater flexibility could be provided for Phase-II wherein third parties may be allowed to develop and utilise land subject to conformity with the Master Plan and upon payment of specified development charges to the Project Developer. This would help accelerate the development of the entire ITIR. The time frame for implementing Phase- II could be 15 to 20 years. 12. A separate Urban Local Body (ULB) may be constituted, if necessary. 13. The State Government, applying for an ITIR, will ensure that after notifying the area, all physical infrastructure and utilities linkages under its jurisdiction are provided within a stipulated time frame. The State Government will notify a nodal Department, which will coordinate these linkages. This Department along with relevant authorities will facilitate all clearances required from the State Government. 14. The State Government would acquire/assist in acquiring the land necessary for setting up of infrastructure, processing and non-processing areas. Acquisition of land must be strictly in accordance with the comprehensive Resettlement and Rehabilitation policy and consequential statutory provisions and policy guidelines as may be amended / notified by the Department of Land Resources from time to time. 14.1 The State Government would consult Ministry of Home Affairs (MHA) in respect of ITIR proposals in sensitive areas / locations, where presence and easy access of foreigners may have adverse implications from the national security point of view. 15. In particular, the State Government will be responsible for providing/facilitating the following infrastructure: i. Power connectivity and availability of reliable and good quality power. The units may also seek open access as per the regulations of the State Electricity Regulatory Commission. ii. Provision of bulk requirements of water; iii. Road connectivity (state roads) and Mass transit connectivity to the nearest airport; iv. Sewerage and effluent treatment linkages, from edge of ITIRs, to the final disposal sites; v. Appropriate infrastructure to address the health, safety and environmental concerns. vi. It should be ensured that the norms and standards prescribed by the Ministry of Environment and Forests notifications of September 2006 are adhered to. 16. Social infrastructure is important and would cover: i. Appropriate and adequate residential facilities ii Educational facilities iii. Health facilities iv. Local Commercial facilities v. Recreational facilities vi. Socio-cultural and Entertainment facilities vii. Most of the facilities would be set up by the developer / State Government. However, the Central Government would also assist as indicated in para 9. 17. The State Government may also notify additional package (s) of incentives for the development of the ITIRs and for the Information Technology / Information Technology Enabled Services / Electronic Hardware Manufacturing units. 18. The State Government would constitute a Management Board for development of the ITIRs with functions as detailed below. This may be done under the relevant state Act; the state will legislate a new Act if necessary. 19. Department of Information Technology (DIT) will be the nodal department of the Government of India for the ITIRs. 20. A High Powered Committee constituted by the Government of India will scrutinize applications for setting up the ITIRs, and subsequently monitor and expedite the progress of implementation. The composition of the High Powered Committee is at Annexure-A. 21. A Management Board constituted by the concerned State Government for each ITIR, under the relevant legislation will be responsible for the development and management of the ITIRs. It will also be empowered to issues/expedite state level approvals. If the state legislation permits, the Board may be an Special Purpose Vehicle (SPV) in a corporate form headed by a Chief Executive Officer with sufficient autonomy, with the participation of the Developer or Co-developers, as well as the leading Information Technology / Information Technology Enabled Services / Electronic Hardware Manufacturing Units. In addition the State Government should also constitute a supervisory body as an ITIR 'State Level Empowered Committee (ITIR-SLEC) to: (a) monitor, review and appraise the functions and the performance of the ITIRs; (b) deal with issues relating to disputes between the stakeholders; and (c) any other function as may be prescribed by the State Government. 21.1 The nodal Department may obtain prior security clearance from Ministry of Home Affairs (MHA) in respect of ITIR proposals, which are of foreign origin, in the sensitive areas like J K, North-Eastern States, border areas adjoining Pakistan, China etc. and coastal areas within 50 kms. of the sea shore and the areas in the close proximity of vital and sensitive installations. PROCEDURE 22. The application for notification of an ITIR shall be moved by the State Government concerned to the nodal Ministry namely Department of Information Technology. The State Government will attach with its application a Project Proposal as per format at Annexure-B. 23. Department of Information Technology (DIT) would ensure, in consultation with the State Government, and the central Ministries concerned, that the proposal is as per this Policy and then place it before the High' Powered Committee for its recommendations. 24. Department of Information Technology will place the recommendations of the High Powered Committee before the Cabinet Committee on Economic Affairs for decision. 25. The following guidelines will be kept in view while considering an ITIR proposal: i. Potential generation of additional economic activity and future growth, including generation of additional employment ii. Potential investment from domestic and foreign sources for production of goods and services. iii. Potential linkages for Information Technology / Information Technology Enabled Services / Electronic Hardware Manufacturing Investment facilities both domestically and internationally. iv. Willingness and commitment of the State Government. v. Interest of major leading units. vi. Present infrastructure linkages to the proposed site, and estimated cost of required addition / up gradation. vii. Land Availability, especially close to airport. viii. Maintenance of ecological balance and sustainable development in the region and ensure conformity with Environmental Laws in force. 26. The Note submitted to the CCEA for approval of an ITIR will clearly state the commitments of Government of India to the provision of infrastructure (National highways, Airports, Telecom, Railways,) in a time bound manner. 27. Each ITIR will be notified separately by Department of Information Technology after CCEA approval in each case. Each concerned central Ministry will then prepare detailed project reports, and obtain financial approvals to the same expeditiously as per extant guidelines of Ministry of Finance. Department of Information Technology will enter into a Memorandum of Agreement with the State Government concerned, indicating the respective commitments with timelines of the Central and State Government, after the ITIR has been approved by CCEA and notified by Department of Information Technology. 28. The Management Board will, after notification of the ITIR, prepare a detailed master plan under the State Town and Country Planning Act, using the expert assistance of a technically qualified consultant. The consultant will be selected after following a transparent process. The master plan wilt consist of a regional development plan specifying land use for integrated townships (where proposed), and for processing and non-processing areas, as welt as ITIR ancillaries of EHM Units. The Master Plan would be prepared in consultation with leading Information Technology / Information Technology Enabled Services / Electronic Hardware Manufacturing units. 29. The master plan as finalized through the above process shall be apprised by the competent authority under the relevant state law to give it appropriate statutory status. 30. Proposals for setting up units in the ITIR will be granted approval by the Management Board, or such authority to which these powers are delegated, after obtaining such clearances as are necessary. Such clearances and approvals will be granted within a stipulated period of time, as prescribed by the concerned State Government. FUNCTIONS OF THE MANAGEMENT BOARD 31. Each Management Board will undertake such measures as it thinks fit for the development, growth, operation and management of the ITIR. These measures will include: (i) Preparation and enforcement of the detailed Master Plan. (ii) Providing the necessary infrastructure within the ITIR, either directly or through Developer(s) (iii) Selection of Developer/Co-developers and entering into concession agreements with them for the development and maintenance of infrastructure internal to the ITIR. (iv) Promotion of investment, both foreign and domestic, into the ITIR. (v) Promotion of production within, and exports from, the ITIR. (vi) Granting approvals for, and facilitating clearances to units within the ITIR. (vii) Review of the functioning and performance of the ITIR. (viii) Regulation of levy of user or service charges or fees or rent for the use of infrastructure / properties in the ITIR (ix) Exercise of authority to delegate, enter into or create Special Purpose Vehicles (SPVs) for specialized services. (x) Any other functions as may be prescribed by the State Government. DEVELOPER AND CO-DEVELOPER 32. The Developer is a legal entity — Government, private or a Public Private Partnership that develops, builds, designs, organizes, promotes, finances, operates, maintains or manages a part or whole of the infrastructure and other facilities in the ITIR. The Developer would be selected by the State Government / Management Board through a transparent mechanism. 32.1 The success of the scheme would depend significantly on the technical and financial capacity of the developer. The pre-qualification and shortlisting of applicants shall be undertaken in accordance with the Guidelines and the Model Request For Qualification (RFQ) prescribed by the Ministry of Finance. While inviting the financial bids, the State Government shall provide the Draft Concession Agreement that will be entered into between the selected bidder and the State Government and shall contain the detailed terms of the Project. The financial bids shall be invited in accordance with the guidelines and Model Request For Proposal (RFP) document as may be issued by the Ministry of Finance. 33. Co-developer will be a legal entity — Government, private or Public Private Partnership — that assists the developer in providing infrastructure facilities in the identified area or to undertake various operations after entering into an agreement with the developer for providing the same. 34. Developer shall prepare and submit a Detailed Project Report (DPR) of the ITIR/township within the stipulated time frame as fixed by the State Government and this report shall consist of layout of the proposed township, land use plan, infrastructure and services development plan, standards and specifications, implementation schedule, resource mobilization, property management, operational and maintenance details etc. 35. Construction and building projects would have to obtain environmental clearances as per the provisions of Environmental Impact Assessment (EIA) notification, 2006 and the Social Impact Assessment (SIA) of large projects. 35.1 All modes of communications channels / infrastructure provided to the Developers / Promoters / Units in the ITIRs should conform to the relevant security norms laid down by the Government and there should be a mechanism to check their misuse, against the national security interests. 35.2 All foreign nationals operating in the ITIRs should be in possession of valid travel documents and they should register themselves with the concerned FRRO/FRO. 36. The benefits of tax holidays as provided under section 80(l)(A) of the Income Tax Act for development, airports, waste management facilities, water treatment plants, etc. would be available to the Developer/Co-developer. UNITS IN THE ITIR 37. Any Information Technology/Information Technology Enabled Services / Electronic Hardware Manufacturing units that will support the IT industry in the investment region for services, manufacturing, stocking, trading including logistics and utilities with local linkages, and for which site is available as per the approved detailed Master Plan, will be eligible for being set up in the ITIR, and may apply to the Management Board in such form as will be specified by the authority concerned. 38. The Management Board, or the authority to which such powers are delegated wilt allot sites to units through a transparent process as specified. 39. An Electronic Hardware Manufacturing unit located in ITIR, whether in Special Economic Zones or elsewhere, may produce / export goods except those prohibited either for services or export under the EXIM Policy or any other Act in force. 40. In case the Developer, or any Co-developer, is unable to discharge his functions, or violates the terms and conditions of the concession agreement, the same may be transferred to a new Developer / Co-developer under terms and conditions to be provided in the concession agreement between the Developer / Co-developer and the Management Board. 41. Any unit that wants to exit out of the ITIR will be allowed subject to payment of applicable dues and in compliance with the agreement with the Management Board in this regard. DISPUTE RESOLUTION MECHANISM 42. The concession agreement(s) executed by the Management Board with the Developer/Co-developer(s), and the agreements with the leading units, may contain the condition that any dispute, difference or controversy of whatever nature arising under or out of or in relation to any Agreement (including its interpretation) between the parties in the ITIR shall be notified in writing by either party to the other party and such dispute, difference or controversy shall, in the first instance be attempted to be resolved amicably by mutual consultation and if no solution is arrived after such consultation, the same may be referred to the International Centre for Alternate Dispute Resolution, New Delhi or such other rules as may be mutually agreed by the parties, and shall be subject to the Arbitration and conciliation Act 1996 and amendments made thereto from time to time. MISCELLANEOUS 43. This policy will take effect from the date of its notification. Any subsequent modification in the Policy will be applied only with prospective effect. N. RAVI SHANKER, Jt Secy. Annexure-A HIGH POWERED COMMITTEE Government of India will constitute a High Powered Committee (HPC) with the following composition: - (i) Cabinet Secretary - Chairman (ii) Secretary, Planning Commission (iii) Secretary, Ministry of Urban Development (iv) Secretary, Department of Higher Education, Ministry of Human Resource Development (v) Secretary, Department of Commerce (vi) Secretary, Department of Industrial Policy and Promotion (vii) Secretary, Department of Revenue (viii) Secretary, Department of Expenditure (ix) Secretary, Department of Telecommunications (x) Secretary, Road Transport and Highways (xi) Secretary, Ministry of Civil Aviation (xii) Chairman, Railway Board (xiii) Secretary, Ministry of Environment and Forest (xiv) Secretary, Ministry of Labour and Employment (xv) Secretary, Department of Land Resources (xvi) Secretary, Ministry pf Home Affairs (xvii) Secretary, Department of Information Technology………………. Convener The Committee may co-opt any other member as required. Chief Secretaries of the State Governments concerned may be invited to the meetings of the Committee as required. The Committee may also take into account the views of the representatives of Industry, as may be deemed appropriate. Annexure-B Format for Project Proposal The Project Proposal to be provided by the State Government, along with its application to the Department of Information Technology, Government of India for setting up ITIR for Information Technology / Information Technology Enabled Services (IT/ITES)/Electronic Hardware Manufacturing (EHM) units. Such proposal may also include setting up of integrated modern township. Such application would inter alia, include the following information: (i) The legal framework in the State under which the IT Investment Region is proposed to be formed, including whether this would be under an existing Act or under a new legislation to be enacted for this purpose - (ii) Particulars of integrated township, if proposed. (iii) Clear delineation of Information Technology / Information Technology Enabled Services and Electronic Hardware Manufacturing areas. (iv) The location along with demarcation of the identified areas with map and clearly identifiable landmarks. (v) The total area of the proposed ITIR, with the proposed zoning plan indicating the processing and non-processing areas to include: (a) total area with location/demarcation on map (b) existing IT/IIES/Electronic Hardware Manufacturing units and vacant land available (c) land acquired and proposed to be acquired (d) the existing and proposed Service and production units in the ITIR (e) Identify non-processing areas with location/demarcation on map. (f) Identify new/residential areas with location/demarcation on map. (g) existing and proposed social infrastructure such as Schools/ Colleges/ Hospitals / recreational area proposed within the residential areas. (vi) Whether the State Government has identified: (a) Interest shown by large IT/ITES; Electronic Hardware Manufacturing industries, (b) Developer(s) (Note: details of the procedure adopted/proposed to ensure transparency In the selection of Developer(s) may also be provided) (vii) a) Whether adequate proposals have been prepared for rehabilitation and resettlement of the persons affected by land acquisition. (b) Whether steps are being taken to obtain Socio Impact Assessment (SIA) clearance. Whether adequate care has been taken to avoid acquisition of agricultural lands/irrigated agricultural lands. (viii) The time frame by which a detailed Master Plan would be formulated and adopted. (ix) An Environmental Impact Assessment (EIA) report as per the manual on Norms and standards for Environment Clearance of large construction projects prepared by the Ministry of Environment and Forests, notification of September, 2006. (x) Estimated potential for generation of additional economic activity and future growth, including potential investment from domestic and foreign sources. (xi) Likely generation of Employment. (xii) Existing and proposed infrastructure for external linkages, including airport, road, rail and telecom as well as infrastructure such as power, water and effluent disposal, to be provided up to and within the ITIR (xiii) Financial aspects of the proposal, including source, mode of financing the project and assessment of viability of the project. (xiv) Proposed management structure of ITIR including the administrative, regulatory and development functions; the nodal department/officer of the State Government may also be indicated. (xv) The commitment of the state government in providing/upgrading basic infrastructure in ITIR and the cost estimates of the same. (xvi) The external linkages for which support is required from the Central Government, and their tentative costs.