Bangalore IT Hub Fails to Gain Pace

Published on Dec 30th, 2013
Karnataka's plan to build a new information technology hub close to the new international airport on the outskirts of Bangalore is yet to take off, with slow pace of land acquisition exacerbated by rising land costs, said a report released by The Economic Times.

Karnataka had planned on developing the first hub, under a May 2008 plan by the central government to encourage Information Technology Investment Regions (ITIR) across the country. The hub was envisaged to bring in 2 lakh crore in investments and create a million jobs, the Karnataka government had said at a global investor meet in 2010.

"The department has been delaying in acquiring land. And now with the new price, the overall estimated cost of the project could double," a government official with direct knowledge of the acquisition process said, requesting anonymity as the official was not authorised to speak to the media.

In 2010, Karnataka approved the ITIR, to be built on more than 10,000 acres of land. It also received interest from over 55 companies including the likes of Infosys, Wipro, TCS and Cognizant who had shown interest in setting up their offices, the government had said at the investor meet.

From 2010, when the cost of land was between 60 lakh and 75 lakh an acre, prices have gone up to as much as 2 crore an acre, according to a second person with direct knowledge of the acquisition process, who did not want to be named.

Private landowners have also bought some land in the vicinity and are charging higher rates for their plots, complicating the process further, the person said.

In August 2013, the Karnataka Industrial Area Development Board, the agency responsible for land acquisition, issued a notice to expedite that work."Acquisition for ITIR has started. Preliminary notification has been issued. Enquiry and serving of notices to the title holders is on. The extent of land involved is 2,074 acres," MN Vidyashankar, additional chief secretary to Government of Karnataka, said in an emailed statement.

The increasing strain on Bangalore's infrastructure has been a matter of perennial concern for companies that made the city India's top technology hub, accounting for a third of the information technology services exported from the country.

As the industry grows, with continental Europe opening up to the idea of sending more IT work to India, Bangalore could lose out to cities such as Indore that has attracted companies such as Tata Consultancy Services in setting up centres.

The Bangalore Political Action Committee, backed by business leaders including Mohandas Pai, the chairman of Manipal Global Education, and Kiran Mazumdar Shaw, chairman of Biocon, met Karnataka's chief minister Siddaramaiah on Thursday to press for faster movement on infrastructure development, among other issues.

Pai, a former board member at Bangalore-based Infosys, India's second-largest IT services provider, also led the Karnataka Information Communication Technology Group that made detailed recommendations to the government in a report submitted in January, on making Karnataka a technology powerhouse, including electronics manufacturing.