State plans more sops for IT parks despite ‘rampant misuse’ of FSI

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Official sources confirmed that the department had proposed to increase the FSI for existing and new technology parks. The existing policy for IT/ITES services already allows 100 per cent additional FSI over and above the applicable FSI for a particular city. It also provides for utilisation of a portion of the built-up space for financial services such as banks, insurance companies, securities, and mutual funds and other allied activities. But the industries department has pitched for extra FSI for such services arguing that availability of land was decreasing in urban agglomerates and the cost of land was heading north.

A senior government official, who did not wish to be named, said the new policy proposes an FSI of three for such parks. It has proposed that the additional FSI can be availed by both existing and new IT parks by paying a premium, which is proposed to be 20 per cent of the ready reckoner rate in Mumbai and 10 per cent in other urban areas. Sources said the new policy provides for utilisation of 20 per cent built up space for non-IT related activities including residential service apartments.

The proposal comes at a time when government agencies have alleged rampant misuse of incentives provided by the state to existing IT/ITeS parks. The City Industrial Development Corporation of Maharashtra (CIDCO), which is the town planning agency, for Navi Mumbai, for instance, has found that such incentives had been diverted to promote commercial activities that have no connection with the IT sector.

Ironically, while pushing for additional FSI sops for IT parks, the industries department has also moved another proposal for providing an ‘exit option’ to existing IT park projects. With Maharashtra already accounting for 30 per cent of the country’s software exports and boasting of nearly 1,200 software parks, the second proposal has reportedly argued that the demand for setting up new IT projects was on the wane. In a move that could lead to regularising of many IT projects where the FSI has been misused for non- IT activities, the department is pushing for granting these activities by imposing a premium.

Sources, however, confirmed that the state’s urban development department and the finance department have raised concerns on this and cited misuse of existing provisions, which may force Fadnavis to call for a detailed report assessing the use of FSI sops provided under the existing IT policy before taking a final call on the new policy incentives proposed by the Industries department.

Since the policy came into force in 1998 — it has been revised thrice — over 100 IT park projects have come up in Mumbai, Navi Mumbai, Thane, and Pune. Over 300 others have been issued letters of intent (LOI).

All projects for which LOI’s have already been issued account for a staggering built up space of six crore sq ft. Assuming land rates across MMR and Pune where most of the IT parks have come up thus far to be Rs 7,000 per sq ft as a conservative average, the benefit passed on to IT parks works out to close to Rs 42,000 crore.

A senior official said that the government must think of other avenues besides FSI to incentivise the IT sector. “It must first be seen if the FSI perks extended so far have met goals. It must not result in windfall gains for developers,” another official pointed out.

The industries department has also proposed an FSI of 4 for setting up of new IT townships, which would have to come up on areas over 10 hectares. Promoting the walk to work concept, the department has proposed that 40 per cent of the built-up space in such townships be used for residential service apartments. Apart from FSI perks, the Industries department has also new fiscal sops for IT parks.

Fadnavis has convened a meeting to discuss various initiatives proposed under his pet ‘Make in Maharashtra’ project. Apart from the IT policy, Fadnavis is also expected to take up policies aimed at promoting electronics sector and retail trade in the state.

He will also review the status of various directives issued by him to improve the business climate in the state.