The Government has evolved a best-in-class package of fiscal
incentives and regulatory support to investors.
A.
Supportive regulatory framework set up for investors
Our discussions with potential ITES investors indicate that
supportive regulations go a long way in attracting investments
to a state. Based on the inputs received from investors, West
Bengal has granted the following non-fiscal incentives to ITES
investors to help their day-to-day operations.
1. Procedures under existing labour laws simplified
to ensure smooth operations
In ITES, where human resource inputs are highly flexible and
mobile, the Government recognises the need to simplify procedural
framework under the existing labour laws. Accordingly, the Government
is committed to move from a regulated administration framework
to a promotional framework to facilitate smooth functioning
of the business.
1.1. All ITES companies are granted the status of ‘Public
Utility Service’ providers under the Industrial Disputes
Act, 1947. The majority of employees in ITES organisations
are outside the purview of the ‘blue-collared worker’
class. However, in view of the Government’s understanding
of 24x365 operations of the ITES sector, the Government has
decided to classify the ITES sector as ‘Public Utility
Service’
1.2. All ITES units are deemed ‘establishment’
under the purview of the West Bengal Shops and Commercial
Establishments Act, 1963.
1.3. Given the round-the-clock nature of work that is part
of the ITES industry, the Government grants it permission
to work on a 24x7x365 model. These units are also exempt from
the following provisions of the West Bengal Shops and Commercial
Establishment Act, 1963.
1.4.Under section 13 of the West Bengal Shops and Commercial
Establishment Act, 1963 the ITES companies will now have an
option of giving compensatory day off to an employee if the
quantum of work exceeds 48 hours a week.
1.5.Under the Employment Exchange Compulsory Notification of
Vacancies Act, 1959, ITES companies will be required to send
a consolidated report every quarter on the vacancies to the
concerned employment exchange. The exchange, will, however sponsor
names only when specifically requested to do so by the company.
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2.
Self-certification allowed for ITES companies on various acts
Having regard to the Government’s responsibility envisaged
in the Acts and Regulations mentioned below, the Government
permits self-certification to ITES companies to the extent possible.
In addition, on all acts administered by Central agencies, prior
consultation will be required with such agencies.
- Payment of Wages Act
- Minimum Wages Act
- Contract Labour (Regulations & Abolition) Act
- Workmen’s Compensation Act
- Employees State Insurance Act
- West Bengal Shops and Commercial Establishments Act
- Payment of Gratuity Act
- Employees Provident Fund and Miscellaneous Provisions Act
- Maternity Benefits Act
- Water and Air Pollution Act.
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3.
ITES companies awarded special status under various acts to
improve infrastructure availability
In addition to the exemptions mentioned above, ITES companies
are given the following facilities:
- Automatic clearances under the West Bengal Pollution Control
Act, except in respect of power generation sets
- Exemption from zoning regulations on application of company
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B. Fiscal incentives for ITES
investors
The existing West Bengal IT Incentive Scheme, 2001 offers fiscal
incentives that are significantly more competitive than those
offered by any other state. The ITES investments have been included
in the scheme which enables them to avail of the fiscal incentives.
To ensure balanced development in all regions, the Government
has divided the State into three types of areas: Group A, B
and C. The fiscal incentives offered vary by location category.
Group A includes Calcutta Municipal Corporation. Group B includes
Howrah, Hooghly, North 24 Parganas, South 24 Parganas excluding
the area under the jurisdiction of the Calcutta Municipal Corporation,
Burdwan, Nadia, Purba Medinipur and Paschim Medinipore districts.
Group C includes Murshidabad, Birbhum, Purulia, Bankura, Malda,
Coochbehar, North Dinajpur, South Dinajpur, Jalpaiguri and Darjeeling
districts.
1. One-time fiscal incentives
- State Capital Investment Subsidy: ITES companies in Group
A & B are granted subsidy of 15 per cent of the fixed
capital investment subject to a ceiling of Rs. 1.5 crore.
Companies in Group C are granted subsidy of 25 per cent subject
to a ceiling of Rs. 2.5 crore.
- Exemption from consumption tax: As per section 2(b) of the
State Tax on Consumption or Use of Goods Act, 2001, ITES companies
are exempted from consumption tax on computer hardware, computer
peripherals and other capital goods including captive power
generation sets during the implementation stage.
- Quality linked incentives: In pursuance of high quality
standards by the State, ITES companies in the small scale
sector will be reimbursed 50 per cent of the expenditure incurred
by them to obtain ISO/ ISO 9000 certificate or SEI-CMM Level
5 or COPC-2000 or eSCM level 3 with a ceiling of Rs. 5 lakh.
- Remission of Stamp Duty & Registration: ITES companies
in Group A, B & C are completely exempted from payment
of Stamp Duty and Registration Fee required for registration
of documents. The requirement of land will be assessed at
the rate of 0.3 acre for every 100 jobs created.
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2. Recurring incentives
- Interest Subsidy: ITES companies in Group
A will be subsidized to the tune of 50 per cent of annual
interest liability on the loan borrowed for an approved project
subject to a ceiling of Rs. 1.0 crore per year for 5 years.
Companies in Group B will be subsidized 60 per cent of annual
interest liability on the loan borrowed for an approved project
subject to a ceiling of Rs. 1.2 crore per year for 7 years
while those in Group C will be subsidized 60 per cent of annual
interest liability on the loan borrowed for an approved project
subject to a ceiling of Rs.1.2 crore per year for 9 years.
- Waiver of Electricity Duty: ITES companies
in Group A, B & C are granted waiver of Electricity Duty
on the electricity consumed for production for 5 years from
the date of commercial production. (This would be applicable
only for grid power and not for captive power, where the company
would have to pay duty at the rate of approximately 5 paise
per unit).
- Employment Generation Subsidy: ITES companies
in Group A & B will be reimbursed 50 per cent of their
contribution towards ESI & EPF for 5 years while those
in Group C will be reimbursed 50 per cent of their contribution
towards ESI & EPF for 7 years.
- Special incentives for mega-projects:
For mega-projects that require investments exceeding Rs. 25
crore and employ more than 750 people in their first year
of operation, the Government may consider a Special Package
of Incentives on a case-to-case basis. Specifically, for companies
with plans to setup large centres, the State may consider
a graded incentive package that would increase the incentives
offered per employee with an increase in the planned size
for the centre.
The Government of West Bengal strongly believes that this policy
will create an enabling regulatory framework for ITES, attract
investments and create the initial momentum to drive growth
in the sector.
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[1] As per theCentral Statistical Organisation (CSO)
[2] ITES includes services like back office operation, call
centre, content development/ animation, data processing, engineering
and design, geographic information system services, insurance
claim processing, legal database, medical transcription, payroll
processing, remote maintenance, revenue accounting, support
centre and website services.
[3] As per Nasscom
[4] Business Process Outsourcing
[5] Application Service Provider
6 West Bengal Electronics Industry Development Corporation
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