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Hosur an IT hot spot? Soon!
Nelson Vinod Moses in Chennai
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February 16, 2005

Consider this picture: Businessmen from Bangalore travelling to Hosur in Tamil Nadu, just like Delhiites commute to Gurgaon or Mumbaikars to Navi Mumbai.

Hosur is a mere 30 km away from Electronic City, Bangalore's IT hub, and the Tamil Nadu government wants to make the industrial township a giant satellite town like Gurgaon or Noida.

The Electronics Corporation of Tamil Nadu (ELCOT) will commission a study shortly along with the Confederation of Indian Industry on how Hosur can be transformed into an information technology and IT-enabled Services hot spot.

"The study will assess the socio-economic and technological potential of Hosur as an IT destination. It will be done by one of the top five consultants and will be completed in three to six months," says Vivek Harinarain, IT secretary, government of Tamil Nadu.

Hosur, he says, has been chosen as it can dovetail the strengths of Bangalore's deep talent pool and salubrious climate with Tamil Nadu's infrastructural forte and relatively inexpensive real-estate rates.

Making Hosur an IT hub, however, will be a tough task. In 2003-04, when Tamil Nadu exported Rs 7,643 crore (Rs 76.43 billion) worth of software, Hosur's contribution was zilch. Tamil Nadu is keen on changing this.

"We will consider building a 250,000 sq ft facility, on the lines of TIDEL Park in Chennai, at a cost of between Rs 35 crore (Rs 350 million) and Rs 50 crore (Rs 500 million). This initiative, we hope, will create a light-house effect and boost investor confidence," Harinarain says.

He says the Tamil Nadu government is likely to use a private-public partnership to upgrade Hosur's present infrastructure, including schools, hospitals and shopping malls, to build Hosur into a viable satellite town.

The state government will provide all supporting infrastructural requirements such as land, sewerage, electricity and water.

The Software Technology Parks of India plans on setting up a park at Hosur. The Union ministry of IT and communications has asked the Tamil Nadu government to allot land for the building.

"With a TIDEL-type park, Hosur is a very viable idea. Lots of residential complexes will be thrown in between Hosur and Bangalore. Travel time is faster outside Bangalore to Hosur rather than within the city," says K Pandia Rajan, managing director, Ma Foi Management Consultants Limited, the recruitment agency.

Yet the Tamil Nadu government will have to invest in improving the quality of people in the districts closest to Hosur. "There is a need for investment in schools and colleges in Dharmapuri and Krishnagiri to develop human capital ," Pandia Rajan points out.

It is not as if Hosur doesn't have anything other than its proximity to Bangalore going for it.

It has been an industrial hub for more than two decades now and home to the manufacturing plants of Ashok Leyland [Get Quote], Titan Industries [Get Quote], TT Prestige, Reckitt Benckiser, Hindustan Lever [Get Quote], Carborandum Universal and TVS [Get Quote] Motors. So, the basic infrastructure is firmly in place.

"Hosur's potential to become a prime outlying suburb of Bangalore, on the lines of Noida and Gurgaon for Delhi and Navi Mumbai for Mumbai, has been largely underutilised. This is primarily due to the lack of adequate connectivity with Bangalore," notes Shivaram Malakala, executive director, Habitat Ventures.

IT majors such Infosys [Get Quote] and Wipro [Get Quote] are just a stone's throw away in Electronics City which is midway between Bangalore and Hosur.

These companies would be wary of setting up operations in Hosur as they are already battling the Karnataka government over the lack of proper roads to Electronic City from Bangalore. If anything can stop Hosur's advances to becoming a IT super city, it will be poor road links.

Wipro and Infosys are already pushing a proposal for an elevated high-speed corridor between Electronic City and Bangalore.

"Work on the Rs 400 crore (Rs 4 billion), six-lane expressway will begin in April with a deadline of 18 months to complete the project," K H Muniyappa, Union minister of state for road transport and highways, said early this year.

The IT industry has committed Rs 100 crore (Rs 1 billion) to the project and Karnataka will contribute Rs 100 crore, with the rest being invested by the National Highways Authority of India.

The initiative to develop the roads between Electronic City and Hosur will have to be taken up by the Karnataka state government, but it has no reason as of now to kick-start the process.

"The road to Hosur from Electronic City does not have a lot of traffic pressure as of now and both governments may work together to improve road connectivity," says Sudeep Jain, managing director of ELCOT.

Also, Hosur's residents are unlikely to shop in Bangalore. "Residents of Hosur might have to pay commercial taxes if they make purchases from stores in Bangalore. In Delhi, cross-border taxes are slowly being phased out," adds Shivaram.

The Tamil Nadu government does not think this is a major roadblock because it believes that the roll out of the value added tax in April will solve this problem.

However, real estate prices are 25-30 per cent lower in Hosur than in the areas of Bangalore closest to Hosur. What do the software companies think of Hosur?

"We are not considering Bangalore or Hosur as of now. But assuming that we were, the primary concerns would be travel time, overheads and the cost of attracting talent," says Arun Jain, chairman and CEO, Polaris Software Lab [Get Quote].

He adds that Hosur as an IT destination will be viable only if a company is considering setting up a 5,000 to 10,000 personnel organisation.

"Setting up operations in Hosur might prove counter-productive if travel times are extended," Jain remarks.

"Twenty-year tax incentives, subsidised land-registration charges and the creation of a special economic zone would help us invest in Hosur," says an official at an IT major, who heads its Tamil Nadu operations.

The proposed airport in the northern part of Bangalore will further challenge Hosur's prospects of attracting industrial and employment generating industries.

So if Hosur is to become a hub of technology companies and industrial activities, it will need good infrastructure and road links to Bangalore.

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