The Government of India is planning to build 43 new information technology cities across the country to retain its top dog status in the business and to be in a position to tap the huge surge in demand for IT-enabled services over the next 10 years.
The move comes at a time when the rising costs of infrastructure and employee wages in big cities is threatening to blunt India’s crucial cost advantage.
While India has held on to its pre-eminent position, its IT and BPO companies are losing their global cost advantage with the emergence of countries like Vietnam and the Philippines, which offer similar services at cheaper rates and are threatening India’s status as the world’s back office.
The proposal, suggested by a high-level group on service sector, has been cleared by the Planning Commission. According to the plan, each IT city will be set up in an area of more than 500 hectare. The cities will altogether generate employment for around 3.5 million people by 2018.
The proposal is to create self-contained satellite townships with commercial space for renting and a commensurate increase in residential accommodation, education, healthcare, retail and recreational facilities.
The Centre has sought the support of state governments in facilitating creation of these new towns. The proposal suggests that the towns will be developed by private players and state governments will ensure trunk services like electricity, water supply, sewage and drainage.