The Problem of Infrastructure: Software Technology Parks Provide Islands of Reliability

One of the biggest roadblocks to a real development of the Indian IT industry is the dearth of supporting infrastructure. The government recognized that Software Technology Parks of India ^[1] (STPIs) were an important prerequisite for MNC investments in the country, creating wealth through offshore software development and production. Such facilities had previously been unreliable and difficult to access, creating one of the biggest disincentives for MNCs to invest extensively. In 1991, the unreliable and inadequate state of India's basic power, electricity, and connectivity infrastructure resulted in key government initiatives to develop the STPIs.

The STPIs were created as autonomous organizations under the Department of Electronics, which is responsible for the direction and development of India's technology park schemes. Thirteen parks have already been installed in diverse cities such as Bangalore, Hyderabad, Chennai, and New Delhi, running at full strength with a highly sophisticated infrastructure. The parks provide multinational IT companies with the power and fiber- optic networking to operate their outsourcing needs. Specific advantages include 100% foreign equity, no import duties on capital goods, duty-free imports of hardware and software within the STPI units, zero corporate income tax until 2010, exemption from excise duty for domestic purchases of capital goods, reimbursement of central sales tax, and overseas investments up to $100 million.

Demand for office space is expected to exceed 66 million square feet over the next five years , while the estimated availability is only 22.5 million square feet. This large gap between supply and demand for stable infrastructure is creating a market for technology parks in India, fostering regional wealth in the form of jobs and corporate investments.

Thus, despite the poor infrastructure of a developing nation like India, countries can still provide islands of reliable facilities for the developmental needs of MNC investments. Building off of these initial investments in the surrounding region, the potential for future wealth creation is enormous .