Overview
The IT/ITeS industry in Rajasthan has grown rapidly over the last few years.

Rajasthan has a vast pool of trained, English-speaking professionals with over 50,000 engineers, graduating from 122 engineering colleges.

Low cost of operations in well-developed cities of the State makes them attractive locations for IT and ITeS units.

Exports
IT/ITeS exports from Rajasthan have touched the INR 5 billion mark in 2009-10 and have grown at a compounded annual growth rate of 51% in the last 5 years. Top 5 IT companies (Genpact, Infosys, Deutsche Bank, Metacube Software, Backoffice IT solutions) contribute nearly 75 % of IT/ITeS exports from Rajasthan.

Number of IT/ITeS Units
There are 89 STPI registered units operating in Rajasthan in 2009-10 and the number has grown steadily over the last 5 years.

79 % of the IT/ITeS companies in Rajasthan are in the IT (software development) segment compared to 21% in ITeS.

Majority (77%) of the companies are involved in software development, followed by 12% in BPO and 8% in medical transcription. 

Industry Cluster
Jaipur is the key IT/ITeS industry cluster in Rajasthan. More than 80% of IT/ITeS units in the state are located here, followed by Jodhpur and Udaipur at 7% each.

Employment
Currently, there are about 9,000 people directly employed in the IT/ITeS industry in Rajasthan.

Direct employment from IT/ITeS industry has the potential to reach 20,000 in the next 2-3 years with the coming up of Mahindra World City and Genpact SEZ.

About 20% units engaged which are engaged in ITeS are contributing 80% of the total employment.

Why Locate in Rajasthan
Human resources - Skilled manpower at relatively low cost
The state has a comparative advantage on labour cost. Cost of an IT/ITeS professional is estimated to be 15-20% lower compared to National Capital Region (NCR).

Rajasthan has a high a number of finance professionals giving ITeS companies confidence to scale up their financial back office operations.

Industry strength - Strong industrial base
IT/ITeS exports from Rajasthan are growing at a compounded annual growth rate of 51% over the last 5 years compared to other peer states, albeit on a much smaller base.

Its image as a favorable IT/ITeS destination is improving with the success of players such as Genpact, Infosys, Deutsche Bank, etc. as well as home grown companies.

Land and Infrastructure - Easy power and land availability at low cost
Rajasthan's competitive advantage lies in the availability of relatively low cost land. Mahindra World City IT SEZ, spread over 750 acres, is one of the India's largest IT SEZ, providing ample ready-to-occupy built up space for IT/ITeS companies.

In addition, good availability of power in Rajasthan promises to facilitate the growth of the IT/ITeS industry.

e-Governance opportunities
GoR has launched several projects to improve government department functioning and provide basic services to people online, thereby creating demand for e-governance solutions.

Various State govt. departments are expected to allocate approx. 3% of department budget for IT/ITeS implementation.

Connectivity -  Well connected to major markets
Rajasthan's proximity to major markets in Northwestern India makes it an attractive location for investment. Rajasthan comprises 23% of the NCR, the world's second largest urban agglomeration.

Rajasthan ranks among the best in railway network in the country.

Quality of life - Good medical and housing facilities
Jaipur and other cities house a broad array of primary and secondary schools. The State is home to several prestigious academic institutions.

The State has excellent medical facilities, including Fortis Escorts Hospital, Soni Group of Hosptials, Aravali Hospitals, Santokba Durlabhji Memorial Hospital, Bhagwaan Mahaveer Cancer Hospital & Research Centre and Narayan Hrudayalaya Health City.

It has a peaceful environment, good social infrastructure and strong tourism brand.

Policies
IT and ITeS Policy 2007:

• An investor friendly IT policy is already in place which provides lucrative incentives to IT/ITeS industries. The following concessions are being available in IT Parks.
• Land rebate up to 60% depending upon type & size of investment
• Exemption of Stamp Duty on registration of land
• 50% Exemption from electricity duty for 7 years
• Simplified Labour Laws. (Women are allowed to work in night shift, self certification under various State enactment'setc.)
• Customized package for Investment beyond INR 100 million.
• Venture Capital

District BPO Scheme
The scheme encourages private players to set up BPO centres in tier 3 towns like Ajmer, Jodhpur, Kota, Bikaner, Udaipur etc. As part of the scheme, govt. will provide various financial benefits such as capital investment subsidy of 50% of capital cost up to INR 2 million financial benefits.

Rajasthan Investment Promotion Scheme (RIPS) 2010
The Government has recently announced RIPS 2010 for setting up of new enterprise, enterprises going for expansion, modernization and diversification, and projects set-up for common social good. All kinds of investments are eligible under this scheme. The new scheme also simplifies the procedure for grant and disbursement of subsidy, and introduces transparency in system, by introducing the system of online disbursement of subsidy.

Subsidies

• Investment subsidy and Employment generation subsidy have been introduced.
• The maximum amount of subsidy shall be 50% of the tax deposited, i.e. VAT and CST or SGST(whenever introduced).
• RIPS 2010 provides investment subsidy to all eligible investors of an amount equal to 30% of the tax deposited, without any linkage with payment of interest and wages.
• Employment generation subsidy has been announced @ 10,000 per employee/annum.For women, SC/ST and persons with disability this amount has been enhanced to 12,000 per employee/annum.
• For entrepreneurs belonging to Women, SC/ST, or person with disability category, an additional investment subsidy amounting to 10% of the taxes deposited has been kept.
• These subsidies have been announced for 7 years, but to give boost to the MSMEs in thenotified area, time limit has been extended to 10 years.
• Procedure for subsidy disbursement has been simplified by introducing a Challan for Adjustment through Treasury (Form VAT-37B).

Exemption from Taxes
The RIPS 2010 scheme announces exemption from payment of various taxes under the following categories of investment:
1.  New Enterprise and Project for Common Social Good
2.  Investment made for Modernization/Expansion/Diversification
3.  Sick Industrial Enterprise for its revival

The type, extent and period of exemption are as follows:

In case of Enterprises going for modernization/expansion/diversification, the exemption from payment of tax(es) shall be allowed only to the extent to which additional tax liabilities accrue due to utilization of additional capacity created after modernization/expansion/diversification.

Key Players
There is a good mix of MNCs and Rajasthan based companies among major IT Players.

"Cities of Rajasthan offer a good pool of qualified young manpower and low operating costs, an excellent advantage-mix for an IT and ITeS services company. Infosys is happy to have located in Jaipur and plans to further strengthen its presence here"

S.D. Shibulal
CEO, Infosys

"The bureaucracy of Rajasthan is the most pro-active all the bureaucratic departments are awesome in their support" right from inception to construction and commissioning, to all approvals. We look forward to Jaipur as the major growth centre."

Mr. Ashok Tyagi
Ex-Senior VP, Genpact

Last Updated: October 10, 2011