After being pursued by the state government for the last six months, IT giant Infosys signed a memorandum of understanding (MoU) with the Maharashtra Airport Development Company (MADC) for setting up a unit in the Mihan-SEZ.
However, the move is still short of clinching the final deal with this state government company which will ultimately lead to allotment of land to Infosys in the SEZ.
The documents were signed in Nagpur by chief minister Prithviraj Chavan who is chairman of MADC. Some senior bureaucrats and politicians were present.
Technically, an MoU differs from an agreement as the former is generally an expression of willingness by the two parties to enter into a pact if certain conditions are met by both.
State governments often sign MoUs with prospective investors from the industry some of which materialize. In this case, other formalities are being done. MADC has called it the biggest investment proposal so far.
Infosys proposes to take up 142 acres of land in the SEZ, where it plans to come up with its 12th campus in the country. CEO and managing director SD Shibulal told the media that the company plans to invest Rs 150 crore and that 2,000-3,000 jobs would be created in the initial phase. The operations are likely to start within three years, added Shibulal.
The overall investment of company is likely to touch the Rs 450 crore mark. By the time the company gets operational, 14,000 jobs for software professionals would be created. The unit is expected to create a substantial number of indirect jobs as well.
"This will be Infosys' second campus in the state after Pune which employs 28,000 persons. The Nagpur unit will offer a chance to many employees posted abroad to come back," said Shibulal.
On a query over the final allotment of land, MADC's vice-chairman-cum-managing director UPS Madan said that normally it is a letter of allotment which is signed with the investor but given Infosys' stature, it was decided to hold an MoU signing function first.
"MADC had been vigorously pursuing Infosys to start the unit. The lease deed too is likely to be signed soon," said Anshuman Gosh, MADC's marketing manager.
Infosys will now submit its proposal for the SEZ unit to the development commissioner who in turn will forward it to the board of approvals (BoA) in the ministry of commerce. The BoA, the governing body for SEZs, is scheduled to meet on March 13. Infosys' case is likely to be taken up during the meeting.
After the LOP, other formalities like signing the deal for allotment of land and registering the lease deed between MADC and Infosys will follow, said Madan. LoP is a green signal granted by BoA for tax benefits available in a SEZ.
Madan added that even as there have been concerns of this SEZ being crowded with only IT companies, Infosys, given its size, could not be ignored. He said that the formalities, including inviting tenders for redeveloping the airport with a third partner, is expected to be done in three years, while that for a 2.3 km taxiway leading to Boeing's MRO may be completed in a year.
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