How Bengal Fell Behind Bengaluru In Software Industry?

Today Bengaluru is widely recognized as the silicon valley of India. The strong presence of IT businesses here makes the city a software giant in the country.

Interestingly, 10 lakh+ Bengali software professionals reside in Bengaluru for a living. While in Kolkata, the numbers are around 2 lakh, comprising IT, ITES, BPO, and KPO.

But why do people from Bengal migrate to Karnataka in search of jobs? Kolkata, once the capital city of United India, was considered to be an employment hub. But, in the present day, it fails to hold back its own people.

Software Industry In Kolkata

Even today, many Bengalis dream about working in Kolkata so that they do not need to leave their homeland for an earning – staying away from family, parents, relatives, and friends.

But will this dream ever become a reality? What were the decisions made that stopped the IT companies set foot in the state? For this, we need to look back and understand the historical turn of events that led to this situation.

Let Us Take A Look Back Post Independence

At the time of independence, Bengal was one of the most industrially developed states in India.

Post-1947, the industries in the state began to decline, and in subsequent periods, the sector forced many industries to close down. 

The central government’s license Raj policies was a major roadblock for industrialization in Bengal. Fewer licenses were issued to businesses here. Also, the Communist government gave full support to the trade unions that led to endless strikes in industries. 

During the 1970-80s, most of the labor-intensive industries were crippled. That led to lock-outs, closures, and layoffs, throwing thousands of employees to the streets and generating unrest among the workers in particular and discontent in society in general.

Hopes Alive Again! End Of License Raj

In the 1990s, the Indian economy began to liberalize. On a national level, Left Front rejected the liberalization policy. 

But in West Bengal, they sought to take advantage of the end of license Raj. 

Left Front government did a complete turn-around in 1994 industrial policy to draw private capital and rejuvenate the industrial sector. 

Industrialization Policy Change in Bengal

This time around West Bengal government welcomed foreign investment. The then Chief Minister Jyoti Basu traveled to many capitalist countries to attract investment. 

The Left front stopped being as supportive of its trade union organ as it was before. That caused the number of strikes to decline sharply.

Despite the hype around the new industrial policy and some increase in investment, the initial efforts did not attract much response in drawing investments. Only a handful of new industries were set up. 

The government established a single-window procedure for the industries to reduce the roadblocks for obtaining clearance. However, the implementation process in Kolkata remained slow.

The main reason for the failure to attract huge investment was the poor infrastructure and the related inability of the state to improve it over time. Bad roads, supply chain, and transportation infrastructure were the other nagging issues. However, the southern states offered a much better prospect compared to West Bengal.

Also Read: IT Work From Home Increases Stress, Anxiety: Boon For Executives, Bane For Engineers?

Dating Back To The Early Era Of Computers

When Bengal was trying to woo investors from IT sectors, Bangalore was already booming.

Then came the era of Buddhadeb Bhattacharya. After taking the chair in 2000, CM Bhattacharya started hectic lobbying with the industrial lobbies in India and abroad to bring more investments in Bengal.

Incidentally, the central government introduced the special economic zone(SEZ) Policy in 2000, the same year when the new CM started his journey along the controversial path of industrial development. A company gains by being in an SEZ, as they are granted policy relaxations and lower taxations etc.

Bhattacharya found in the SEZ policy an opportunity to attract more capital to the state. It seems worthy to note that West Bengal was one of the pioneer states in India to have an SEZ. 

In 2006, CITU wanted to register the trade union in the IT sector. But Buddhadeb Bhattacharjee opposed it and made the IT sector in the gambit of public utility service. With the intention that no strike can disrupt operations in the IT sector. 

Premier IT Company Set-up In Bengal

Software Programmer

Wipro set up its first campus in Salt Lake Sector V in 2005-06.

In the 2006 assembly elections, the Left Front won the elections principally on the program of industrialization. 

The government announced several industrial projects to be set up in the state requiring around one lakh acres of land. He offered lands to industries at subsidized rates.

But, SEZ implementation culminated in an apparent tussle between agriculture and industry.

Between 2006 and 2008, West Bengal witnessed possibly the most severe violence over land acquisition for industrialization.

Regime Of CM Mamata Banerjee

Two of the major industrial projects planned by the Left front governments were stalled to support the farmer’s rights: the Tata Nano car plant in Singur and a chemical plant at Nandigram.

In 2011Trinamool Congress won elections and formed the government led by CM Mamata Banerjee. 

From the beginning, the TMC government opposed the setting up of special economic zones and took a hard stand against it. They were against the blindfold incentive scheme for setting up industries in the state.

During the Left Front regime, Infosys had proposed to set up an IT/ITeS SEZ over an area of 20.14 hectares. They had purchased 50 acres of land for the project in Rajarhat.

Wipro had also acquired, 19.76 hectares of land in Rajarhat, Kolkata.

Due to no approval from the government – Infosys or Wipro were not able to operate for their proposed SEZs.

The lack of SEZ status and the party’s policies on industry held back other companies also from investing.

The SEZ policy repeal burdened the developers of future projects with massive stamp-duty liability. As, it was waived in most of the other state SEZ Acts, around 34 developers backed out from investing in the state. All these SEZs together would have put up an investment proposal of above Rs 60,000 crore.

The state has done satisfactorily in the MSME sector during Mamata Banerjee’s rule but lagged to attract big industries.

Of the total 330 notified SEZs in the country, Only five are in West Bengal, in contrast to 30 notified SEZs in Bengaluru, out of which 28 are dedicated to IT and ITES services. All SEZs in Bengal are in the IT/ITES sector, and they were notified during the Left regime before 2011.

The Good News | Bright Future For Software Industries In Rising Bengal

Though, IT sector growth in Bengal started late. But, Bengal certainly holds a bright future and has a lot to offer in the software industry for upcoming generations.

Mamata Banerjee has offered both Wipro and Infosys 50 acres of land each in New Town to start their operations.

Infosys would commence work for its maiden project in the state from July 2021 and is expected to complete it in two years. 

Wipro, too, has committed to invest in a second campus in the state without SEZ status.

Although most of the multinational IT companies have a presence in Kolkata, the number of projects and opportunities are still comparably limited to other cities like Bengaluru, Hyderabad, Pune, and Chennai. 

The IT and IT–SEZ parks in Kolkata are at Salt Lake, Rajarhat, and Bantala. Rajarhat Newtown has become an important IT destination and is considered one of the posh areas in Kolkata.

Few major IT parks, that are currently operational in Kolkata include Sector V, DLF 1,2, Unitech, Ecopace, Gitanjali Tech Park (TCS), DLF 1, DLF 2, Millennium Business Park, Bantala IT Park, IT Lagoon, to name a few. 

Future Prospects | Bengal Silicon Valley Project

Bengal Silicon Valley Hub is a new IT park coming up in Kolkata with over 200 acres of land in Rajarhat Newtown.  

Many top companies Reliance, TCS, Capgemini, Genpact, have invested in the city of joy. 

Offices of Reliance Communications, Infosys, HCL Technologies, ITC infotech, Genpact, L&T Infotech are under construction and shall open soon. 

Currently, the large ITC Infotech campus is coming up in Newtown. It is expected that at least 4000–5000 people will be hired by the company. 

With Silicon Valley, one can expect several startups to start their journey in the city. This project is going to offer massive employment in the IT sector in the city. If these scenarios turn into reality, then, Kolkata will definitely create a name for itself in the IT market.

The future ventures look promising and raise hopes for the rising IT industry of Kolkata. 

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