Guj to take back Infocity land, won’t extend lease beyond 2030

Gandhinagar: Gujarat govt has decided not to renew the lease of Creative Infocity Ltd, developer of the state’s flagship Infocity project in Gandhinagar, setting the stage for the govt to take back control of the sprawling 116-acre campus after the concession period ends in 2030.The decision, taken at the highest level in the state govt, comes in the backdrop of a long-running dispute between the govt and the developer over alleged violations of the concession and lease agreements governing the project. Although the 30-year lease is scheduled to expire only in July 2030, the department of science and technology has already initiated procedures for reclaiming the land and project assets once the concession period ends, official sources said.“There is no justification for extending the lease in view of the alleged contractual breaches. The govt had issued termination notices back in Aug 2008, but the dispute subsequently entered arbitration proceedings and has remained under legal consideration for years,” said a senior official in the govt.According to sources close to the development, the govt will compensate Creative Infocity Ltd for the buildings and infrastructure created on the site in accordance with provisions of the agreement, with valuation based on depreciated asset value.

“However, the compensation payable to the developer is likely to be significantly lower than the financial liabilities arising from the violations of the lease agreement,” said a source.The Infocity project was conceived as Gujarat’s first integrated information technology township aimed at attracting leading IT and technology companies to the state by providing world-class infrastructure within a single campus.

A pre-feasibility study conducted with the assistance of consultancy firm PwC and Gujarat Informatics Ltd was the nodal agency of the govt to implement the project.A concession agreement between GIL and Creative Infocity Ltd was signed on Aug 1, 2000. Under a master lease agreement executed in Feb 2001, the state leased 116 acres of land in Gandhinagar to the company for development of the IT township.However, differences between the govt and the developer surfaced within a few years.

In Aug 2008, Gujarat Informatics Ltd issued final termination notices directing the company to hand over the project site and transfer project assets back to the govt.Some of the violations of the agreement included commercial exploitation of more than 39 acres of land, violation of the approved land-use plan, deviations from prescribed construction schedules and project requirements, failure to furnish development security in the prescribed format, disputes over revenue-sharing obligations with the govt, outright sale of Infocity properties, non-payment of project development expenses, and failure to appoint an independent engineer and auditor in consultation with Gujarat Informatics Ltd.When the project was conceived, Infocity was located on the outskirts of Gandhinagar, but with the city having grown over the past two decades, the IT hub is now located within the city.