Gujarat’s first integrated Information Technology (IT) township, Infocity in Gandhinagar, is set to return to government control after 2030. The Gujarat government has decided not to renew the lease of Creative Infocity Ltd (CIL), the company led by founder Dilip Barot, which developed and managed the state’s flagship IT park project. The decision means the 116-acre campus will be handed back to the government once the current concession period ends in July 2030.
The move follows a long-running dispute between the Gujarat government and the developer over alleged violations of the concession and lease agreements governing the project.
Government Rules Out Lease Extension
According to officials, the decision was taken at the highest level of the state government. While the existing 30-year lease is scheduled to expire in July 2030, the Department of Science and Technology has already started the process of reclaiming the land and project assets once the concession period comes to an end.
Officials said there is no justification for extending the lease because of the alleged contractual breaches by the developer. Although termination notices were issued as far back as August 2008, the matter entered arbitration and remained under legal consideration for several years.
How the Infocity Project Began
The Infocity project was launched as Gujarat’s first integrated IT township with the aim of attracting leading information technology and technology companies by providing world-class infrastructure within a single campus.
A pre-feasibility study for the project was conducted with the assistance of consultancy firm PwC, while Gujarat Informatics Ltd (GIL) acted as the government’s nodal agency.
A concession agreement between GIL and Creative Infocity Ltd was signed on August 1, 2000. Under a master lease agreement executed in February 2001, the Gujarat government leased 116 acres of land in Gandhinagar to the company for developing the IT township.
Dispute Started Within a Few Years
Differences between the government and the developer surfaced within a few years of the project’s launch. In August 2008, Gujarat Informatics Ltd issued final termination notices directing the company to hand over the project site and transfer the project assets back to the government. However, the matter moved into arbitration proceedings, delaying the final outcome.
Alleged Violations Cited by Government
According to sources, the government has cited several alleged violations of the agreement, including:
Commercial use of more than 39 acres of land.
Violation of the approved land-use plan.
Delays and deviations from approved construction schedules and project requirements.
Failure to provide development security in the required format.
Disputes over revenue-sharing obligations with the government.
Sale of Infocity properties without following the agreed terms.
Non-payment of certain project development expenses.
Failure to appoint an independent engineer and auditor in consultation with Gujarat Informatics Ltd.
These alleged violations formed the basis of the government’s decision not to extend the concession beyond 2030.
Compensation to Be Based on Asset Value
Government sources said Creative Infocity Ltd will be compensated for the buildings and infrastructure created on the site as per the terms of the agreement. The compensation will be calculated based on the depreciated value of the assets.
However, officials indicated that the compensation payable is likely to be significantly lower than the financial liabilities arising from the alleged violations of the lease agreement.
Infocity’s Changing Importance
When the project was first conceived, Infocity was located on the outskirts of Gandhinagar. Over the past two decades, the city’s expansion has brought the IT hub well within the urban limits, making the land considerably more valuable than when it was originally leased.
With the lease ending in 2030 and no extension planned, Gujarat’s pioneering IT park is now expected to come back under direct government control, bringing an end to one of the state’s longest-running infrastructure and land disputes.
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