HCL Infosytems is the latest entrant and accompanying it is global IT major, HP. CNBC-TV18 learns the state government is talking with other IT majors like Dell, IBM and Lenovo.

The chief minister Uttaranchal, N D Tiwari, says that they have given incentives in excise and income tax, and that this would continue for three years.

The Uttaranchal state government has been courting investors with tax sweeteners. In fact, the state industry body, Sidcul, is in talks with global majors to set up their manufacturing operations.

The last three years have seen companies invest as much as Rs20,000 crore in the state. Increased tax benefits and leased land on subsidised rates has led to 386 different companies including the Tata's and Hero Honda to setup base.

It is learnt that 393 corporates are queuing up for leased plots. Tech major HCL, has chosen Rudrapur to set up a new hardware manufacturing unit with a production capacity of a million PCs a year.

Rival, Hewlett Packard, is following suit. While the extent of its investment is not clear, Sidcul says that it is looking to top HCL's investments.

Adding to the investment euphoria is the PM's commitment to extend tax incentives till 2010 and corporates are keen to make the most of the tax break. HCL has already proposed setting up a component manufacturing facility as well.

Clearly, Uttaranchal is going hi-tech in a big way. So much so that HCL management believes that every second PC bought in India over the next two years will come from this manufacturing facility.

If uttaranchal is luring in IT investors with tax concessions, Tamil Nadu is using the lure of It parks and IT SEZs in its smaller cities as a bait to lure in IT investors.

C Chandramouli, IT secretary, Tamil Nadu says, "These are cities of Trichy, Coimbatore, Madurai, Salem and Tirunelveli. All these cities are basically corporations and they have a large pool of talented youngsters in the universities."

The government will develop both campus-style special economic zones and IT parks in these cities. Coimbatore and Tirunelveli will get special economic zones and Salem and Trichy will house IT parks. But more interesting are the plans for Hosur- Bangalore's envious neighbour.

Santhosh Babu, district collector, Krishnagiri, says, "It should be a cakewalk to start an industry here because we in the district administration and the government are very proactive on this. Land is available. We are ready to show investors land in and around Hosur."

In Hosur, the government has proposed a 2,500-acre SEZ and a 200-acre IT park. Sources say that the district administration has also identified a 150-acre plot and a 750-acre piece of land for two IT companies. Land allotment will commence in two or three months.

Tamil Nadu contributes to 14 per cent of India's IT exports. But the government hopes that the fresh investment will help to make it the most sought after destination for tech companies. That spells more competition in the southern states.