All the major computer hardware manufacturers like HCL Infosystems, Wipro, Acer India, IBM, Samtel India, Proview Infotech, Nexus Computers, Hewlett Packard, Accel ICIM have their manufacturing or assembling facility in this union territory. In addition, there are around 60 small-scale players dotting the industrial map of Pondicherry.

Other hi-tech players like Sharon Global Solutions (smart and ATM card manufacturer), ARM Ltd (makers of telecom masts and towers) and NCR (ATM maker) are also heading towards Pondicherry. Existing players like Acer India and HCL Infosystems are on an expansion mode.

Says Acer India deputy GM (operations and support) Sudhir Goel: By next year we will ramp up our capacity to 10, 000 units a year from the present level of 3,500 units. The additional investment will be in the range of Rs10 crore. Acer India has till date invested around Rs 5 crore in its existing plant. Now, HCL Infosystems is planning to manufacture components like cabinets, printed circuit boards, motherboards and memories at an outlay of Rs 12 crore.

As on date the total value of hardware production in Pondicherry is Rs 2,810.44 crore, says Pondicherry industries secretary Dr G. Narendra Kumar. This is bound to go up when the existing players expand their capacity.

What attracts hardware manufacturers to Pondicherry? The first thing that the manufacturers point out is the investor-friendly attitude of the government officials. Investors also enjoy the benefits of low cost of living that is the hallmark of a small town as well as abundance of skills that is available in a large city.

The investors also enjoy the sales tax concessions and five-year income tax holidays that Pondicherry offers them. HCL Infosystems shifted one of its plants from Chennai to Pondicherry just to take advantage of tax benefits. Moreover, the Chennai Port is nearby and with the laying of East Coast road, travel between the two places has become far easier now, says Goel.

But what happens when the tax holidays are over? It is true that the sales tax incentives have brought us here. But once the value-added tax regime is introduced, the situation will be quite different. Cost of production will be the deciding factor for the investors while choosing the location of the manufacturing unit, says Samtel India business head Alok Dutta.

Pondicherry lacks in basic infrastructure such as ports, both sea and air, and good roads. Both the ports are nearly non-functional today. Hardly one or two ships call on the port to carry molasses for the Pondicherry distilleries. The union territory also lacks proper telecom connectivity and recreation facilities to lure software companies. This, coupled with lack of functional airport, makes Pondicherry unattractive for top executives to reside here.

The state administration is gearing up its act to sort out the glitches related to the infrastructure. The Software Technology Park of India has decided to set up an earth station in Pondicherry that will sort out the telecom connectivity problem. We are in the process of setting up an expert promotion zone. An industrial growth centre at an expanse of 600 acre will also be built, says Pondicherry Industrial Promotion Development and Investment Corporation MD N Anbarasu.

The government is planning to acquire ITDCs Asoka Hotel and build an amusement and theme park on the 65-acre plot allotted to the hotel. Our focus now is to create the necessary infrastructure like schools, hospitals, recreation centres, sports stadia and other urban facilities that would attract industrial investments, he says.

In order to make Pondicherry an attractive, live-in city for top business executives, the government is also planning to build an integrated housing colony on 30 acres at Kalapet. The government is also trying to convince the union civil aviation ministry to extend the airport runway so that larger aircraft can land and take off and Pondicherry is connected by air to major cities.

The government is setting up a corporation for the development of a port at Karaikal where the National Thermal Power Corporation is setting up a 1,000-mw coal-based power plant.