Dispute between the Kerala government and Dubai-based Tecom Investment over the nature of the latter’s exitfrom theSmartCity Kochi project continues to drag more than a year after the State Cabinet approved an exit plan.
While Tecom insists that any exit should be treated under the provisions of the Indo-UAE treaty, the State government has objected, arguing that the project falls under the Original Framework Agreement signed between the parties. To further drive home the point, the government issued a notice to Tecom a fortnight back citing the violation of the agreement even as Tecom had approached the Centre’s Inter-Ministerial group seeking to make the bilateral trade treaty applicable to the project.
A couple of meetings at the Central level had since then failed to find a mutually acceptable understanding. A meeting scheduled for Wednesday (January 7, 2026) and supposed to be attended by the Chief Secretary, IT Secretary and Tecom officials was postponed. Reportedly, Tecom also insists on a mutually acceptable centre for arbitration unlike in the Original Framework Agreement, which fixed Kochi as the centre of arbitration tribunal in the event of a dispute.
The notice has been issued to Tecom citing the violation of clause 7.2.2 of the agreement, which made it incumbent on Tecom to build 88 lakh sq ft with a ceiling of 70% for IT, and generate 90,000 jobs in 10 years, said government sources. This was after the government found the grounds on which Tecom sought to exit the project in 2024, taking advantage of terms in the agreement favourable to it, flimsy. SmartCity Kochi, which has been without a Chief Executive Office for close to two years, was not available for comment.
In the event of default on the part of Tecom, the framework agreement empowers the government to terminate the lease and buy out the entire shares of Tecom at a price to be determined by an independent evaluator while taking the value of land as ₹91.52 crore, which was the advance lease premium paid by the SmartCity Kochi to the government for 88% of land. In other words, the value appreciation of the land will not be considered in any buyout.
Mutually agreed policy
The government decided to go for a mutually agreed exit policy for Tecom on the grounds that arbitration under the Arbitration and Conciliation Act of 1996 will be time-consuming causing the land to be rendered out of use for a long time.
The sole IT tower of the SmartCity Kochi hosts 27 IT and ITeS companies catering to some 5,500 jobs in addition to five projects developed by co-developers.
Published – January 07, 2026 05:11 pm IST
