SEZs: In standstill mode

Aug 17 2013, 09:59 IST
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SummaryDespite the package of reforms rolled out for special economic zones, developers are not enthused as several legislations and tax proposals related to the sector await clarity.

On Monday, the government rolled out the promised “package of reforms” to boost the country’s exports. The commerce ministry notified the Amended Rules, 2013, for special economic zones (SEZs) launched with much fanfare over seven years ago.

However, real estate developers are not very enthused by the amended policy. The reason, they say, is not just policy, but several other factors that have stifled the growth of a sector, which posted growth of over 121 per cent in exports in 2009-10.

As per the amended policy, the minimum land requirement norms have been eased, graded scale for minimum land criteria has been introduced, an exit policy for SEZ units has been offered while minimum land requirement for setting up an IT/ITeS SEZs has been done away with.

The minimum area requirement for single-product SEZs has been halved to 50 hectares and that for multi-product SEZs to 500 hectares. The minimum land requirement norm for IT SEZs has been scrapped. They are now subject to only a minimum built-up criteria norm, which is 5 hectares for category B cities such as Jaipur, Ahmedabad, Chandigarh and Lucknow and 2.5 hectares for smaller cities and rural areas. According to the government, the incentive is aimed at pushing IT SEZs into cities with lower densities.

Sector-specific SEZs have also been given the option to add an additional sector for every 50 hectares of contiguous area added. This would allow sectoral SEZs to bring in similar or related sectors under the same zone. Further, SEZs being set up exclusively for electronics hardware, agro-based food processing, biotechnology, handicrafts, the minimum area required would be 10 hectares. The government has introduced agro-based food processing SEZs given the demands by agrarian states including Punjab and Haryana where land is very expensive.

However, despite the relaxed land requirement, analysts, developers and real estate sector watchers say that the move would not mean much in the existing economic scenario, especially with key legislations including the Land Acquisition bill, Real Estate bill, and Direct Taxes Code, pending with Parliament.

Manoj Goyal, director, Raheja Developers, one of the major investors in SEZs, told The Indian Express that SEZs are not struggling because of land size alone. There are several issues plaguing the industry.

“The easing of land requirement certainly helps, but there are other factors which play a major role. The market has been very negative and there are no tenants available. Relief from minimum alternate tax

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