Land norms eased for SEZs to rekindle investors' interest
New Delhi: Amid dwindling interest in SEZs, the government on Thursday announced a "package of reforms", including easing of land requirement norms and an exit policy, to rekindle investor interest in Special Economic Zones.
"...The SEZ scheme has not been able to realise its full potential so far. We have undertaken a comprehensive review of the SEZ Policy ... I am happy to announce a package of reforms for reviving investor interest in SEZs," Commerce and Industry Minister Anand Sharma said.
SEZ, once a major attraction for investors, lost the sheen following imposition of MAT and DDT, certain provisions in the proposed direct tax regime (DTC) besides the global slowdown.
Announcing the supplementary foreign trade policy (FTP), Sharma said the government has taken note "of the fact" that there are acute difficulties in aggregating large tracts of uncultivable land which is vacant to set up SEZ.
"...We have decided to reduce the Minimum Land Area Requirement by half for different categories of SEZs," he said.
For multi-product SEZ, minimum land requirement has been brought down from 1000 hectares to 500 hectares and for Sector-Specific SEZs, it has been brought down to 50 hectares.
Also, there would be no minimum land requirement for setting up IT\ITES SEZs, besides easing of minimum built up area criteria.
Sharma further said the government has received feedback from SEZ units that suggested they are placed at a severe disadvantage in absence of exit policy.
"We have now decided to allow transfer of ownership of SEZ units including sale" he announced.
The 170 functional SEZs -- export oriented enclaves -- have attracted investment of over Rs 2.36 lakh crore and exports from them totalled Rs 4.76 lakh crore in 2012-13, a growth of over 2,000 per cent over the 7 year period.
While the Export Promotion Council for EOUs and SEZs welcomed the steps, it said government should have withdrawn the minimum alternate tax (MAT) as well.
While minimum land requirement norm has been done away with for IT\ITES SEZs, Sharma said the developers would have to adhere to minimum build up area criteria.
"Minimum built up area requirements (for IT\ITES SEZs) have also been considerably relaxed," he said.
The requirement of one lakh square meters will be applicable for 7 major cities: Mumbai, Delhi (NCR), Chennai, Hyderabad, Bangaluru, Pune and Kolkata.
For the class B-cities, minimum built up area would be 50,000 sq. Mtrs, while for other cities 25,000 sq. Mtrs built up area norm will be applicable.
To provide greater flexibility in utilising land tracts falling between 50-450 hectares, Sharma said it has been decided to introduce 'Graded Scale for Minimum Land Criteria' which would permit a SEZ an additional sector for each contiguous 50 hectare parcel of land.
This will also bring about more efficient use of the infrastructure facilities created in such an SEZ, he said.
Further, he said, flexibility to set up additional units in a sector specific SEZ has been provided by introducing 'Sectoral Broad-Banding' to encompass similar or related areas under the same sector.
On the issues relating to vacant land, the existing policy allows for parcels of land with pre-existing structures not in commercial use to be considered as vacant land for the purpose of notifying an SEZ.
Sharma said that it has now been decided that "additions" to such pre-existing structures and activities being undertaken after notification would be eligible for duty benefits similar to any other activity in the SEZ.
So far government has notified about 390 SEZs in different parts of the country. The SEZs provide employment to about one million people.