SEZ policy amendments to come next week

As per present norms, to set up an SEZ, developer needs to acquire huge tracts of uncultivable land which will be vacant and contiguous

 

 

The government is set to notify the new rules on special economic zone (SEZ) next week that were announced during the Foreign Trade Policy in April on decreasing the land area requirements and easy exit of SEZ units. This will lead to the amendment of the SEZ policy.

During the annual supplement to the Foreign Trade Policy of 2009-2014 that was unveiled on April 18, the government had announced a number of measures for SEZs, keeping in mind especially the problems arising out of acquisition of land.
 
As per the present norms, to set up an SEZ, a developer needs to acquire huge tracts of uncultivable land which will be vacant and contiguous. Hence, a lot of proposals got held up due this clause while others were rendered unviable in meeting these requirements.

At present, minimum land required for multi-product, multi-services, IT and gems jewellery SEZs is 1,000 hectares, 100 hectares and 10 hectares each respectively. But now the government has reduced the minimum land criteria in order to fulfill the contiguity criteria for the SEZ developers.

The land area requirement was reduced by half for multiproduct and sector-specific SEZs. For multiproduct SEZs the minimum land area requirement has been reduced to 500 hectares from 1,000 hectares earlier while for sector-specific SEZs this has been reduced to 50 hectares from 100 hectares.  

For IT SEZs, which contributes the most in SEZ exports, the minimum land criteria has been done away with. However, only a minimum built up area criteria would have to be fulfilled by SEZ developers.   

These measures will be applicable for the upcoming new SEZs and not the existing ones. Also, in an unprecedented step, the government today allowed transfer of ownership of SEZ units including sale for those players which do not want to continue with SEZ scheme anymore. This has been done since the SEZ policy does not have a clear exit policy.

Exports from SEZ reached Rs. 4,76,159 crore, up 31% from Rs. 3,64,477.73 crore in 2011-12. Currently, there are 577 formally approved SEZs while 170 SEZs are operational.