All existing notified SEZs deemed to be multi-sector SEZs: Government

The central government has notified that all notified and existing Special Economic Zones (SEZs) shall be deemed to be multi-sector economic zones. This would release land parcels in single commodity SEZs for other sectors.

The aim is to get more entities to set up manufacturing facilities in SEZs and to help developers to monetise their unutilised land, say sources. This amendment to the SEZ rules of 2006 ensures units from two or more sectors can start operations in any, including trading and warehousing.

Besides, the minimum area required for an SEZ or Free Trade Warehousing Zone (other than for information technology, IT-enabled services, biotech or health services) has been fixed as 50 hectares; in some northern and northeastern states, 25 hectares.

For IT, ITeS, biotech or health (other than hospital) services, there is no minimum area requirement for an SEZ. The requirement for minimum built-up area has been brought down from 100,000 sq metres to 50,000 sq m in Category A cities, from 50,000 sq m to 25,000 sq m in Category B and from 25,000 sq m to 15,000 sq m in Category C cities.

Senior officials from the state government here took the credit for the change to their continuous lobbying in this regard. The Tamil Nadu government has been raising the issue continuously with the Union ministry of commerce, said one.

Business representatives say in the 13 years since the rules were made, much has changed. Sector-specific SEZs did not have enough takers. Besides, technology has entered many sectors, making units sector-agnostic and breaching the standard definitions at earlier sector-specific SEZs.

“A lot of land remained unutilised and a lot of opportunity was being lost by new units which wanted to set up. A new industry which is into artificial intelligence — we didn’t know which category to fit them into. By opening it up, we are saying every industry player can set up a unit in any SEZ ,according to market conditions,” said Sunil Rallan, chairman of J Matadee Free Trade Zone and president of the Tamil Nadu Association of SEZ Infrastructure Developers.

The Government of India has given formal approval for 417 SEZs; the number of those notified is 349. Of these, the number of operational SEZs is 238. The number of units which are approved in these SEZs is 5,168; almost two-third are IT SEZs. The non-IT  ones had a lot of unutilised land. Total land area for the approved SEZs is 48,000 hectares, says Rallan.

“The government is no longer going to set up artificial barriers to curtail the choices for a prospective investor. There are a lot of units in China-US trade war that are looking to move out of China or starting additional factories. India was an attractive destination but because of the virtual barriers.

created by policy, people were not able to plug into SEZs,” he adds.

With this, the existing SEZs will get more units coming in, and more approved SEZs will be active, it is expected. Earlier, it required 500 hectare to get a multiproduct SEZs, now brought down to 50 ha. Getting tjis much land is far more achievable and it is better to have a small number of multi-product SEZs than one big multi-product SEZ, said Rallan. New investments and new business will come up and shareholders of developer firms will start seeing new revenue coming up.