Kerala may be given 'special state' status for SEZs

The Centre plans to induct Kerala in the list of ‘special status’ states, which are given relaxation in their requirement for areas for special economic zones (SEZ). This is in response to a state government’s request to the Ministry of Commerce and Industry for the relaxation in an effort to promote exports and generate employment.

Kerala is looking at creating more tax-free enclaves, especially the multi-product SEZ category, since they provide direct and indirect employment to a large number of people. “The matter is still under discussion and a decision would be taken soon,” a senior commerce department official told Business Standard.

The Kerala government, in a letter written last month, had also cited the global economic downturn as one of the reasons for seeking the relaxation as more and more developers were finding it economically unviable to set up projects over huge spread of land.

Currently, the special status states consist of all the north-eastern states, Jammu and Kashmir (J&K), Himachal Pradesh, Goa and all Union Territories. The minimum area required for multi-product SEZs by these days is 200 hectares, against 1,000 hectares required by other states. In the case of services SEZs, 50 hectares is required by special category states, against 100 hectares by other states. However, for all other types of SEZs such as information technology and gems and jewellery, the requirement of area remains 10 hectares as mandated.

“These states are given special status as they have smaller land area and are hilly states. The aim is to promote SEZs in these states that will generate greater employment. However, even after such relaxation, multi-product SEZs have failed to take off mainly in J&K and the North-East,” said L B Singhal, director general, Export Promotion Council for EoUs and SEZs.

According to latest official statistics, Kerala has received 24 formal approvals, out of which 15 are notified SEZs while 5 are operational spread across 618.31 hectares. A total of 346 SEZs have been notified on 41,090.31 hectares.

The Left-ruled Kerala faced a lot of controversy over the development of SEZs though it finally introduced the SEZ Policy in 2008, which stipulated that 70 per cent of the SEZ land should be utilised for industrial purpose.