SEZ contiguity norms likely to be relaxed

SEZs promoted by Reliance, Raheja, IFFCO may benefit.

The government is likely to announce the relaxation norms regarding contiguity of the large-scale special economic zones (SEZs) in the next meeting of the Board of Approval (BoA) on October 21. This is likely to benefit the SEZs promoted by Reliance, Raheja Developers and IFFCO, among others.

Developers had long been insisting on relaxing the contiguity norms for building SEZs as they were often faced with the problem of a highway, water pipeline, railway tracks, canals and sewage line passing through the enclaves. Hence, they had requested the government to relax the present norms which mandated that the land had to be in contiguity in order to set up an SEZ.

“The problem of contiguity should be solved in the next BoA meet as the Department of Revenue has formulated their views on this. Over a dozen projects are stuck due to lack of clarity on this,” a senior official from the Ministry of Commerce and Industry told Business Standard.

BoA is an inter-ministerial body set up under the chairmanship of the commerce secretary.

The move, if approved, would let the developers procure the materials for constructing the bridges and flyovers duty-free. Reliance-promoted Navi Mumbai SEZ Pvt Ltd is stuck due to the contiguity problems ever since the project got formal approval in 2007. It is a multi-product SEZ spread over an area of 1,233.67 hectares.

In order to provide contiguity developers had been building flyovers, skywalks or underpasses to connect both portions of the land and make it seamless. But this has put severe financial pressures on them, making the entire project economically unviable.

The issue was first considered in the BoA meeting held on April 9, when it was decided to frame a specific policy measure to address the issue. At that time, the Board had decided that there will be no insistence on contiguity if a certain project gets stuck due to a road, railway line or drains running through the land.

During the meeting it was also suggested that if the developer builds a bridge, flyover and underpass to provide connectivity, he can procure the materials for the construction duty free, however, it would be subjected to prior approval from the Board.

However, during the meeting of BoA on June 8, the Department of Revenue raised its objections and said it would not allow duty-free materials for constructing such infrastructures. But, it is yet to clarify its position officially.