SEZ developers face policy hurdle in Gujarat

Special Economic Zone (SEZ) developers setting up their projects on government-allotted land in Gujarat are finding their projects unviable, thanks to a policy hurdle.

As per government rules SEZ developers, who have been allotted land by the government, can lease or rent space to other players only after paying a premium of 75% of the difference between the purchase price and the existing market rates to be decided by a government committee, says a government resolution.

Developers will have to pay premium every time they lease it to a new player. This, say developers, will render their projects, especially those in IT/ITeS, unviable.

While the state government says it is working out a separate policy on premium in SEZ, developers have demanded that the premium on land should be done away with.

“A couple of SEZ developers have written to the state government raising the issue,” said a senior government official.

The issue is even threatening chief minister Narendra Modi’s pet project-- the Rs 63,000-crore Gujarat International Finance Tec-City (GIFT).

GIFT, which is being built on 500 acres of government land will face similar issues, said sources close to the development. When contacted a senior official of GIFT refused to comment on it.

A number of upcoming SEZs are being built on government allotted land. As per SEZ Act and Rules there can be no sale of property.

"The players who are setting up SEZs are mainly developers, who may lease space in the project to other end-users. These developers will have to pay a premium everytime they lease it to a new tenant," said sources close to the development.

The developers have made various representations to the state government in this regard since 2006. So much so that one of the developers have communicated to the government that they would have to abandon their project if the rules are not relaxed.

Gujarat is the only state which charges premium on SEZ even after it has allotted the land. Moreover, the developer will have to take permission of the state government everytime he wants to lease the space to new players.

In Maharashtra, for IT/ITEs the premium is 10% of the stamp duty whereas in Andhra Pradesh, Tamil Nadu and Karnataka there is no premium. Also no government permissions are required after the land has been alloted.

When contacted a senior government official said they are aware of this problem and are working on a new SEZ policy, which will also have a premium attached to it. The extent of premium is yet not decided, he added.