School, hospitals can now come up in non-processing SEZ areas

Aiming to revitalise SEZs, the government has permitted dual-use of non-processing areas in special economic zones, allowing developers to set up social infrastructure like schools, hospitals and hotels which can be accessed by people within and outside these conclaves.
As per a notification, the non-processing area in special economic zones (SEZs) has been divided into two parts. The social or commercial infrastructure in one part can be accessed by entities within SEZ as well as those outside these conclaves. The second part is exclusively for SEZ entities.
No exemption or concession would, however, be provided for creation of social or commercial infrastructure which would be used by entities within SEZ and outside.

"The customs duty, central excise duty, service tax, and such other central levies and tax benefits already availed of for creation of such infrastructure shall be refunded by the developer in full, without interest," it said.
It was a long-pending demand of the industry that the government permit use of social or commercial infrastructure for people outside such zones.
The move will help SEZ developers to attract investments and make it more viable for them to invest in such infrastructure in the non-processing areas.

The notification further said the infrastructure, which will be used only by SEZ entities, that "portion shall be bonded and physically segregated from the Domestic Tariff Area (outside these zones)".

It said that this infrastructure would be eligible for exemptions, concessions and drawback but has to be approved by the Board of Approval.
It also said that for housing purposes, the developer would not use more than 25 per cent of the non-processing areas. Similarly, for commercial infrastructure, they can use not more than 10 per cent of the area.
Open and circulation areas should not be less than 45 per cent of non-processing area.
"Social and institutional infrastructure including schools, colleges, socio-cultural centres, training institutes, banks, post office, etc., in the remaining area," it added.
Further, no sale would be permitted of "such duty paid" dual use infrastructure in the non-processing area and only lease hold rights can devolve upon the users of transferees of such infrastructure.