All that you need to know about SEZs

HT Estates - - HTESTATES -

The finance min­is­ter an­nounced sev­eral pro­vi­sions in Bud­get 2014 that were largely aimed at pro­mot­ing af­ford­able hous­ing de­vel­op­ment, stim­u­lat­ing hous­ing de­mand and ad­dress­ing the liq­uid­ity crunch pre­vail­ing in the sec­tor.

Fol­low­ing the im­ple­men­ta­tion of the SEZ Act, 2005, set­ting up of SEZs be­came the hottest trend in the In­dian econ­omy due to the cost and rev­enue ben­e­fits they of­fered. To reap th­ese ben­e­fits, a large num­ber of de­vel­op­ers ap­plied for SEZ ap­provals. Touted as en­gines of growth, SEZs cre­ated quite a stir in In­dia in 2006 and 2007. How­ever, post-2007 there has been a sig­nif­i­cant de­cline in the in­ter­est in de­vel­op­ment of SEZs.

After a head start in 2006-07, there has been a sig­nif­i­cant dip in the num­ber of SEZs be­ing no­ti­fied for op­er­a­tions. The phe­nom­e­non of de­no­ti­fi­ca­tion has been con­stant from 2009 on­wards with many lead­ing SEZ de­vel­op­ers ex­it­ing the mar­ket.

De­vel­op­ers claimed that the l iq­uid­ity crunch, re­duced tax ben­e­fits due t o i mpo­si­tion of Div­i­dend Dis­tri­bu­tion Tax (DDT) and Min­i­mum Al­ter­nate Tax (MAT), and con­stant changes to the fis­cal pol­icy gov­ern­ing SEZs are ma­jor rea­sons for their in­abil­ity to ex­e­cute their SEZ plans.

Of the 566 applications that re­ceived ap­provals to set up SEZs, only 185 are cur­rently op­er­a­tional across the coun­try. Some de­vel­op­ers have even re­quested the gov­ern­ment to de-no­tify their SEZs, oth­ers have asked it to re­duce the no­ti­fied land area and the rest are still un­de­cided.

Amend­ments to SEZ Act, 2005

Most re­cent amend­ments to the SEZ Act 2005 were in 2013 and are as fol­lows:

Min­i­mum land re­quire­ment for set­ting up the SEZ:

500 hectares for multi-sec­tor SEZs in­stead of 1,000 hectares ear­lier 50 hectares for sec­tor-spe­cific

in­stead of 100 hectares ear­lier Re­quire­ments for spe­cial cat­e­gory states etc. have ac­cord­ingly been re­duced fur­ther A new ‘agro-based food pro­cess­ing’ sec­tor was in­tro­duced; would re­quire a min­i­mum land area re­quire­ment of 10 hectares

Graded scale de­vel­op­ment in­tro­duced for util­is­ing land parcels be­tween 100 to 450 hectares for SEZ de­vel­op­ment; a new sec­tor will be al­lowed in an SEZ per de­vel­op­ment of ad­di­tional 50 hectares of con­tigu­ous land Any ad­di­tions to al­ready ex­ist­ing struc­tures (not in com­mer­cial use be­fore SEZ de­vel­op­ment) and all the con­struc­tion ac­tiv­i­ties be­ing un­der­taken after no­ti­fi­ca­tion of a par­cel of land for SEZ de­vel­op­ment would be el­i­gi­ble for ben­e­fits as per the SEZ Act Min­i­mum land re­quire­ment of 10 hectares for IT/ITeS SEZs in ear­lier pol­icy re­placed with builtup area (BUA) re­quire­ment as fol­lows:

100,000 sqm for the seven ma­jor cities in­clud­ing Ben­galuru, Chen­nai, Delhi (NCR), Hyderabad, Kolkata, Mum­bai and Pune

50,000 sqm for cat­e­gory B cities 25,000 sqm for other cities To pre­vent mis­use of de-no­ti­fied parcels of land, con­sid­er­a­tion of those pro­pos­als which sat­isfy the fol­low­ing cri­te­ria:

All pro­pos­als must have an un­am­bigu­ous NOCcer­tifi­cate’ from state gov­ern­ments State gov­ern­ments may also en­sure that such de-no­ti­fied parcels would be utilised for cre­ation of in­fra­struc­ture to sub­serve the ob­jec­tive of the SEZ as orig­i­nally en­vis­aged Such land parcels after de­no­ti­fi­ca­tion will con­form to land- use guide­lines/ master plans of the re­spec­tive states.

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