New Delhi, Oct. 2: Fresh norms for special economic zones (SEZs) are likely to be announced within a fortnight, sparking hopes of a revival of investor interest.
Among the possible takeaways are a reduction in the minimum area and extension of the benefits of export schemes.
A senior commerce ministry official said, “The new guidelines are in the finalisation stage and could be notified in the next two weeks or so. Views of different ministries are being considered before finalising the new rules. The changes would help these zones become infrastructure-driven zones and not tax exemption-driven zones.”
Commerce minister Anand Sharma said, “Very soon there will be revised guidelines where we will restore interest and their attractiveness. We will see how we can make SEZs viable for investors. The guidelines will have a greater degree of clarity.”
The ministry plans to reduce the threshold for each sector-specific SEZ because of the constraints faced by developers in acquiring large, vacant and non-agricultural land.
It plans to reduce the minimum area for multi-product SEZs from 1,000 hectares to 250 hectares; and multi-services/sector-specific zones from 100 hectares to 40 hectares, officials said.
As the contiguity norm poses a hurdle for investors, the ministry plans to apply the norm only to the processing area where manufacturing and exports take place and exempt it for other areas.
Under the existing norms, the land is not considered contiguous if a railway line or a waterway or power cable pass through it.
Officials said changes in norms for building schools, residential complex, hospitals and shopping areas were also being considered. Under the present guidelines they have to be present within the SEZ zone.
The government is planning incentives for developers keen on remote and under-developed areas. It was also considering extending the benefits of export schemes to SEZ units.
The export benefits announced in the foreign trade policy in June included a 2 per cent interest discount, or subvention scheme, for a number of sectors such as toys, sports goods, processed agricultural products and ready-made garments, apart from SMEs and the handloom sector.
The focus product and focus market schemes, wherein the government gives cash incentives equivalent to 2 per cent of the value of exports, were expanded with the incorporation of seven new markets and 100 new products.
The government had imposed minimum alternative tax and dividend distribution tax on SEZs in 2010-11, which were earlier exempted from almost all levies. Due to imposition of these levies, there has been a visible slowdown in setting up tax free zones in the country.
Reduce area of multi-product SEZs from 1,000 hectares to 250; For multi-services SEZs it will come down to 40 hectares
Contiguity norm only on processing area where exports and
manufacturing take place
Changes in norms for building schools, hospitals, residential
complex and shopping areas on anvil
Incentives for developers setting
up SEZs in remote areas
Extend benefits of export schemes to SEZ units