The Telegraph
Since 1st March, 1999
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Norms make SEZs socially aware

New Delhi, Sept. 21: The Centre today finalised detailed guidelines to develop infrastructure in the proposed special economic zones (SEZs) of the country. The norms cover virtually everything, including schools, houses and hospitals in the non-processing area of the zones.

Outlining the details of the guidelines, G.K. Pillai, special secretary in the ministry of commerce, said, “We are pushing for social infrastructure since so far SEZ developers have not concentrated on this aspect.”

The government has also set a minimum investment level of Rs 1,000 crore or net worth of Rs 250 crore as the eligibility criterion to develop multi-product SEZs.

In the case of sector-specific SEZs, the minimum investment limit has been fixed at Rs 250 crore or a net worth of Rs 50 crore.

Interestingly, the criteria covering the minimum investment levels of SEZ developers has an escape clause which states, “Proposals not meeting the above minimum investment or net worth criteria with enough justification for the same (will) be considered on merits by the board of approvals.”

“The board of approvals has broadly decided the procedure to be adopted while approving infrastructure in non-processing area of SEZs. The Centre will shortly notify the list of activities that will qualify for tax exemptions,” Pillai said.

The list of activities include building basic infrastructure, water and sewage treatment plants, office space, shopping areas, schools, houses, hospitals, recreational and sports facilities, restaurants, power and gas connections.

Pillai said developers of sector-specific SEZs can build a maximum of 7,500 houses, a 100-room hotel, a 25-bed hospital and have an office space of up to 50,000 sq m in the non-processing area.

In multi-product zones, developers can build a maximum of 25,000 houses, a hotel with 250 rooms, a 100-bed hospital and office space of not more than 250,000 sq m, he said.

However, developers can build houses only in stages, which cannot be sold, he said, adding the board may allow additional houses if the developers require for employees working within the zone. But the additional houses would not qualify for tax sops.

In addition, multi-product zones that are spread over a minimum area of 1,000 hectares would be allowed to build ports, airports, banks, railheads and golf courses.

Pillai released an exhaustive list of the infrastructure activities that can be carried out in each kind of zone. As many as 33 activities have been listed under each SEZ heading. There is also a provision for “any other ancillary or incidental operations specified in the list, which the board of approval may authorise from time to time”.

Information technology and infotech-enabled zones, bio-tech and gems and jewellery SEZs are three categories that have been clubbed in section A. Sector-specific SEZs have been listed in section B and multi-purpose zones have been listed in section C.

More the merrier

The board of approval for SEZs today gave final approval to 14 more proposals, taking the total number of zones approved so far to 164.

The SEZs approved today cover mainly textiles and infotech sectors. The states in which they are situated include Maharashtra, Andhra Pradesh, Haryana, Uttaranchal and Delhi. The bidders whose proposals were cleared today included DLF, Parsvnath, and Welspun.

The board of approval will hold four meetings over the next two weeks to consider another 200 proposals.

Nothing special: RBI

The Reserve Bank of India obviously does not think special economic zones are special.

RBI governor Y.V. Reddy told newspersons on the sidelines of a conference here, “Like any other land, it (SEZ) is real estate.”

The central bank feels SEZs should be treated on a par with other real estate development projects and finance to these estate developers should be at comparable rates.

In a notification issued last night, RBI had said, “In view of the current market conditions, it has been decided that the exposure of banks to entities for setting up SEZs or for acquisition of units in SEZs, which includes real estate, would be treated as exposure to commercial real estate sector with immediate effect.”

The central banker had recently made known its reservations about tax sops for SEZs, which it felt could lead to uneven economic growth.

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