New SEZs norms may cost developers in case of delays

NEW DELHI: Government has planned major changes in the Special Economic Zones (SEZ) rules that it will come down heavily on developers who do not start work for operationalising their zones even after final clearance of the Board of Approvals.

"We propose to make it mandatory on developers to complete all formalities for notification of their zones within six months of getting final approval, failing which their clearances will be cancelled," Commerce Secretary and Chairman of Board of Approvals G K Pillai said.

There are as many as 70-80 cases where the more than six months have passed and the developers have not come for getting their projects notified, he said during a stock-taking exercise on SEZs.

The today's interactive session with Export Promotion Council for EoU and SEZs will provide inputs to the BoA for fine tuning of the rules.

The scope of changes in rules will also extend to the tax benefits that co-developers of the SEZs and their contractors and sub-contractors should get.

"In the proposed amendments even co-developers and contractors and sub-contractors will be given the tax concessions," he said.

Apart from some of the bigger issues, the amendment to rules will clarify lot of issues that have come up since the SEZ Act has become operational.

When SEZ Act was set a single window clearance mechanism was envisaged but it has not yet come into force.

Pillai said the Commerce Ministry was in touch with state governments to amend their laws so that the single window clearance system could be operationalised. Earlier inaugurating the interactive session, Pillai said there was no need to amend the SEZ Act but certain concessions would have to be made in SEZ rules.

"Some small issues have come up in implementation of the Act and some we will change to suit requirements of everybody," he said.

Pillai said so far 63 SEZs have been notified and investments worth Rs 11,000 crore has been received since the SEZ Act was operationalised.

He said by 2009 more than Rs 60,000 crore investment would flow in to SEZs and they could create nine lakh jobs.