SEZs may get easier access to funds under proposed core sector status
SEZ developers in India will be able to get easier access to funds and at cheaper interest rates if the government goes ahead with a proposal to give infrastructure status to the sector.
By ET Bureau |
NEW DELHI: SEZ developers in India will be able to get easier access to funds and at cheaper interest rates if the government goes ahead with a proposal to give infrastructure status to the sector. The commerce department has decided to make a strong case for grant of the status to SEZs with the Reserve Bank of India. Officials from the commerce department and the RBI are scheduled to meet soon to reach a decision on the issue.
Sources said commerce secretary G K Pillai is slated to meet RBI deputy governor Usha Thorat shortly to discuss whether SEZs deserve to be included in the core sector.
Since half the area on which SEZs are built have to mandatorily be part of the processing area which constitutes industrial infrastructure and a large part of the non-processing area is social and commercial infrastructure to support the processing area, the commerce department believes that the sector qualifies for infrastructure status.
���We have been following this issue with the RBI since last year. This time round, we are hopeful of making them see our point of view,��� an official said. ���Our department has a strong case. Moreover, there is a genuine need for greater access of funds for SEZs which could happen only if it is given infrastructure status,��� the official added.
He said that SEZs attract FDI, contribute to exports and create lakhs of new jobs every year.
Since SEZs are classified under the real estate sector, funds earmarked for real estate by banks are often exhausted and there is not enough funding available for SEZ projects. If given infrastructure status, SEZ developers would be eligible for funds earmarked for infrastructure projects. To top that, funds would also be cheaper as banks lend to the core sector at a 2% lower interest rate.
While initially, multi-product SEZs were allowed to have 35% processing area, under the revised guidelines all SEZs mandatorily have to have processing activities in 50% of the total SEZ area. In the non-processing area, too, there is infrastructure to support the processing area like power plants, sewage treatment plants, roads, hospitals and educational institutions . ���There is no reason why SEZs cannot qualify for infrastructure status. We hope the RBI is convinced ,��� the official said.
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According to figures furnished by the export promotion council of EOUs and SEZs, the exports from EOUs and SEZs in the last five years have gone up from Rs 33,647 crore to Rs 1,91,638 crore, showing a 5.7 times growth. Last year, exports from SEZs have gone up from Rs 34,787 crore to Rs 66,638 crore, showing a growth of 93%.
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