Processing area in SEZs to be cut to 35%
The government has decided to reduce the minimum ‘processing area’ requirement in SEZs to 35% as compared to 50% earlier.
By TNN |
NEW DELHI: In A move that comes as a shot in the arm of developers of multi-product Special Economic Zones (SEZs), the government has decided to reduce the minimum ‘processing area’ requirement to 35% as compared to 50%, earlier. A decision to this effect was taken on Tuesday by the Empowered Group of Ministers (EGoM) on SEZs — headed by defence minister Pranab Mukherjee. The decision to lower the minimum processing area requirement would help corporates like Reliance, DLF, Adani and Unitech who are planning multi-product SEZs spread over at least 1,000 hectares of land.
According to the government’s definition, ‘processing area’ indicates manufacturing facilities, which actually produce the goods meant for export from SEZs. In the case of service sector SEZs, ‘processing area’ would describe facilities from where services are exported.
Since, ‘processing area’ has now been reduced to 35%, the remaining 65% of the space within SEZs could be used for building supporting infrastructure facilities like housing, restaurants, entertainment zones, schools, hospitals and other facilities required for those employed in SEZs. Therefore, the EGoM’s decision is a major boost to real estate developers eyeing a piece of the SEZ pie.
The finance ministry has been insisting that the ‘processing area’ for SEZs should be increased to 75% but the commerce & industry ministry has been resisting the move, pointing that the floor level has already been increased from 25% specified originally.
The EGoM also decided that 10 hectares of land would be a minimum requirement for sector-specific SEZs meant for gems & jewellery, In addition, these SEZs should also adhere to minimum built-up area criteria — 1 lakh sq metres for IT; 50,000 sq metres for gems & jewellery; and 40,000 sq metres for biotech.
The EGoM has provided guidance to sort out some operational problems relating to implementation of the SEZ scheme, said a statement issued by the commerce & industry ministry here. The committee decided that the land requirement will remain the same for other types of SEZs — 1,000 hectares for multi-product zones, 100 hectares for service sector SEZs and other sector-specific SEZs, except those from IT, gems & jewellery and biotech segments.
The EGoM meeting was attended by commerce & industry minister Kamal Nath; finance minister P Chidambaram; IT & communications minister Dayanidhi Maran; law minister HR Bharadwaj and Planning Commission deputy chairperson Montek Singh Ahluwalia.
According to the government’s definition, ‘processing area’ indicates manufacturing facilities, which actually produce the goods meant for export from SEZs. In the case of service sector SEZs, ‘processing area’ would describe facilities from where services are exported.
Since, ‘processing area’ has now been reduced to 35%, the remaining 65% of the space within SEZs could be used for building supporting infrastructure facilities like housing, restaurants, entertainment zones, schools, hospitals and other facilities required for those employed in SEZs. Therefore, the EGoM’s decision is a major boost to real estate developers eyeing a piece of the SEZ pie.
The finance ministry has been insisting that the ‘processing area’ for SEZs should be increased to 75% but the commerce & industry ministry has been resisting the move, pointing that the floor level has already been increased from 25% specified originally.
The EGoM also decided that 10 hectares of land would be a minimum requirement for sector-specific SEZs meant for gems & jewellery, In addition, these SEZs should also adhere to minimum built-up area criteria — 1 lakh sq metres for IT; 50,000 sq metres for gems & jewellery; and 40,000 sq metres for biotech.
The EGoM has provided guidance to sort out some operational problems relating to implementation of the SEZ scheme, said a statement issued by the commerce & industry ministry here. The committee decided that the land requirement will remain the same for other types of SEZs — 1,000 hectares for multi-product zones, 100 hectares for service sector SEZs and other sector-specific SEZs, except those from IT, gems & jewellery and biotech segments.
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The EGoM meeting was attended by commerce & industry minister Kamal Nath; finance minister P Chidambaram; IT & communications minister Dayanidhi Maran; law minister HR Bharadwaj and Planning Commission deputy chairperson Montek Singh Ahluwalia.
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