The Hindu : Business : SEZ norms for social infrastructure fixed

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Friday, Sep 22, 2006
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SEZ norms for social infrastructure fixed

Special Correspondent

Board of Approval clears 14 more SEZs

NEW DELHI: In a bid to stem growing criticism over the scheme for creating special economic zones (SEZs), the Union Government has finalised detailed guidelines for developing social infrastructure in these areas such as schools, houses and hospitals while laying down investment norms for developers. The Board of Approvals (BoA) for SEZs on Thursday also gave a formal approval for 14 more SEZs, bringing the total cleared to 164.

Briefing newspersons about the BoA's decisions, the Special Secretary in the Commerce Ministry, G. K. Pillai, said the procedure to be adopted while approving infrastructure in the non-processing area of SEZs had been broadly decided. The Government would notify shortly the list of activities that would qualify for tax exemptions, he said.

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

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

The board has, however, also laid down norms for net worth and minimum investment for developers. These stipulate that developers must have a net worth of at least Rs 250 crore and invest a minimum of Rs. 1,000 crore for a multi-product SEZ. For sector-specific zones, the minimum investment has been fixed at Rs. 250 crore and the minimum net worth at Rs. 50 crore.

Under the new guidelines issued by the board, 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. metres 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 2.50 lakh sq. metres. However, developers can build houses only in stages and the houses cannot be sold.

Mr. Pillai said the board might allow additional houses if the developers required for employees working within the zone but these would not qualify for tax incentives. The 14 proposals cleared on Thursday by the board, he said, included three from real estate developer DLF and two by Parsvnath. The board also approved Maharashtra Airport Development company's proposal to set up an airport-based SEZ near Nagpur spread over about 2,086 hectares as well as a textile SEZ to be set up by Welspun.

PTI reports:

`SEZs are real estate'

The Reserve Bank of India on Thursday ruled out any concessional finance to developers in these zones, saying they should be treated on a par with real estate projects.

Coinciding with the Centre's ongoing exercise for finalising the guidelines for States on land-related issues for SEZs, the apex bank also directed the nationalised banks to offer credit to SEZs on same terms and conditions as offered to real estate developers.

"Like any other land, it (SEZ) is real estate,'' the RBI Governor, Y. V. Reddy, told reporters on the sidelines of a seminar on Financial Education here when asked if the latest directive would make the funding for SEZs costlier.

The Commerce Ministry on Thursday said the RBI's decision to treat SEZs as real estate projects for lending purposes was unlikely to dampen corporate India's enthusiasm to set up these zones.

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