Measures to boost special economic zones coming today
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The government is set to notify on Monday measures aimed at giving a fresh impetus to investments in special economic zones (SEZs) and boosting exports, including a cut in the minimum area required for such zones and a new dedicated scheme for electronic hardware and food processing.
"The idea is to give incentives to push SEZs out of the big cities and explore the less dense cities," said a commerce department official, who did not wish to be named Agro-based food processing special economic zones are being introduced following demands by the agrarian states such as Punjab and Haryana, where land is very expensive, and the Northeast region, where land is very scarce.
As per new norms, the minimum area required for electronic hardware and agro-based food processing special economic zones has been fixed at 10 hectare due to the limited availability of land in a few states. Besides, electronic hardware, special economic zones will be eligible for additional benefits, including a 20% capital subsidy.
"SEZs can serve as an enclave to attract foreign capital into the country and also give a leg-up to manufacturing," the official said, adding that these zones would eventually help cut down imports.
The government is looking to attract long-term foreign capital into the country and has liberalised its foreign direct investment for the purpose.
The manufacturing sector recorded a growth of just 1% in 2012-13, adding to the worries of policymakers.
As per the new norms, the investors will be able to set up both software and hardware facilities on the same premises. "The thrust has been to allow better utilisation of available land," the official said, adding that the objective was to make these distinct from the single-product SEZs, where the mandatory minimum land area is being halved to 50 hectare.
In a significant dilution of norms, the government will allow developers to use land with some prior minor construction as a vacant land for SEZ. However, benefits such as duty-free imports and 100% income tax exemption for the first five years, will only apply to the land where construction takes place after it gets notified as an SEZ.
"People sit on a lot of land, with a small construction at the corner of it, rendering the entire land ineligible for an SEZ. These changes will address this concern," the official said.
Multi-services special economic zones will be treated on a par with single-product SEZs, with the minimum area being slashed to half from 100 hectare. This will allow multi-product SEZ developers with a minimum land requirement of 500 hectare to set up multi-services SEZ on an additional 50 hectare of land.
Developers will be allowed to add another product on a contiguous 50 hectare in case of multi-product special economic zones.
Commerce and industry minister Anand Sharma had in April announced the reduction in minimum land for multi-product SEZs to 500 hectare from 1,000 hectare and scrapped the minimum requirement altogether for IT SEZs.
The amendments will also allow an easier exit for developers, allowing them to transfer or sell ownership of SEZ units. SEZs allow duty-free imports or domestic procurement of goods and also provide 100% income tax exemption on export income for SEZ units for the first five years.
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The government is set to notify on Monday measures aimed at giving a fresh impetus to investments in special economic zones (SEZs) and boosting exports, including a cut in the minimum area required for such zones and a new dedicated scheme for electronic hardware and food processing.
"The idea is to give incentives to push SEZs out of the big cities and explore the less dense cities," said a commerce department official, who did not wish to be named Agro-based food processing special economic zones are being introduced following demands by the agrarian states such as Punjab and Haryana, where land is very expensive, and the Northeast region, where land is very scarce.
As per new norms, the minimum area required for electronic hardware and agro-based food processing special economic zones has been fixed at 10 hectare due to the limited availability of land in a few states. Besides, electronic hardware, special economic zones will be eligible for additional benefits, including a 20% capital subsidy.
"SEZs can serve as an enclave to attract foreign capital into the country and also give a leg-up to manufacturing," the official said, adding that these zones would eventually help cut down imports.
The government is looking to attract long-term foreign capital into the country and has liberalised its foreign direct investment for the purpose.
The manufacturing sector recorded a growth of just 1% in 2012-13, adding to the worries of policymakers.
As per the new norms, the investors will be able to set up both software and hardware facilities on the same premises. "The thrust has been to allow better utilisation of available land," the official said, adding that the objective was to make these distinct from the single-product SEZs, where the mandatory minimum land area is being halved to 50 hectare.
In a significant dilution of norms, the government will allow developers to use land with some prior minor construction as a vacant land for SEZ. However, benefits such as duty-free imports and 100% income tax exemption for the first five years, will only apply to the land where construction takes place after it gets notified as an SEZ.
"People sit on a lot of land, with a small construction at the corner of it, rendering the entire land ineligible for an SEZ. These changes will address this concern," the official said.
Multi-services special economic zones will be treated on a par with single-product SEZs, with the minimum area being slashed to half from 100 hectare. This will allow multi-product SEZ developers with a minimum land requirement of 500 hectare to set up multi-services SEZ on an additional 50 hectare of land.
Developers will be allowed to add another product on a contiguous 50 hectare in case of multi-product special economic zones.
Commerce and industry minister Anand Sharma had in April announced the reduction in minimum land for multi-product SEZs to 500 hectare from 1,000 hectare and scrapped the minimum requirement altogether for IT SEZs.
The amendments will also allow an easier exit for developers, allowing them to transfer or sell ownership of SEZ units. SEZs allow duty-free imports or domestic procurement of goods and also provide 100% income tax exemption on export income for SEZ units for the first five years.
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