Change in SEZ norms

Validity period of in-principle SEZ approvals reduced.

With the political heat over special economic zones mounting by the day, the Union commerce ministry has brought about significant changes in the rules that govern these zones.

The amendments, notified on March 16, will allow developers to acquire more land than initially planned as well as change the nature of the SEZ. In other words, if a 600-hectare textile zone were to acquire an additional 400 hectares, it can become a multi-product zone.

According to the original SEZ rules, a change in the classification was not permitted.

The commerce ministry has also accepted the demand of SEZ developers to change the definition of "contiguous area," which will allow them to acquire land that has public utilities like a road or a railway line running through it.

"The Board of Approval will have the power to classify a contiguous area as one which has such public utilities or thoroughfares. However, this will depend on the extent of utilisation of such utilities," a commerce ministry official said.

This amendment will benefit multi-product SEZ developers (which need a minimum 1,000 hectares of land) like Reliance Industries.

These developers have told the commerce ministry that there are virtually no large tracts of land in India without some sort of public utility being located or running through it.

However, the commerce ministry has decreased the validity period of in-principle SEZ approvals from three years to one year. "This way, we can ensure that developers do not sit on proposals," the official said.

The new rules will also allow sub-contractors of zone developers to avail excise and sales tax benefits.