Govt relaxes SEZ size norms

The government has decided to amend the rules for special economic zones, empowering the board of approval to relax the area-norms for old cases where an in-principle approval had been given but the final notification was held up on account of area constraints.

Senior officials said the matter was discussed at a meeting of the ministerial group on special economic zones (SEZ) last week.

"It was decided that old cases, which were held up on account of the area-limit, be formally cleared by giving powers to the board of approval (BoA) to relax the area norms," an official said.

The move is expected to benefit several companies like Nokia, whose notification by the revenue department had been made conditional to it acquiring additional land.

The company had been seeking deletion of the clause that required this to be fulfilled. Officials said there were around 18 cases which would benefit from the change in SEZ rules.

Officials said while the ministerial group had decided to relax the area norms for SEZs in the information technology sector, several other outstanding issues would be sorted out at a meeting between the commerce and revenue secretaries. No date had so far been fixed for the meeting.

The two ministries had locked horns over several issues, including demands by North Block to restrict exemption for SEZ units from minimum alternate tax; amendment of Section 10 AA of the Income Tax Act to exclude units formed by splitting or reconstruction of existing business and, units formed by the transfer of old plant and machinery, from tax benefit and issuing of guidelines to exclude trading.

While North Block wanted these amendments to the SEZ Act, the commerce ministry was resisting the move on grounds that the Act was passed after detailed consultation with all ministries and political parties.