STPI directors to get control over infotech SEZs

Crucial administrative matters of special economic zones (SEZs) dedicated to the information technology sector will now be handled by directors of the Software Technology Parks of India (STPI), an autonomous body under the Department of Information Technology (DIT).

Significantly, the commerce ministry is the nodal ministry for SEZ-related matters, while STPIs come under the Ministry of Communications and Information Technology.

The ministry notified the move last month.

The notification appoints STPI directors as development commissioners of infotech SEZs.

However, the directors will report to the commerce ministry on matters related to these SEZs.

The DIT wanted to exercise administrative control of these SEZs but the proposal was rejected by the commerce department.

There are around 40 STPIs in the country. The directors of these parks will be assigned IT SEZs in the vicinity of the parks that they administer.

As mandated by the SEZ Act, 2005, every SEZ must have a unit approval committee, headed by a development commissioner. The committee is in charge of a number of administrative matters, including clearances for units inside these tax-free zones.

"Central officers from any services can be appointed development commissioners. But they report to the commerce ministry on SEZ-related matters," said a source.

According to analysts, the move will benefit infotech companies as well as the government. "The STPI infrastructure can be leveraged by the companies. The administrative set-up of STPIs and SEZs are similar and hence there should not be any problem," said a Delhi-based SEZ expert.

Moreover, as the size of the infotech SEZs is around 10 hecatres, STPI directors will be able to handle the issues without requiring additional staff.

In large multi-product zones, which have a minimum area of 1,000 hectares, at least 15 Customs officials are required to keep a check on the incoming and outgoing goods.

After the SEZ rules and Act came into effect in February 2006, the largest number of applications to set up the tax-free zones have come from the infotech sector.

According to analysts, out of the 160 notified SEZs, at least 100 are from the infotech sector.