SEZ proposals may face two-stage screening

The commerce ministry is considering a two-stage screening of proposals for setting up special economic zones (SEZs). The idea is to limit the number of cases that are sent to the inter-ministerial Board of Approval for clearance.

"We are examining the revenue department's suggestion for a preliminary screening of proposals before they are sent to the board. The applications sent to the department of commerce can be first looked at by the chairman of the BoA. Any applicant that does not fulfill the land, minimum net worth, or investment criteria can be informed that its proposal is not according to the requirements and therefore is not being sent to the BoA," a senior commerce ministry official said.

At present, the commerce ministry has prepared a checklist of 24 parameters for applicants keen on setting up SEZs. These include the amount and source of foreign direct investment.

The ministry had in September also included a minimum investment criterion of Rs 250 crore or a net worth criterion of Rs 50 crore for sector-specific zones.

For multi-product zones, the minimum investment required is Rs 1,000 crore or a net worth criterion of Rs 250 crore.

Officials said the revenue department was concerned that there were too many applications for setting up SEZs. The BoA was also cautious about new zones.

At a meeting held on October 10, of the 79 proposals on the agenda, the BoA formally approved just 26 cases and gave in-principle approval to eight. Similarly, on October 6, of the 85 cases on the agenda, it granted formal approval to eight cases and 17 in-principle approvals.

The BoA has since February granted formal approval to 212 zones and in-principle approval to 152. It has so far notified 36 SEZs.

Officials said the commerce ministry was also considering a proposal to amend the SEZ rules regarding contingency of land.

"The revenue department has raised the issue of discrepancy in the rules. While giving the board the power to relax the contingency norms for land area, the rules do not specifically allow it to relax the contingency requirement for a zone with regard to public transport such as a road or a railway line. We are considering amending the rules to allow this provision," an official said.