SEZs likely to have minimum 50 acre size

The board of approval (BoA), the inter-ministerial body which considers special economic zone (SEZ) proposals, is considering fixing 50 acres as the minimum area required for product-specific SEZs.

This follows objections raised by the finance ministry regarding the size of some of the SEZs. Of the 19 product-specific zones approved so far in-principle, five are of less than 50 acres.

These include a gems and jewellery zone in Manikanchan at Salt Lake and the Wipro SEZ in Salt Lake Electronic City in West Bengal, food processing SEZ at Kakkancherry near Calicut and electronics industries SEZ at Kalamassery in Kerala, and information technology SEZ at Shastri Park being set up by the Delhi Metro Rail Corporation in New Delhi.

"There have been instances where a product-specific SEZ with a size of five acre has been approved. However, hilly areas like Himachal Pradesh or the North-east could be exempted from this criteria," officials told Business Standard.

The SEZ Bill approved by Parliament did not lay down a specific size for SEZs. Officials added that the limit would be applicable to new proposals and would be pegged higher for multi-product SEZs.

The finance ministry had said infrastructure created within an SEZ should not be shared with the surrounding area or the domestic tariff area. It felt that this could lead to revenue leakages as SEZs were being given special duty concessions.

This view has, however, been overruled by the BoA which says at least 51 per cent of the infrastructure created should be used by the units located in SEZs. "So long as 51 per cent of the infrastructure is used within an SEZ, the remaining can be shared with DTA units," an official said.

The proposal of Reliance Energy Generation Ltd to set up a power plant at their Dadri SEZ in Uttar Pradesh was cited as an instance by the North Block.

However, the BoA said since the plant would produce power in excess of the requirement, there was no harm in sharing power with DTA units or the Noida SEZ.

Officials pointed out that instances of cess being imposed on exporters in SEZ units at multiple stages of production would be resolved once the SEZ Bill was enacted. The Bill proposes to do away with every cess in the zones.

A total of 45 SEZs have been cleared in-principle so far. These include 22 integrated multi-product SEZs, 19 sector-specific SEZs, two port-based, and two free trade and warehousing zones.