The UPA government is likely to tighten the Special Economic Zone (SEZ) approval rules to weed out non-serious players. The commerce ministry will ask SEZ developers to acquire 30 per cent of land to get the inprinciple approval extended by a year. If the developers want a two-year extension, they will have to acquire 50 per cent of SEZ land before approaching the Board of Approval (BoA).
The move comes a few months ahead of the Lok Sabha elections where SEZ land acquisition may emerge as a major poll plank. SEZs are specific duty-free enclaves deemed to be foreign territory for trade operations, duties and tariffs. SEZ units enjoy income tax benefits, duty-free import, service tax exemption and a host of other fiscal incentives.
BoA, the nodal agency under the commerce ministry, scrutinises SEZ applications before approval.
"Another key issue is the shareholding pattern of the company wanting to set up the SEZ. We have noticed that suddenly some companies submit applications for transferring the SEZ to a newly floated company. Questions have been raised at the ministerial level about the promoter's intention here. Therefore, we are in the process of deciding a certain percentage of shareholding the parent will have to hold in the new entity implementing the project. A mechanism to monitor SEZ progress will also be in place shortly. These will come up for discussion at a meeting on January 15," according to a senior commerce ministry official.
An SEZ developer gets in-principle approval only when the state, where the project is coming up, clears it. The developer gets a formal approval after land is acquired and the SEZ is notified once the infrastructure is ready.
Source: Realty PlusGovt likely to tighten SEZ approval norms
