Latest Property News on 'Special Economic Zones'

Ansal Revives Plan- Launching SEZ in Haryana

Ansal API, the New Delhi-based real estate player that deferred plans to launch special economic zone (SEZ) projects in the National Capital Region (NCR) due to falling commercial demand in sector, is now launching an agro and food processing SEZ at Murthal in Haryana, spread over 250 acres. The developer is also looking to set up a biotech park in Lucknow across 80 acres, which will house 42 biotech firms. The company would invest Rs 1,000 crore in the unit. In the first phase of the project, Ansal would sell plots in the sizes of 5-10 acres and multiples to companies, which would be operational from early 2011.

The developer has already signed memorandum of understanding (MoU) with five rice exporters and is expecting sales in the range of Rs 600-700 crore from the initial phase. The funds raised from selling the plots would be used to construct built-out units in the subsequent phases, which would be either leased or sold. Ansal officials refused to comment. Last year, Pranav Ansal, managing director of the company, had hinted the company might denotify the SEZ due to delays in getting approvals and also because of global headwinds. In 2008, DLF Ltd, the largest real estate developer in the country changed its earlier plan of building an information technology SEZ in New Delhi and instead launched a housing project called Capital Greens. Read More »

Bring STPI Schemes at Par with SEZs- Nasscom

Nasscom, the representative body of IT-BPO firms in the country, on Wednesday said it has recommended that the STPI initiatives are brought at par with special economic zone (SEZ) schemes to help smaller firms remain competitive. “In our Budget 2010-11 wishlist submitted to the government, we have recommended that the STPI (Software Technology Park of India) initiatives should be at par with SEZ schemes as this will help the small and medium companies remain competitive,” Nasscom President Som Mittal said. Indian IT firms are looking for an extension of the tax holiday for the STPI scheme.

“We want the STPI extension to happen particularly for SMEs and Tier II and III cities as its more viable for them. It (STPI) should mirror the SEZs as this would provide a level-playing field for the entrepreneurs,” Mittal said. The sunset clause under section 10A and 10B of the Income Tax Act, which expires this year, gives a tax holiday to the companies operating under the STPI scheme and these benefits are available till 2011. Read More »

SEZ at Dahej Expected to Attract an Investment of around Rs 30,000 to Rs 35,000 crore

The Special Economic Zone at Dahej is expected to attract an investment of around Rs 30,000 to Rs 35,000 crore, chief executive officer of Dahej SEZ R J Shah said. The Dahej SEZ is shaping well. Land has been allotted to 32 industries there, of which 10 are in advance stage of development, he said. “We expect the total exports form Dahej SEZ to cross Rs 60,000 crore in another few years down the line, when all the units commence production,” R J Shah told newsmen on the sidelines of Confederation of Indian Industry(CII) 3rd Nigeria-India Business and Investment Forum(NIBIF-2010).

Amongst the big ticket investments at Dahej SEZ is the petrochemical complex being set up by ONGC Opal, with a proposed investment of over Rs 20,000 crore, Besides, 1500 MW capacity Torrent Power Plant with an investment of over Rs 8,000 to 10,000 crore is also coming up there, Shah said. There are large industries in chemical and engineering sector including that of DIC Fine Chemicals and Torrent Pharma, he added. “One company from US, two from Japan, one from Belgium and one from Germany will also be putting up their plants in Dahej,” Shah said. “So far an investment of over Rs 2,000 crore has been made in this SEZ,” he said.

Govt Makes Enforcement Agencies Entry into SEZs Easier

The government has rolled back one of the key provisions governing special economic zones (SEZs) to allow enforcement agencies to enter these zones without prior permission. Under existing rules, such agencies need permission from the development commissioner of SEZs before conducting out any search, inspection, seizure or investigation. Though the latest amendment relating to the functioning of economic enclaves is dated 30 November, it was publicized only late last week. While the government sought to play down the amendment, the response of analysts was mixed—some welcomed it, while others argued that it diluted the concept of SEZs and made them potentially vulnerable to red tape.

The SEZ policy was envisaged as a solution to the bureaucratic tangle of a multiplicity of controls and clearances required for companies to function, the absence of world-class infrastructure and an unstable tax regime. With a view to attract larger foreign investments into India and promoting export-led growth, the SEZs policy was launched in April 2000. Section 22 of the SEZ Act originally provided that any designated government authority could carry out investigation or search or seizure in the zone, or in a unit, with “prior intimation” to the development commissioner, the apex administrative authority in an SEZ. Read More »

India’s First Water Theme Based IT Park Gets SEZ Status

The Centre has notified the 33 acres of land identified for the Infopark at Ambalappuzha as a Special Economic Zone. IT Secretary Ajay Kumar said the decision was taken at a meeting of the Board of Approvals for SEZ of the Union Ministry of Commerce in New Delhi.

“The Infopark will be developed as the first ‘water-theme-based’ IT Park in India with immense untapped potential for promoting IT and knowledge services in this land of backwaters. With this park, we aim to create an ambience that is extremely conducive for professionals to work in a stress-free environment,” said Ajay Kumar. Read More »

Govt Initiates Green SEZ Plans

The government has proposed that all SEZs should meet at least 25 per cent of their lighting needs through solar energy, a move that will go a long way in making SEZs green, even as consensus eludes climate change talks in Copenhagen. “At least 25 per cent of the installed external lighting load should be solar powered,” the draft guidelines for Green Special Economic Zones said. The government also wants at least half of the requirement for bill boards to be solar-powered.

The draft proposals intend to make all new and existing SEZs green as the government wants existing SEZs to go for green certification. In addition to lighting requirements, the draft proposals also call for a minimum of two per cent of estimated energy consumption for each zone from solar or other forms of renewable energy and scale it up gradually. “Over a period of 10 years, the solar/ other forms of renewable energy must be extended from two per cent to a minimum of 20 per cent of total estimated energy consumption,” it says. Read More »

RIL in Discussion to Sell its stock in Haryana SEZ

With an aim to rope in a strategic partner for its Haryana SEZ project, corporate giant Reliance Industries is believed to be in talks with IL&FS and a couple of other players for part-sale of its stake. The discussions are being held with infrastructure development and finance major IL&FS as also with some other potential partners for sale of a minority strategic stake by RIL in Reliance Haryana SEZ Ltd, sources said.

However, it could not be ascertained how much stake RIL could offload in the venture and what was the valuation it was looking at for the stake sale, sources said, adding that the talks were still in preliminary stages. In its annual report for 2008-09, RIL had said that it was planning to bring in a strategic business partner in its Haryana SEZ project to maximise investment potential in the joint venture unit. The SEZ was to originally come up on 10,000 hectares at an investment of over Rs 25,000 crore, but the size was scaled down to 5,000 hectares after the government put a cap on land acquisition for such projects. Read More »

SEZ in Limelight Once Again

Forty four years ago, India was one of the first Asian nations to experiment with a prototype of today’s special economic zone (SEZ), when an export processing zone was set up in Kandla. India was ahead of time as Chinese leader Deng Xiaoping found merit in converting a backward fishing village of Shenzhen into an SEZ only in 1979. Despite the headstart, India failed to capitalise on the model of creating hubs for exports as the SEZ saga went into doldrums till an Act was promulgated only four years ago. Once the Act came into force in early 2006, the massive rush of getting SEZ approval made Udyog Bhawan a hot-spot of future industrial action in the country. Three years down the line, the proposed islands of prosperity have entered into a realistic zone. Hit by the global economic downturn and protests over land acquisition in various big-ticket SEZs, private developers have slowed down their momentum whereas some others have even decided to withdraw their commitment on setting up SEZs altogether.

Let’s take the recent case of Essar Steel which has now requested the ministry of commerce to de-notify a sector-specific SEZ in Gujarat’s Hazira. And the reason? In a new gameplan for the company, discarding the SEZ tag will help it sell its products in the Indian market as most steel biggies have acknowledged that a faster recovery of the world’s steel market is preposterous at this juncture. No wonder, DLF and Maytas Ventures among others have also either surrendered their SEZs or are in the process of doing so. What’s more, political compulsion in the coastal state of Goa has forced developers to shut down their business even after some of those SEZs were formally approved and were notified, leading them to fight a court battle with the state government. So what’s next for India’s SEZ saga which former commerce minister Kamal Nath was pursuing in a very aggressive manner. Also, in a rare showdown between a politician and a bureaucrat, then commerce secretary G K Pillai locked horns with the Goa chief minister arguing that notified SEZs could not be denotified. Read More »

SEZ Exports Doubles in First Fiscal despite Contraction in World Trade

Despite a contraction in world trade, exports from India’s special economic zones (SEZs) have maintained the high growth levels of the pre-crisis period. Commerce ministry data shows SEZ exports more than doubled in the first half of this fiscal, when the country’s total exports dipped 18.6%. After the 2006-07 implementation of the SEZ policy, exports from these tax-free zones have increased by over 50% annually. “SEZ exports stood at Rs 1,01,265 crore in April-September this year as against over Rs 48,000 crore in the corresponding period a year ago. This clearly shows that export growth this year would be significantly higher than the initial estimate of 15%,” said DK Mittal, additional secretary, department of commerce. Total exports were at Rs 3,78,196 crore in H1.

However, with access to liquidity getting squeezed and land acquisition proving a problem certain developers are having a rethink on their SEZ plans. The board of approval (BoA) that met here on Thursday under the chairmanship of commerce secretary Rahul Khullar allowed 10 developers to exit. The proposed 5,000-hectare Maha Mumbai SEZ is among the projects facing problems over land acquisition. The BoA on Thursday asked developers—RIL chairman Mukesh Ambani and his associate Anand Jain have stakes in the zone—to re-apply through the state government. Read More »

Flaws in SEZ Policy Forcing Major Players to Plan Exit

Many of India’s notified special economic zones (SEZs) want to exit, downsize or postpone their SEZ-specific obligations. Blame it on flaws in the basic SEZ policy itself, and not just the slowdown. Though India’s SEZ policy was inspired by global examples of government-industry efforts to cut costs and multiply forex earnings, in practice, the compromises made to adapt the model to Indian situations have undermined its viability.

The Comptroller and Auditor General’s performance-audit of some of the functional SEZs reveal domestic earnings are larger than exports for most of them. According to an OECD study, domestic sources account for 75% of the capital formation in Indian SEZs. The real problem is that SEZs are a half-baked solution to the rapidly rising demand for urban spaces generated by India’s fast growing industry and services. With the number of new urban dwellers over the next 15 years expected to be at least 200 million, India needs full-fledged new towns, not the townlets represented by SEZs: the size of an SEZ is capped at 50 sq km, whereas the additional demand for urban space to accommodate 200 million plus new urbanites would run to tens of thousands of sq km. Read More »