Latest Real Estate News on 'Sezs India'

29 SEZ developers including TCS, Parsvnath Infra & Unitech Infracon seek more time to implement projects

Comments Off on 29 SEZ developers including TCS, Parsvnath Infra & Unitech Infracon seek more time to implement projects   |  October 29, 2013

NEW DELHI: As many as 29 special economic zone developers including Tata Consultancy ServicesBSE -0.20 %, Parsvnath Infra and Navi Mumbai SEZ Pvt Ltd have sought more time from the government for implementing their projects. The inter-ministerial Board of Approval (BoA) chaired by Commerce Secretary S R Rao will consider these requests at its meeting on November 8.

Posco-India Pvt Ltd, Unitech Infracon and Lodha Dwellers have also requested additional time for project implementation from the BoA, according to the agenda note of the meeting.

The developers have cited reasons like global meltdown and fluctuating market conditions for delay in completion of projects.

TCS, which is setting up IT/ITES zone in Kolkata has requested for further extension due to problems related to construction. Unitech Infracon Ltd which is setting up IT/ITES zone in Greater Noida has “requested for further extension as work started in 2008 and the pace was slow due to global melt down and fluctuating market conditions”, it added.

The developers have asked for one more year to execute their SEZs. The validity period of the approvals for most of them has either expired or is on the verge of expiry.

The validity period for Lodha Dwellers and Unitech Infracon expired on May 2 and May 22 respectively. The validity period for Navi Mumbai SEZ will end on November 21.

The board will also take up two applications for setting up new zones. Under the SEZ Act, the units get 100 per cent tax exemption on profits earned for the first five years, 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.

SEZs, which were once major vehicles for investment and export promotion, started losing sheen after the global meltdown and imposition of minimum alternate tax. As many as 58 SEZ developers had surrendered projects due to various reasons till July 31. Exports from SEZs grew by about 31 per cent to Rs 4.76 lakh crore during 2012-13.

Govt mulls single window clearance for SEZs in Madhya Pradesh

Comments Off on Govt mulls single window clearance for SEZs in Madhya Pradesh   |  September 27, 2013

INDORE: To ensure hassle-free establishment of special economic zones (SEZs) in Indore, the state government is all set to go for Development Control Regulation (DCR). On the lines of Gujarat, a single window clearance system is being planned for them.

A decision to this effect is likely to be taken during the meeting of the state cabinet in Bhopal on Wednesday. Once cleared, the Act will empower the SEZ development commissioner to sort out the issues and give necessary permission to the SEZs that have already been allotted land by the state government and received notifications for the SEZ status.

They include TCS, Infosys and Impetus. While TCS and Impetus have already begin construction for their SEZ project in Indore, Infosys has started construction work for the boundary walls surrounding its project site. It is despite the fact that Infosys is yet to go for formal laying of foundation stone for its project.

Talking to ToI on the sidelines of an event here on Tuesday, state’s IT secretary Hari Ranjan Rao, said, “The DCR will help the IT SEZs in Indore get permission for works like high-rise building and other layout plans directly from the SEZ development commissioner. No more they need to waste their valuable time in running from pillar to post to get the clearances from different government offices.”

SEZ development commissioner AK Rathore, who mooted the idea for formation of DCR, said, “I had submitted a detailed draft in this connection during my recent meeting held with the officials of town and country planning (T&CP). The DCR will ensure the SEZ units get necessary approvals from a single agency, thus putting an end to the system of approaching multiple agencies for different clearances.” Pithampur SEZ units are suffering in absence of any such facility from the state government so far. Despite the fact that SEZs are treated as deemed foreign territory and hence they are free from any kind of local taxation, the units at Pithampur SEZ have already started receiving notices from local authorities like commercial taxes department and municipal bodies, asking them to pay their due taxes.

Joint director, town and country planning, Sanjay Mishra, said, “Quite a few amendments have been made in the already existing MP Land Development Regulation to fit the bill.” State’s industry and IT minister, Kailash Vijayvargiya, said that the forthcoming DCR will be applicable to all the SEZs in the state.

SEZs: In standstill mode

Comments Off on SEZs: In standstill mode   |  September 5, 2013

On Monday, the government rolled out the promised “package of reforms” to boost the country’s exports. The commerce ministry notified the Amended Rules, 2013, for special economic zones (SEZs) launched with much fanfare over seven years ago.

However, real estate developers are not very enthused by the amended policy. The reason, they say, is not just policy, but several other factors that have stifled the growth of a sector, which posted growth of over 121 per cent in exports in 2009-10.

As per the amended policy, the minimum land requirement norms have been eased, graded scale for minimum land criteria has been introduced, an exit policy for SEZ units has been offered while minimum land requirement for setting up an IT/ITeS SEZs has been done away with.

The minimum area requirement for single-product SEZs has been halved to 50 hectares and that for multi-product SEZs to 500 hectares. The minimum land requirement norm for IT SEZs has been scrapped. They are now subject to only a minimum built-up criteria norm, which is 5 hectares for category B cities such as Jaipur, Ahmedabad, Chandigarh and Lucknow and 2.5 hectares for smaller cities and rural areas. According to the government, the incentive is aimed at pushing IT SEZs into cities with lower densities.

Sector-specific SEZs have also been given the option to add an additional sector for every 50 hectares of contiguous area added. This would allow sectoral SEZs to bring in similar or related sectors under the same zone. Further, SEZs being set up exclusively for electronics hardware, agro-based food processing, biotechnology, handicrafts, the minimum area required would be 10 hectares. The government has introduced agro-based food processing SEZs given the demands by agrarian states including Punjab and Haryana where land is very expensive.

However, despite the relaxed land requirement, analysts, developers and real estate sector watchers say that the move would not mean much in the existing economic scenario, especially with key legislations including the Land Acquisition bill, Real Estate bill, and Direct Taxes Code, pending with Parliament.

Manoj Goyal, director, Raheja Developers, one of the major investors in SEZs, told The Indian Express that SEZs are not struggling because of land size alone. There are several issues plaguing the industry.

“The easing of land requirement certainly helps, but there are other factors which play a major role. The market has been very negative and there are no tenants available. Relief from minimum alternate tax (MAT) was the biggest USP and that advantage is no longer available. Secondly, although the SEZ Act claims single window clearance, it is not being followed,” said Goyal.

He added that economic slowdown in the last couple of years has further deteriorated the industry. “However, small land parcels would be good but only for IT and ITeS sector because now they will be able to go phase-wise, small steps and the financial risk will also come down. Getting funding for small proposals is much easier,” said Goyal. The government in Budget 2011-12 levied MAT of 18.5 per cent on the book profits of SEZ developers and units, which were enjoying an exemption under the Income Tax Act. Dividend distribution tax (DDT) was also imposed in the Budget. This, according to developers, clearly dented the interest in SEZs.

An official from a leading real-estate company, who did not want to be quoted, said that the relaxed norms will not attract buyers because of the forthcoming General Elections. “The policy uncertainty is at its peak and people are on standstill mode, essentially waiting for the election results. That will be a big decisive development after which they will see the policy direction and start the work,” the official said.

Developers however agree on one point – private equity funds are, for the time being, only saving grace for the real estate sector. For instance, private equity giant Blackstone has already invested around $1 billion in India’s commercial and residential assets in the last two years and is reportedly scouting for more opportunities. Analysts say that even though the PE funds are here to stay, the relaxed norms cannot help much given the moderate demand.

“It is a good move. But real estate here is largely dominated by residential projects. Commercial demand isn’t much. For developers, this relaxation does not mean much right now,” said Abhishek Kiran Gupta, senior manager, Jones Lang LaSalle India.

With a view to attracting greater foreign investments, the government had announced SEZ policy in April 2000 and until February 2006, SEZs functioned under the provisions of the Foreign Trade Policy. Later, to provide a stable policy regime, the SEZ Act, 2005, was passed and implemented from February 2006 onwards.

The announcement saw frenzied moves from realtors and industries wanting to cash in on the plethora of fiscal sops and ease of doing business offered through the policy. Exports from SEZs saw exponential growth over the seven-year period from 39 per cent in 2003-04 to 122 per cent in 2009-10. However, perennial land acquisition problems, sudden U-turn on fiscal sops and administrative issues adversely impacted what was being seen as an open market within an economy marred by several distortions.

Vikram Bapat, executive director, PwC, said that the policy changes are too little and too late. “Liberalising the area requirement works but what is not clear is the policy direction. The units were coming due to cost arbitrage but now since there is no tax benefit, why would SEZs come up? MAT and DDT have adversely impacted the demand-supply situation. Further, an SEZ has to make commercial sense too,” said Bapat. The Direct Taxes Code had provided for deduction of profits for units commencing operations on or before March 31, 2014. “With no clarity on DTC, the so-called 2014 window is also not clear. There may be a spurt in demand with more clarity,” said Bapat.

Unitech group’s UCP gets bids up to Rs 2,700cr for Gurgaon SEZ

Comments Off on Unitech group’s UCP gets bids up to Rs 2,700cr for Gurgaon SEZ   |  August 21, 2013

NEW DELHI: Unitech Corporate Parks, a Unitech group firm listed in London, has received bids of up to Rs 2,700 crore from six companies, including Blackstone, for sale of its IT Special economic Zone (SEZ) in Gurgaon.

Listed on London’s Alternative Investment Market and set up to invest in commercial real estate of India, UCP has 60 per cent stake in the Gurgaon SEZ comprising 3.6 million sq ft commercial space. Unitech has remaining stake in the SEZ.

UCP has given the mandate to property consultant Jones Lang LaSalle India to find out potential buyers.

According to sources, UCP, which has put the Gurgaon SEZ on the block, has received bids from US-based private equity firm Blackstone, Singapore’s sovereign wealth fund GIC, investment firm Xander group, Canada’s pension fund CPPIB, Kotak Group and Maple Tree.

The maximum bid was of Rs 2,700 crore, sources said, adding that the company is expecting the deal value to go up because of interest. The reserve price has been fixed at Rs 2,500 crore.

A Unitech spokesperson declined to comment when asked about the bidding process.

The deal is expected to be announced by the end of this month or early next month, sources said.

Unitech is expected to garner Rs 1,100-1,200 crore from this deal and the amount will be used to retire debt and fund construction of projects, sources said.

UCP raised about 360 million pounds by issuing and placing its Ordinary Shares on the AIM of the London Stock Exchange in December, 2006.

It had invested in six commercial projects in India in partnership with Unitech, of which five are in the national capital region and one in Kolkata. UCP has 60 per cent stake in these properties while Unitech has 40 per cent. That apart, Unitech holds 12-13 per cent stake in UCP.

How China succeeded with SEZs

Comments Off on How China succeeded with SEZs   |  June 15, 2013

In China, SEZs were developed along its southern coast in the areas of Shenzhen, Shantou, Zhuhai, Hainan and Xiamen which were backward small villages lacking in basic infrastructure and industrial resources. These zones were developed as manufacturing hubs and the open access to international trade sea lanes led to their success.

These SEZs attracted huge amounts of foreign capital and optimised the use of management, advanced technology and equipment. In India, apart from a few port locations, most of the existing and proposed SEZs are located inland.

Moreover, the Indian policy makers could only see half the picture in assuming that the foreign investors who were not comfortable with the limitations on repatriation of investments from China would flock to India.

Unlike the totalitarian regime of China where the State established the SEZs, in India it was left to the private sector without adequate support mechanism where the Centre and State Government policies often were put at cross purposes.

As a result, many foreign companies, especially from Japan, France, Germany and Italy are clueless whether to invest in a country where the change of regime at political level can result in change of policies overnight.

Facts speak for themselves. About 80,000 Japanese companies have factories in China, especially in its SEZs. In Thailand too, over 17,000 Japanese companies have factories in notified zones. In comparison, India has only 840 Japanese companies.

China, unlike India with focus on IT/ITeS, concentrated on manufacture and today China’s exports are 30 per cent of its GDP, lion’s share coming from SEZs. Also, China gave fiscal benefits to coastal SEZ factories for a long period of 20 years, before extending the same incentives inland to motivate manufacturing. In contrast, fiscal benefits to Indian SEZs did not even lat beyond four years. So, while it demotivated the existing SEZs, companies which were planning to create factories in the Indian SEZs decided not to.


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