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Amendment to SEZ Act on the cards
September, 18th 2006
The commerce ministry is considering nominating the directors of software technology parks of India (STPIs) as development commissioners of information technology special economic zones. An amendment to the SEZ Act 2005 is being planned accordingly. The information technology department has been pushing a proposal to treat STPIs on a par with SEZs. The department's concern is that since the tax benefits of STPIs are in place only till 2009, there might be a migration of the existing units from the parks. Meanwhile, the commerce ministry is thinking of fixing an indicative land area for construction of shopping malls, apartments and hotels in the non-processing portion of a SEZ. "The government may decide to allow construction of shopping area up to 50,000 sq m in case of a multi-product zone. Any developer that decides to exceed this limit will not be eligible for any tax benefits," an official said. Similarly, the Board of Approval may decide to restrict the number and area of dwelling units inside a zone. In case of sector-specific zones, particularly IT SEZs, the view is that since the social infrastructure is in most cases a part of the main building block, there is no need for a bigger area to be demarcated for this purpose. "We may, therefore, allow an IT zone to set aside not more than 10,000 sq m for social infrastructure," an official said. The government has so far notified 24 SEZs. Some of the new SEZs are expected to become operational within this calendar year. These include Divi's Laboratories' pharma zone in Vishakapatnam, set up with an investment of Rs 200 crore, which is expected to begin production next month, and Apache's footwear SEZ in Nellore with an investment of Rs 500 crore, expected to begin production in December.
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