Government squeezes SEZ norms to prevent misuse

22 Sep 2006

Following widespread criticism of the SEZ policy for promoting real estate development in the garb of industrial promotion, the commerce ministry has come out with new norms on financial strength for SEZ developers and the kind of common facilities that can be created within an SEZ.

As per the norms, applicable to all fresh SEZ applications, promoters of sector-specific SEZ's should have a minimum net worth of Rs50 crore or should invest at least Rs250 crore. For multi-product SEZ's, the minimum net worth requirement would be Rs250 crore and the minimum investment would be Rs1,000 crore. For calculating net worth of promoters, the combined net worth of all group companies can be considered.

The board of approval has been given discretionary powers to consider proposals, which do not meet the above criteria on merit.

Detailed lists of common facilities that would be allowed in sector-specific and multi-product SEZ's have been notified separately. Under these norms, housing units, hotels, hospitals and schools would not be allowed in SEZ's for IT&ITES, biotechnology and gems & jewellery sectors.

The ministry has also set limits on housing, hotels and other such facilities in larger SEZ's. Sector-specific zones can have only 7,500 housing units and only up to 100 hotel rooms. Total area of hospitals and schools cannot exceed 25,000 square metres. Other facilities like shopping malls, entertainment centres and other facilities cannot exceed 50,000 square metres.

Multi-product zones can have up to 25,000 housing units and 250 hotel rooms. Total area of other facilities cannot exceed 250,000 square metres.