Govt relaxes SEZs norms for smaller cities

Avoiding the adverse impact of the Direct Taxes Code (DTC) on special economic zones (SEZs), the government in a recent move has relaxed the minimum built up area norms for these units coming up in tier two and tier three cities. The latest move will spur large scale investments in IT/ITeS SEZ in smaller cities thereby helping sectors including gems and jewellery, non-conventional energy, biotechnology and free trade warehousing where minimum built up area norms are prescribed.

Making things more clear the government in a notification has classified all cities into four categories including A1 (comprising four metros, Bangalore and Hyderabad), A (which includes cities like Pune Ahmedabad, Coimbatore, Vijayawada and Visakhapatnam), B1 (smaller cities including Patna and Ludhiana) and B2 (the cities falling outside these three categories).

For 21 cities which have been categorized as B1 such as Kochi, Agra, Allahabad, Madurai and Raipur, the government has pruned minimum built up area for SEZs to 50% of the current norms. For B2 cities, the minimum built up area has been lowered to just 25% of the current criteria. For the SEZs the current built up area requirements range from a minimum 40,000 sqm for bio- technology units to one lakh sqms in case of IT/ITeS units. However the built up area norms for the processing area where production takes place is at least 50% of the total covered area of the SEZ. As many as 16 cities – mostly large ones – have been classified as A and A1 and the built up area norms for these cities remain unchanged.