Click to play videoNew Delhi: With apprehensions on the misuse of Special Economic Zones (SEZs) mounting, the Commerce Ministry is in the process of drafting a new set of restrictions for SEZs.
Sources say that the new restrictions are aimed at curbing non-essential infrastructure like hotels, apartments, amusement parks and shopping malls among others as well as curbing the number of Offshore Banking Units (OBUs) permitted in SEZs. OBUs might be allowed only in genuine multi product SEZs.
The guidelines are likely to be finalised at the meeting of the Board of Approvals (BOA) on September 21.
This follows the RBI apprehensions on the matter that currently there are no restrictions on number of OBUs in SEZs.
Government is also considering to restrict number of apartments in SEZs and rampant resale of apartments.
These restrictions, if approved, would also restrict the number of apartments a developer can build in a Special Economic Zone.
It would be linked to either the built up area in the processing part or the number of people employed at an SEZ.
Construction of non-essential infrastructure would also be linked to nature of business activity or location of an SEZ.
The Finance Ministry and the Left have pointed out that the current SEZ policy would result in misuse of incentives and could also lead to massive land scams.
But some of the restrictions proposed for new SEZ policy would be dampeners for sector specific SEZs.
For instance an IT SEZs, like those being built by Infosys, Wipro, HCL, located close to cities would not be allowed to construct hotels. This, because the government thinks, that clients visiting the SEZ can use hotels located in the city.
For multi product SEZs, construction of apartments would only be allowed in phases. Also non-essential infrastructure would only get a one-time exemption and not 10-year tax holidays as had been allowed earlier.
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