INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

PROCESSING FLOOR FOR SEZS TO BE CUT TO 35%

   IN A move that comes as a shot in the arm of developers of multi-product SEZs, the government has decided to reduce the minimum ‘processing area' requirement to 35% as compared to 50% earlier. A decision to this effect was taken by the empowered group of ministers (eGoM) on SEZs ––headed by defence minister Pranab Mukherjee. The decision to lower the minimum processing area requirement would help corporates such as Reliance, DLF, Adani and Unitech that are planning multi-product SEZs spread over at least 1,000 hectares of land.

According to the government's definition, ‘processing area' indicates manufacturing facilities which actually produce the goods meant for export from SEZs. In the case of services sector SEZs, ‘processing area' would describe facilities from where services are exported.

Since ‘processing area' has now been reduced to 35%, the remaining 65% of the space within SEZs could be used for building supporting infrastructure facilities like housing, restaurants, entertainment zones, schools, hospitals and other facilities required for those employed in SEZs. Therefore, the eGoM's decision is a major boost to real estate developers eyeing a piece of the SEZ pie.