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While concerns over the adverse impact of the Direct Taxes Code on Special Economic Zones run amok, the Government has relaxed the minimum built-up area norms for these tax-free enclaves coming up in smaller cities. The move will mainly spur investments in IT/ITES SEZs in Tier 2 and Tier 3 cities and also help sectors such as gems and jewellery, non conventional energy, biotechnology and free trade warehousing, where minimum built up area norms are prescribed.

In a recent notification, the Commerce Ministry has classified all cities into four categories A1 (four metros, Bangalore and Hyderabad); A (cities such as Pune, Ahmedabad, Coimbatore, Vijayawada, Visakhapatnam), B1 (small cities such as Patna and Ludhiana). Locations which fall outside these three categories have been tagged as B2 cities.

For 21 cities which have been categorised as B1 (including Kochi, Agra, Allahabad, Madurai, and Raipur), the Government has pruned minimum built-up area for SEZs to 50 per cent of the current norms. For ‘B2′ cities, the minimum built-up area has been lowered to just 25 per cent of the present norms. The current built up requirements range from a minimum 40,000 square meters for bio-technology SEZs to one lakh square metres in case of IT/ITES SEZs. The built up area norms pertains to the processing area where production takes place; this is at least 50 per cent of the total SEZ area.

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 in order to encourage entrepreneurs and developers to look at development in semi-urban areas thus ensuring that world-class infrastructure gets created in remote areas and enabling people in smaller cities to seek employment at their doorsteps.

Via Business Line