Special Economic Zones (SEZs) could be in for some tax trouble. States have questioned the stamp duty exemption given by the Centre under the SEZ Act. Some state governments have termed the move ultra vires, arguing it went against the Indian Stamp Act. The finance ministry has proposed to elicit the law ministry’s views on the issues raised by states, government sources told ET. The issue was debated at a meeting of the state tax secretaries and finance ministry representatives held late last month. States alleged that while the Centre had the power of legislation, the power to fix rates lay with the states. While Orissa took up the issue initially, some other states like Madhya Pradesh have also joined forces. Sources pointed that the Centre, in a bid to bring about unification of duties, has linked the funding under Jawaharlal Nehru National Urban Renewable Mission to reduction in stamp duty by states. They said if the Centre had powers to cut stamp duties, it could have done so at one go and not gone through such a long process under JNNURM. “The reduction in duty is ultra vires of the provisions of the Indian Stamp Act,” a state official said on condition of anonymity. The Act reads: “Parliament can make law in respect of stamp duty. It can prescribe rates of stamp duty. The stamp duty rates prescribed by Parliament in respect of bill of exchange, cheques, transfer of shares, etc, will prevail all over India. However, other stamp duty rates prescribed by Parliament in Indian Stamp Act, 1899 (e.g. stamp duty on agreements, affidavit, articles of association of a company, partnership deed, lease deed, mortgage, power of attorney, security bond, etc) are valid only for Union territories. In case of states, the rates prescribed by individual states will prevail in those states.” However, in the case of a dispute, the Act provides, “if there is conflict between state law and Union law, the Union law prevails [Article 254 of Constitution]”. The law ministry’s views could be taken on whether this provision empowers the Centre to change the stamp duty rates in a state through legislation. Economic times (09 June 08)

Government changes SEZ Policy - No SEZ over 5000 hectares (06 April 2007)

THE government has changed its policy on Special Economic Zones (SEZs), making large, multi-product SEZs virtually impossible to build. Nandigram violence on SEZ, has changed several binding parameters: (1) The size cannot exceed 5,000 hectares (12,500 acres) — There was only a lower limit of 1,000 hectares. State governments can impose lower ceilings, if they so choose (2) At least 50% of the area has to be earmarked for processing for all SEZs — Earlier, the norm was 35% for multi-product SEZs and 50% for sectorspecific SEZs (3) A state government cannot acquire land for an SEZ on behalf of private developers, nor can state governments form joint ventures with private developers if they do not already have land in possession to offer the project. States can acquire land to develop SEZs on their own, provided they stick to the new relief and rehabilitation package to be announced soon (4) SEZs will have tougher export obligations to meet — instead of being merely net foreign exchange earners, they will also have to have export earnings at least equivalent to their purchases from the domestic tariff area. While the ceiling of 5,000 hectares on SEZs will presently affect the plans of just a handful of SEZs, the bigger challenge for private developers lies in acquiring large tracts of land meeting all contiguity norms without government help. The 5,000-hectare ceiling will directly affect Reliance’s Maha Mumbai project in Maharashtra and Jhajjar project in Haryana, where the company had proposed to develop SEZs of 10,000 hectares each. Other projects to be affected include DLF’s 8,097-hectare multi-product SEZ in Gurgaon and Omaxe’s 6,070-hectare project in Rajasthan. The authority given to state governments to lower the ceiling further could increase this list. Commerce ministry officials said the Centre had decided to give states the authority to cut down on the size of the SEZs further in response to representations from a number of parties, including the Left, on the need to fix lower limits Economic times (06 April 07)

Genpact plans to set up IT SEZ in Kolkata.

IT services firm Genpact plans to set up Rs 100 crores IT SEZ in Kolkata. Genpact has recently received clearances to set up three SEZs in Bhopal, Bhubaneswar and Jaipur. It is also in the process of constructing a development centre on a 12-acre plot within the IT SEZ being developed by DLF in Gurgaon. Economic times (10 Feb 07)

 Board of Approval (BoA) gives nod to operations of 30 notified SEZs.

BoA on SEZs has accorded co-developer status to a number of developers of notified SEZs including Motorola and Foxconn, Mahindras and Ascendas and Petronet LNG and Kochi Port Trust. SIn the Mahindra world city SEZ in Chennai, including Mahindra Integrated Township, Mahindra Holiday Resorts and Ascendas Mahindra IT Park Private. Petronet LNG was approved as a co-developer in Cochin Port Trust while Integrated Warehousing Kandla Project Development Private Ltd was given co-developer status for a free trade warehousing zone in Kandla SEZ.
Others to get co-developer status include Leela Lace Holdings Pvt Ltd as co-developer in Info Park SEZ at Kochi and DLF Assets Pvt Ltd as co-developer in the DLF Info City Developers (Chennai), IT/ITES SEZ in Ramapuram, Chennai. IT and ITES SEZs which got clearances for authorised operations include HCL Technologies Ltd at Noida, Quarkcity India Pvt Ltd at Mohali, Wipro Ltd in Pune, M L Dalmiya and Co Ltd at Kolkata, Ansal IT City and Parks Ltd at Greater Noida and Satyam Computers Services Ltd at Bahadurpally Village, Andhra Pradesh.
Other SEZs which received clearances for authorised operations include Zydus Infrastructure Pvt Ltd’s pharmaceuticals SEZ at Gujarat, MIDC agro products SEZ at Latur, Maharashtra, Fab City SPV (India) Limited for a sector specific SEZ for manufacturing and developing semiconductor facility at Hyderabad and Whitefield Paper Mills Limited for writing and printing papermill SEZ at Godavari District, Andhra Pradesh.There are a total of 236 proposals which have been formally cleared by the board of approval of which only 63 have been notified. The remaining 173 proposals which have been formally approved but cannot start operations include Singapore-based property developer Ascendas, Sri Lankan textile company Brandix, Infosys, Jindal Steel, the Chatterjee Group, the Tata’s and the Mahindra’s-Economic Times

Nuziveedu plans Rs 697-cr SEZ near Chennai.

Rs 1,000-crore Nuziveedu Seeds group, which is developing IT-integrated infrastructure projects across all major Indian cities, has proposed to establish an IT/ITeS Special Economic Zone (SEZ) at Sholinganallur, near Chennai, at an estimated cost of Rs 697 crore. In the first week of February 2007, Nuziveedu Seeds (NSL) approached the Tamil Nadu Industrial Development Corporation (TIDCO) for the SEZ project.The proposed equity for the project is about Rs 300 crore. Economic times (9 Feb 07)

The IL&FS has joined hands with Maharashtra Industrial Development Corporation (MIDC) for implementing four SEZs in the state through the Public-Private-Partnership model. Of the four SEZs, three would be product specific and one a multi-product zone. The multi-product SEZ would come up at Amravati. IL&FS would be developing the agro-processing SEZ in Latur, SEZ for textiles near Nagpur where companies like Indo-Rama, Morarjee Mills, Fab Worth and Wool Worth are functional, specialized SEZ on pharmaceuticals has been proposed at Nanded. Economic Times (7 Feb 07)

Himatsingka plans to invest Rs 400 Cr in SEZ.

Textile design and manufacturing firm Himatsingka Seide plans to invest Rs 400 crore in setting up an integrated bed linen manufacturing facility at the Special Economic Zone (SEZ) in Hassan, Karnataka. Economic Times (29 Jan 07)

Assam Company with Gujarat State Petroleum Corporation (GSPC) plans to set up Rs 2,000-crore hydrocarbon SEZ in Gujarat. GSPC-Assam Co jointly would invite the likes of Geosis, Schlumberger and BJ to participate in the proposed hydrocarbon SEZ. Economic Times

Of the 150 SEZs approved by the board of approval (BoA) of the Union commerce ministry, nine SEZ are from Gujarat alone. Six SEZs, which had been given 'in principle' approval earlier, were given a formal approval by the BoA. The six include the Dahej SEZ, to be set up by the Gujarat Industries Development Corporation (GIDC), the Jamnagar SEZ to be set up by the Reliance Industries and the Mundra SEZ to be development by Adanis. Two others were given a final nod — the jewellery park in Surat and a pharma SEZ to be set up by Zydus Cadila in Ahmedabad. The existing apparel park in Sachin near Surat, run by the Diamond and Gems Development Corporation, was allowed to extend its area by 50 per cent and turn into a multi-product SEZ

MAN to set up US plant, Indore SEZ 

Bhartiya International plans leather SEZ in AP

New Delhi based Bharatiya International Ltd plans to set up a leather products SEZ in Nellore district Andhra Pradesh. Bharatiya International will set up 10 units of its own in the SEZ, apart from other leather manufacturers who have expressed interest in the setting up a facility in the SEZ.  Bhartiya International will commence construction within six months from the date of handing over the land and the approval for setting up an SEZ. Economic Times (18 Jan 07)

JB Chemicals to set up Pharma SEZ in Gujarat

JB Chemicals & Pharmaceuticals plans to develop and construct a pharmaceutical sector specific SEZ at Panoli, Gujarat. The company plans to set up the said SEZ for manufacturing of pharmaceutical finished formulations, APIs and their intermediates and contract manufacturing with an estimated investment on infrastructure of about Rs 115 crore.  EconomicTimes (17 Jan 07)

The SEZ mania is likely to see 10 SEZ’s for IT/ITeS in Pune alone receiving approvals. IT and ITeS companies have committed to about 5 lakh sq ft in SEZs and about 6.4 lakh sq ft within Software Technology Projects of India (STPI) in 2007. IT and ITeS sectors accounted for 90% of the total space absorption in Pune. Moreover, the state has the highest number of approved SEZs at 72 and the state could touch the 100-mark- Economic Times- (15 Jan 07)

ESSAR to invest Rs 10,500 cr in Hazira SEZs

The Essar group is planning to invest Rs 10,500 crore in a SEZ at Hazira, augment steel manufacturing capacity to nine million tonne and expand its refinery at Vadinar. The group has been approached by major automobile groups like Nissan and component manufacturers like Manineto to set up facilities at the Hazira SEZ.-Economic Times (12 Jan 07)

Political views on SEZ  

The UPA government has already set the ball rolling for SEZ. Most of the political parties in the country are positive towards SEZ's. However every party has its own version and differ on some issues, which may be sorted out soon. One of the main issue is related to land acquisition  Main apposition party in centre BJP, is in principle in favour of SEZ and hopes that it will lead to growth in GDP of the country, however BJP is not in favour of acquisition of fertile land for SEZs. Left parties are in favour of SEZ's with some modification and issues to be addressed such as land only on lease  to developer on BOT basis, rehabilitation of displaced farmers and others, discourage acquisition of agricultural land, regulation of land use within SEZ, housing facility to workers in SEZs, modification is tax benefits. Despite difference in  political views Board of Approval  (BOA) is in full swing doing its work as per SEZ Act and rules.(20-10-06)