Once an SEZ, always an SEZ!
HARSIMRAN SINGH & ARUN S
NEW DELHI, SEPT 20: SEZ status, if given to a territory of land in India, cannot be denotified, according to the current SEZ Act. If an SEZ fails after five years in operation, the land gets locked and cannot be put to any other (housing or institutional) use.
“The current provisions in the SEZ Act provide that in case a developer has difficulty in making profits, or is unable to make his project viable, then the government can interfere. A last opportunity can be given to the developer to turn around failure, for which an administrator will be appointed to find another developer,” says LB Singhal, director-general, Export Promotion Council for EOUs and SEZs.
“The provisions have been designed so that if the developer wants to de-bond the SEZ units that are profitable, or are interested in continuing, the units shall not suffer. That is why the SEZ Act specifies that once an SEZ is notified, it cannot be denotified,” Mr Singhal adds.
According to experts, a possible exit option is to relocate a profitable unit to another SEZ, while keeping its status intact. “But this will also not be easy as relocating huge plant and machinery is difficult in a multi-product SEZ. That is why the denotification is not allowed,” says an expert.
Some experts, however, feel that very few of the 150 SEZs approved so far will fail. “Most projects will be viable, as the developer can make money out of the social infrastructure he builds in the non-processing area, which in most cases is 65%. But in unforeseen circumstances, like an IT bust or some sector doing badly globally, the government should consider allowing either the relocation of the SEZ or changing the type of SEZ,” says Ernst & Young partner Ajit Krishnan.
http://www.financialexpress.com/fe_full_story.php?content_id=140993
NEW DELHI, SEPT 20: SEZ status, if given to a territory of land in India, cannot be denotified, according to the current SEZ Act. If an SEZ fails after five years in operation, the land gets locked and cannot be put to any other (housing or institutional) use.
“The current provisions in the SEZ Act provide that in case a developer has difficulty in making profits, or is unable to make his project viable, then the government can interfere. A last opportunity can be given to the developer to turn around failure, for which an administrator will be appointed to find another developer,” says LB Singhal, director-general, Export Promotion Council for EOUs and SEZs.
“The provisions have been designed so that if the developer wants to de-bond the SEZ units that are profitable, or are interested in continuing, the units shall not suffer. That is why the SEZ Act specifies that once an SEZ is notified, it cannot be denotified,” Mr Singhal adds.
According to experts, a possible exit option is to relocate a profitable unit to another SEZ, while keeping its status intact. “But this will also not be easy as relocating huge plant and machinery is difficult in a multi-product SEZ. That is why the denotification is not allowed,” says an expert.
Some experts, however, feel that very few of the 150 SEZs approved so far will fail. “Most projects will be viable, as the developer can make money out of the social infrastructure he builds in the non-processing area, which in most cases is 65%. But in unforeseen circumstances, like an IT bust or some sector doing badly globally, the government should consider allowing either the relocation of the SEZ or changing the type of SEZ,” says Ernst & Young partner Ajit Krishnan.
http://www.financialexpress.com/fe_full_story.php?content_id=140993
posted by Sudarshan Rodriguez at 12:52 PM
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