Thursday, November 30, 2006

Two nations, two SEZs, two tales


K. Subramanian

Where there is little in common

--------------------------------------------------------------------------------
"Imitation may be the best form of flattery, but imitating China's SEZs,
set up in a socio-political-economic environment very different from
India's, is not necessarily the best way to go forward."
--------------------------------------------------------------------------------

A tectonic divide has been created in the country by the government's
policy on Special Economic Zones. It runs across political parties,
economists, civil activists and even ministries.

It was the brainchild of the late Murasoli Maran, who was impressed by
what he saw in Guangdong during his visit to China and decided, on his
return, to put it in the Exim Policy 2000.

It took five years for the SEZs Act of 2005 to take shape and a few more
months for the Rules to be framed. Then came the flood of applications
seeking approvals for SEZs across the country. States vie with one
another to set up SEZs and large industrial houses wear approvals as
badges of honour.

"Early birds" began to acquire land from hapless farmers at throwaway
prices in cahoots with local authorities. The surge in land `deals'
disturbed public opinion and created fear among economists over the
adverse impact on agriculture, in particular food security.

Chinese vision of SEZs

What is missed in the debate is the vision of SEZs the Chinese had when
they embarked on the strategy in the late 1970s, and its relevance for
India. It seems to be an attempt to cut-and-paste a stereotyped version
of China's SEZs on Indian policy. Unfortunately, China's policy was not
etched in stone.

The historic decision on economic reform and opening was taken in 1978
at the 11th Communist Party meeting and SEZs flowed from it. Four SEZs
were set up in 1980: Three in Shenzhen, Zhuai and Shantou in Guangdong
Province, and the fourth at Xiamen in Fujian Province. Significantly,
these bordered Hong Kong or were across Taiwan and Macao having close
links with Chinese communities there and commercial networks.

Advocates of the policy led by Deng Xiaoping stressed its `experimental'
nature and its role in developing state capitalism, which was viewed as
a precondition for socialist modernisation. Hardcore socialists warned
of the adverse impact of an `open door' policy, especially erosion of
socialist relations of production.

The sceptics acquiesced when a longer-term strategy was unveiled by the
Party high command.

Long-term strategy

It synthesised three elements. The first was that having regard to the
record of political upheavals and uncertainty in China, foreigners would
not invest in major cities. The second was the fear, rather a concession
to hard-core dissenters, that economic and political risks would be
higher if major economic centres, which had been sheltered for decades,
were exposed suddenly to foreign investment. Finally, the historical
mission of China to reclaim sovereignty of Hong Kong, Taiwan and Macao
and integrate them with the mainland.

When Deng commenced the experiment in the late 1970s, he declared that
he had no road map. He was tentative, hesitant and would move
cautiously, "like crossing the river by feeling the stones under the
feet." The locations of the SEZs were chosen with thought. They were on
the southern coast and linked to Chinese territories and community
networks. They had no record of industry or infrastructure and were
thinly populated. They were chosen to reduce the risk of political and
economic fallout with the intention of abandoning them if they were
unsuccessful and extending them to others if successful.

Chequered record

The SEZs had a long and chequered record in China's development. Sadly,
there are several myths attached to them. India's model is influenced by
these myths. It did lean on the market but was not driven by it. The
SEZs did not succeed in a decentralised manner but required regular
monitoring and refurbishing by the Chinese government.

In the initial years, from the early to mid-1980s, the record of SEZs
was poor. It was no doubt the transition stage. They failed to step up
exports or attract foreign direct investment and technology. Low-value
items were produced. There were bribes and real-estate scandals. Deng
was on the defensive.

In 1984, Beijing reoriented its reform policy and designated 14 coastal
cities and extended SEZ preferences to what were called `open regions.'

This led to a shift in FDI flows away from the SEZs. By the end of the
1980s and the early 1990s, Beijing extended the `open regions' to the
`three deltas' — the Pearl River Delta, the Minnan Delta and the Yangzi
River Delta, the Hainan province and the Pudong area in Shanghai.

Pudong was considered an "SEZ among SEZs." Open areas reached from south
to north all along the coast. The much-publicised Deng's visit to the
Southern provinces in 1992 was another landmark and led to radical
opening of new areas and sectors.

Opening up of China

When a very large part of China was opened up, the relative importance
of the SEZs declined. No doubt, this vindicated Deng's vision of
treating SEZs as `experimental' and extending them to other areas
gradually.

However, as later developments would show, the Chinese were moving away
from the SEZs. They were concerned about rising income disparities and
lack of regional imbalances. They are considering a new law to level the
field between the foreign and domestic firms and to increase
government's receipts.

Alongside the SEZs, the government set up smaller and more focused
economic and technological development zones (ETDZs) in other Southern
provinces and in the inland and western region. Following public demand,
there followed high-tech zones, science and technology parks, incubation
centres, industrial parks, etc.

Though there was abuse and mushrooming and overlap of these facilities,
they were funded from public sources and contributed to higher
production and exports. When the SEZs were marginalised, there were
other zones, some of them more focused and larger, which could take over
the role.

In India, it is doubtful whether the current policy would lead to
similar support structures, especially as the zones are privately
funded. China's SEZs were based on exports and after initial delays they
did perform. There were global factors, which contributed to their
stellar role.

The most important was the presence of overseas Chinese with their
financing and trading networks. They could shift production from Hong
Kong and Taiwan and also send large amounts of capital to finance exports.

The other wave flowed from the multinational corporations' strategies to
relocate labour-intensive segments of manufacturing (especially
electronics) in low-wage areas.

The last was the booming American economy and the New China Policy,
which allowed open access to the US market. These have lost their
relevance since . China's integration with Hong Kong and Macao is
complete. In fact, the SEZ strategy contributed to it greatly. The
multinational production strategy is no longer confined to any country
in Asia or to any commodity. Now the corporations are able to play one
country against another and no nation, except perhaps China, has special
advantages.

The US economy is sluggish and is no longer taken as the engine of
growth. China itself is reshaping its strategy and looking more inwards
to domestic demand to sustain its development. Thus, if India hopes to
gain any advantage through SEZs for exports, it is chimerical.

It is tale of two SEZs that have little in common. As Prof T.N.
Srinvasan of Yale University remarked, "Imitation may be the best form
of flattery, but imitating China's SEZs, that were set up in a
socio-political-economic environment very different from India's, is not
necessarily the best way to go forward." (Economic Performance and
Reforms: First Year of UPA Government, May 26, 2005.)

(The author, a former Finance Ministry official, has extensive
experience in international, financial and trade issues.)
http://www.thehindubusinessline.com/2006/11/30/stories/2006113000440800.htm

Unitech to raise Rs 3,100 cr, to set up IT SEZ

TIMES NEWS NETWORK[ WEDNESDAY, NOVEMBER 29, 2006 10:30:38 PM]

KOLKATA: West Bengal appears to be a hot investment destination for
Delhi-based real estate major, Unitech Ltd. The company, which on
Wednesday announced plans to raise £360 million (Rs 3,100 crore), has
decided to set up an IT SEZ (special economic zone) in the state.

A major slice of the funds will also be used for developing four IT SEZs
and an IT Park in the National Capital Region (NCR). When contacted,
Writers’ Buildings sources told ET, “Unitech’s proposed IT SEZ will come
up in Rajarhat for which it has applied for 50 acres. It also plans to
create an additional 4.5 million sq ft of IT workspace in the state.”

However, the company remained tightlipped about its proposed IT
investments in West Bengal. When contacted, a Unitech source said “we
cannot comment on any investment plans as it is our silent period”.

At present, Unitech is setting up the Uniworld City, a residential
complex over 100 acres at New Town along with joint venture partner,
Universal Success of Indonesia. The Rs 3,000 crore real estate venture
has been designed by RMJM, UK-based architecture and landscaping firm.

The real estate major is also involved in major infrastructure
development in the state. It has joined hands with the Indonesia’s Salim
Group to develop a 10,000 acre chemical SEZ and a 12,500 acre
multi-product SEZ in the state. Unitech, Salim and Universal Success
have floated a new company-New Kolkata International Development Pvt Ltd
- to implement these projects.

New Kolkata International Development is setting up an eastern highway
link which will be a four-lane expressway between Barasat Bypass and
Raichak. The other infrastructure projects Raichak-Kukrahati bridge and
Haldia-Nandigram bridge.

On Wednesday, Unitech announced its plan to float a new real estate
investment firm, Unitech Corporate Parks Plc, in the Isle of Man and
plans to list it on the London Stock Exchange’s Alternative Investment
Market (AIM) with an institutional placement of its shares.

Unitech Corporate Parks which intends to invest in the Indian commercial
real estate sector, said in a regulatory filing that the offer size is
expected to be about £360 million ($700 million).

http://economictimes.indiatimes.com/articleshow/641552.cms

Ispat plans to set up engineering SEZs

TIMES NEWS NETWORK[ THURSDAY, NOVEMBER 30, 2006 01:29:59 AM]

NEW DELHI: Ispat Group is planning to set up the first specialised
engineering and metallurgical SEZs in the country. The group already has
interests in steel, mining, textile and power.

Ispat Industries MD Vinod Mittal told ET: “We are looking at developing
a specialised metal-related SEZ in Maharashtra. We see an opportunity in
this segment which is used for making various automobile products.” The
SEZ will try to attract investments from auto and auto component
companies among others.

Though he did not spell out details of the project, it is learnt that
the group is looking at developing the SEZ over an area of about 3,000
acres which would be able to absorb investment worth Rs 3,000 crore.

The SEZ will tap into the big opportunity emerging in the automobile
industry in the Mumbai-Pune belt. In recent times, many global
automobile companies have announced plans of setting up greenfield units
or ramping up existing operations.

This has thrown up opportunities for steel companies in terms of
increased demand for steel products used for making intermediate
products including components.

Ispat is planning this diversification along with a brownfield expansion
of its steel
manufacturing business. The estimated investments for the expansion of
steel capacity is pegged at Rs 2,500 crore. The company is looking at
various options of funding the investment plan.

The brownfield expansion programme would be completed by 2008. This
would increase the capacity from the existing 3.6-mn tonnes to 5.4-mn
tonnes at the Dolvi plant. Ispat Industries, the flagship company of the
group also has a unit at Kalmeshwar where it manufactures cold rolled
steel.

http://economictimes.indiatimes.com/articleshow/644399.cms

Wednesday, November 29, 2006

Tidco to set up SEZ for auto parts

KAVITHA VENKATRAMAN
Posted online: Wednesday, November 29, 2006 at 0135 hours IST

CHENNAI, NOV 28: Tamil Nadu Industrial Development Corporation Ltd
(Tidco) will soon join hands with a well-known entrepreneur to set up an
auto component special economic zone (SEZ). The sector specific SEZ will
come up in about 2,000 acres of land with an investment of Rs 400 crore.
According to a government official, “Auto companies in the US and
Europe, to keep their prices at reasonable levels, have started
outsourcing auto component manufacturing to India. They will only do the
assembling at their country. An auto entrepreneur, to give leverage to
this outsourcing wave in the automobile industry, has come up with the
idea of setting up a project exclusively for the auto industry. The auto
entrepreneur is scouting for 2,000 acres of land to house the project.
Application has been filed with board of approvals, ministry of commerce
for obtaining SEZ status for the project”.

The entrepreneur has approached Tidco to be the local partner. The
government agency will take part in the project with minimum investment.
Tidco will pick up anywhere between 2% and 11% stake in the equity of
the project. The project will call for an investment of about Rs 20 lakh
per acre. The debt-equity ratio of the project could be 3:1 or 2.5:1.5,
which is yet to be finalised.

The idea behind Tidcopicking up stake in the huge project, they said, is
basically to focus on large projects. The state agency has decided to
invest in big projects instead of investing in many small projects. The
agency has about 10 SEZs at various stages of implementation including
Hosur, Perambalur, Reliance ADAG, Ascendas, Nanguneri and Ennore SEZ. It
is also planning for two more SEZs in the state, one in Coimbatore and
another in the outskirts of Chennai.

http://www.financialexpress.com/fe_full_story.php?content_id=147559

Tuesday, November 28, 2006

No break on SEZ express, says Nath


WRITANKAR MUKHERJEE

TIMES NEWS NETWORK[ SATURDAY, NOVEMBER 25, 2006 08:46:28 PM]

KOLKATA: The finance ministry may have voiced apprehensions over
estimated revenue losses exceeding Rs 1 lakh crore by 2009-10 on account
of tax holidays to special economic zones (SEZs).

But union commerce and industry minister Kamal Nath is unwilling to buy
the argument. On the contrary, he stressed "the governmment would press
ahead with plans to develop SEZs across the country, especially since
the comprehensive SEZ Act has been passed".

"This is just a point of view to look into the matter. The government
will go not refrain from developing SEZs across the country. The finance
ministry should have pointed out these issues earlier.

Now that we have passed a comprehensive SEZ Act, we will continue with
our plans to develop SEZs," said Mr Nath. He was speaking to newsmen on
the sidelines of the 33rd annual awards ceremony of Gem & Jewellery
Export Promotion Council here on Saturday.

Nevertheless, Mr Nath, clarified that "there was real no dispute between
the commerce and finance ministries" on the issue of developing SEZs.

Be that as it may, the minister of state for finance, Mr S S
Palanimanickam, had informed Lok Sabha on Friday that of the total
estimated revenue losses of Rs 1,02,621 crore between 2006-07 to 2009-10
due to SEZs, the loss on account of direct taxes would be about Rs
53,740 crore and indirect tax at Rs 48,881 crore. It is expected that
300 SEZs will come up between 2006-07 and 2009-10.

Mr Nath also complimented West Bengal's SEZ model saying "it would
generate more employment opportunities". Earlier, the minister indicated
the Centre plans to sanction several SEZs for the gem and jewellery sector.

"The sector also needs to draw up a comprehensive strategy in areas like
design, branding and working condition of artisans to achieve
competitive advantage in the global market. It is only then that we can
achieve annual export revenues of $20 billion from the present $17
billion from this sector," Mr Nath said.

India's share of global trade in gems and jewellery is tiny 3.5% and
exports were at $9.6 billion during April-October 2006.


http://economictimes.indiatimes.com/articleshow/573924.cms

States seek flexible labour laws for SEZs

ARUN S
Posted online: Tuesday, November 28, 2006 at 0208 hours IST

NEW DELHI, NOV 27: The government on Monday said there had been an
increasing demand from state governments to have flexible labour laws
for designated areas.
Speaking at the CII-WEF India Economic Summit, commerce and industry
minister Kamal Nath said, “They (some chief ministers) have told me to
leave it (labour reforms in such areas) to them. I think, it (such
demands from states) is only going to snowball more”.

Currently, labour laws are also applicable to designated areas like
Special Economic Zones (SEZs).

According to the SEZ policy, states can delegate the power of the labour
commissioner to the development commissioner of SEZ and declare the zone
a public utility.

But labour is a subject under the concurrent list of the Constitution of
India. Which means states have certain powers to allow some flexibility
in such laws through amendments. Currently, there are around 40 laws
dealing with labour issues - the main ones being Industrial Disputes
Act, 1947 and Contract Labour (Regulation and Abolition) Act, 1970.

Although the government initially wanted to allow flexible labour laws
in SEZs, due to stiff opposition from the Left parties, it had to take
off such a provision in the final Act. On the ramifications of such
labour policies, Supreme Court lawyer Prashant Bhushan said, “But the
government is surreptitiously trying to bring in labour reforms through
the SEZ Act saying such policies will bring in more domestic and foreign
investment.

This will be a reality once most of the industries shift to SEZs to gain
tax advantages. Once such reforms are carried out, companies will be
able to hire and fire employees easily. Besides, employees will also not
be able to strike work in protest.”

CPI(M) leader Nilotpal Basu said, “Even under the SEZ Act, states cannot
claim exemption from labour laws of the country and also cannot bring in
changes according to their interests in contravention of existing labour
laws.”

But some states like Maharashtra, Gujarat and Madhya Pradesh are
understood to have been pitching for flexible labour laws in SEZs to get
big-ticket investments. One of the reasons for SEZs being a big success
story in China is the country’s flexible labour laws.

http://www.financialexpress.com/fe_full_story.php?content_id=147487

Finmin figure of Rs 100,000-cr loss due to SEZ sops is exaggerated'



TIMES NEWS NETWORK[ TUESDAY, NOVEMBER 28, 2006 03:05:21 AM]
 
The Issue of the “revenue (to be) foregone” by the government due to the tax concessions for the special economic zones (SEZs) seems to be too intense to be settled under duress. Despite the Group of Ministers-brokered deal of compromise with the commerce ministry, which is apparently bullish on SEZs, the finance ministry is still haggling over what it sees as the SEZs’ adverse impact on the government finances.

It recently said in Parliament the revenue loss on SEZs in the next five years would be Rs 100,000 crore. North Block would also like to keep alive the debate on whether the SEZ developers’ should have tax relief on sale of urban infrastructure in SEZ to anyone other than the SEZ units.

PricewaterhouseCoopers executive director Vivek Mehra has dwelt upon the subject. Speaking to KG Narendranath, he refutes the MoF estimate which is ‘based on incorrect assumptions of tax.’ Taking the MoF estimate of fresh SEZ investment of Rs 360,000 crore during 2005-2010 for granted, Mehra says in that case, the revenue loss attributable to the various forms of tax relief for SEZs would be just Rs 33,000 crore.

This, he says, would be more than offset by the additional tax revenue of Rs 148,350 crore, on account of the additional economic activity worth Rs 845,160 crore due to the SEZ sales in the export and domestic markets. Excerpts:

One contention is SEZs would lead to unfair enrichment of a few and deprivation of the rural people of agricultural land. This, it is argued, would worsen rural poverty and catalyse undesirable migration of unskilled labour to the urban areas.

The growth of Indian economy, despite the recent strides, has occurred haphazardly. The services sector, driven mainly by IT and IT-enabled services, would hardly suffice to offer employment to the unskilled and semi-skilled from the rural India, where two-third of India still lives. About 71 million people are being added to the working age population every year, and their employment must come mainly from manufacturing, given the constraints of agriculture.

Even as commercial spaces are being built with gusto, living and working spaces remain grossly inadequate. India cannot wait. A large number of new factories along with working and living spaces have to be built at an unprecedented scale and in a shorter period of time than ever before.

 
The government, as it has proven, cannot create these facilities out of its own resources in an efficient manner. That is where the private sector has a role, and this is being facilitated by the SEZ policy. SEZs are going to be the platform for spending money in development of areas.

Of the 237 formal approvals for SEZs, 61% are for IT and IT-enables services There are going to have a tiny size, as compared to the mega SEZs being developed in China and the US. Multi-product SEZs, which can contribute substantially for the kind of infrastructure development you speak of, have a share of 4% in the formal approvals.

The minimum size of an IT SEZ is just 10 hectares with a minimum 50% built-up processing area. In comparison, multi-product SEZs will have a minimum size of 1,000 hectares and at least 35% built-up processing area. Which makes it clear that multi-product SEZs will have a larger role in the setting up of office and living spaces. But the reality is that it will take at least 3-5 years for any of these proposed big zones to start operations.

The developmental and job creation activities cannot be put in abeyance since the multi-product zones come up. Even the smaller IT, gems and jewellery, biotech SEZs and various other sector-specific SEZs which have a stipulated minimum size of 100 hectares have a contributory role in the whole plan. Even a dispersed model like the STPs have proven to be successful.Your take on the finance ministry stand that the central exchequer will suffer a revenue loss of Rs 100,000 crore during 2005-10 due to tax sops to SEZs

To make this estimate, the ministry assumes the SEZ investments in the period would be Rs 360,000 crore. Earlier, the ministry had estimated the notional revenue loss at Rs 1,75,847 crore, pegging the revenue foregone on raw materials used for exports from SEZs at Rs 77,792 crore. Since tax incurred on inputs used for export production is anyway refundable under various export promotion scheme, this loss of Rs 7,792 crore is totally fictitious. The ministry says the direct tax loss would be Rs 55,531 crore.

This again is exaggerated, as EoUs, STPs, etc are anyway eligible for exemption till March 31 2009. The loss, on account of SEZs would be limited to that during 09-10, which would be just Rs 22,913 crore. The ministry has computed indirect tax loss on SEZs at 10% customs duty and 16% CVD which is also an over-estimate. EoUs and STPs are allowed to import capital goods at nil duty. Moreover, for exports from DTA, there is concessional 5% customs duty and nil CVD under the EPCG scheme. I have reckoned the average customs duty to be around 3%, which revises the revenue loss down to Rs 10,152 crore. The total loss would thus be Rs 33,065 crore.

On the other hand, the additional economic activity due to exports and domestic sales of SEZs would be Rs 845,160 crore. This, assuming the tax-GDP ratio at 10.4%, income tax rate at 33.6% and indirect taxes at 27.6% would enable the centre to earn an additional Rs 148,352 crore as tax revenue. So, the SEZs would add to the Centre’s tax revenue.

Again, the revenue department is of the view that the tax benefits for the urban infrastructure in the SEZs should be linked to SEZ units’ actual use of the facilities. Norms for notifying the authorised operations by the developer have been notified.

We will have to make the zones viable. It is going to be a long-haul. In the process, there could be a few who would extract undeserved gains. But our priority should be to facilitate the setting up of these zones in the larger interest of the economy and the unemployed. Micro-management like the one the finance ministry is reportedly mulling over, would make things too bureaucratic and cumbersome. This is not what we want.
http://economictimes.indiatimes.com/articleshow/msid-609974,curpg-2.cms

 

Monday, November 27, 2006

Dr Reddy's to set up SEZs


Monday November 27 2006 21:25 IST
HYDERABAD: The pharma industry in the State is set for a big boost as
the pharma major, Dr Reddy's Laboratories, is gearing up to set two
major Special Economic Zones following recent approval from the Centre.

The proposed SEZs will be the first of their kind in Andhra Pradesh and
are expected to fuel further growth in the pharma sector, which is
already in a vibrant state, according to industry pundits.

“We will set up two SEZs in the State. In Hyderabad, the SEZ will be for
formulations while in Srikakulaum, it will be for Active Pharmaceutical
ingredients (APIs),” a senior official of the company told this
website's newspaper.

The SEZ for formulations will be the largest SEZ ever intended for the
pharma industry in the State spanning across over 250 acres.

As the State has already made a mark in formulations, the SEZ, when
completed, is sure to cement the lead the State already enjoys in the
sector.

“By any standard, this is going to be a very large SEZ. We already have
some land at Bahadurpally near Hyderabad and on the lookout for
acquiring more land,” the official told.

The initial investment will be over 600 crore but the total investment
in the SEZ could be well above Rs 1,200 crore.

The company currently is in the process of hammering out other modalities.

The key issues like partnerships and the number of units to be set up
are in the discussion stage, according to sources.

Dr Reddy's will develop the second SEZ, earmarked exclusively for Active
Pharmaceutical Ingredients (APIs) in Srikakulam where it operates a
facility.

According to analysts, the SEZ for APIs will factor in long-term growth.

Needless to say, this will augur well for the State. According to Ernst
& Young's Health Quotient - 2006, vertical integration into APIs is
gathering stream and all major Indian companies would be driven by this
factor.

Already, all major companies including Dr Reddy's are integrated with
strong API cash flows and USFDA approved assets.

Further, in Andhra Pradesh, the SEZ route has been adopted largely for
developing IT and ITeS sectors. The biotech sector in the State had seen
Rs 1000 crore investment up to 2002.

Even going by the same pace, around Rs 6,000 crore investments is likely
in the next five years, according to sources in the Department of
Industries.

With the proposed SEZs in the State, this may go up significantly,
according to sources in the Department of Industries.
http://www.newindpress.com/NewsItems.asp?ID=IEU20061127110407&Title=Hyderabad&rLink=0

Sunday, November 26, 2006

Nath invites SEZ funding


[ 24 Nov, 2006 0111hrs ISTTIMES NEWS NETWORK ]


RSS Feeds| SMS NEWS to 8888 for latest updates

MUMBAI: Commerce minister Kamal Nath wants Chinese money to flow into
India's Special Economic Zones (SEZs). Responding to a query on the
government's position on letting unfettered access to Chinese
investments in the country, he said, "We will get Chinese companies to
invest in SEZs."

He was speaking on sidelines of a trade and investment summit that was
addressed by Chinese president Hu Jintao. By 2010, Nath said, India will
receive at least $5 billion in direct investments from China. He also
suggested that both countries should diversify the composition of their
trade baskets to encourage two-way trade.

Before that happens though, there are many contentious issues between
both countries that need to be resolved. Like, movement of people
between both countries. Very recently, Chinese technicians were denied
visas to work at an SEZ in Andhra Pradesh on security grounds.

The issue is also on the mind of Mukesh Ambani-controlled RIL which is
trying to bring in 1,800 Chinese workers to lay pipeline from the KG
Basin on the Eastern coast to Dadri in the north and Jamnagar in the west.
The security issue has also raised its head in other sectors like
telecom and ports. Two Chinese companies along with a Mumbai-based
bidder that had won the bid to develop the Vizhinjam deep water
container terminal in Kerala was denied security clearances.

While the Kerala government was hoping the Jintao's visit would clear
the air, no clarity has emerged from both sides on the issue yet. A
Kerala state official said chief minister VS Achuthananthan alongwith
the port and law minister, M VijayaKumar will meet Prime Minister
Manmohan Singh on Vizhinjam issue on November 29.

Nath and his Chinese counterpart Bo Xilai called for "an early and
substantive resumption and conclusion of the Doha round of
multi-laterial trade negotiations."

Both the ministers observed that inflexible stances had led to the
suspension of the talks in July 2006. But now, proactive negotiations
must resume to ensure that success does not remain elusive.
http://timesofindia.indiatimes.com/NEWS/India_Business/Nath_invites_SEZ_funding/articleshow/msid-548369,curpg-2.cms

No break on SEZ express, says Nath


WRITANKAR MUKHERJEE

TIMES NEWS NETWORK[ SATURDAY, NOVEMBER 25, 2006 08:46:28 PM]

KOLKATA: The finance ministry may have voiced apprehensions over
estimated revenue losses exceeding Rs 1 lakh crore by 2009-10 on account
of tax holidays to special economic zones (SEZs).

But union commerce and industry minister Kamal Nath is unwilling to buy
the argument. On the contrary, he stressed "the governmment would press
ahead with plans to develop SEZs across the country, especially since
the comprehensive SEZ Act has been passed".

"This is just a point of view to look into the matter. The government
will go not refrain from developing SEZs across the country. The finance
ministry should have pointed out these issues earlier.

Now that we have passed a comprehensive SEZ Act, we will continue with
our plans to develop SEZs," said Mr Nath. He was speaking to newsmen on
the sidelines of the 33rd annual awards ceremony of Gem & Jewellery
Export Promotion Council here on Saturday.

Nevertheless, Mr Nath, clarified that "there was real no dispute between
the commerce and finance ministries" on the issue of developing SEZs.

Be that as it may, the minister of state for finance, Mr S S
Palanimanickam, had informed Lok Sabha on Friday that of the total
estimated revenue losses of Rs 1,02,621 crore between 2006-07 to 2009-10
due to SEZs, the loss on account of direct taxes would be about Rs
53,740 crore and indirect tax at Rs 48,881 crore. It is expected that
300 SEZs will come up between 2006-07 and 2009-10.

Mr Nath also complimented West Bengal's SEZ model saying "it would
generate more employment opportunities". Earlier, the minister indicated
the Centre plans to sanction several SEZs for the gem and jewellery sector.

"The sector also needs to draw up a comprehensive strategy in areas like
design, branding and working condition of artisans to achieve
competitive advantage in the global market. It is only then that we can
achieve annual export revenues of $20 billion from the present $17
billion from this sector," Mr Nath said.

India's share of global trade in gems and jewellery is tiny 3.5% and
exports were at $9.6 billion during April-October 2006.

http://economictimes.indiatimes.com/articleshow/573924.cms

Nath sore over finmin report on SEZs

INDRONIL ROYCHOWDHURY
Posted online: Sunday, November 26, 2006 at 0022 hours IST

KOLKATA, NOV 25: The rift between the commerce and finance ministries
over the issue of special economic zones continues to widen and be a
cause of serious concern.
Commerce and industry minsiter Kamal Nath on Saturday rubbished the
finance ministry’s report to Parliament that the tax holidays extended
to SEZs entailed great revenue loss.

. Minister of state for finance SS Palanimanickam had informed
Parliament on Friday that the tax holidays to SEZs will cause revenue
loss of Rs 102,621 crore during 2006-07 to 2009-10.

Of the estimated revenue loss, direct tax loss would be around Rs 53,740
crore and indirect loss would touch Rs 48,881 crore.

However, speaking on the sidelines of the 33rd annual award presentation
ceremony of the Gems and Jwellery Export Promotion Council, Nath told
reporters that there are concerns from various organisations and forums
about the revenue implication of the special economic zones. But all
these are merely a “point of view.

While revenue is the main concern of the finance ministry, employment
generation is the priority of the commerce & industry ministry.

“We have shifted our focus to employment generation. SEZs and
export-oriented units are now being considered important, due to their
potential in generating employment, over revenue or foreign exchange
earning,” Nath said.

But not all seem to be sharing Nath's enthusiasmon SEZs. For, the
Reserve Bank of India and the International Monetary Fund have expressed
concern that SEZs could aggravate the uneveness of development by
diverting resources from less developed areas. The RBI has also
increased the risk weightage on SEZs by 150%,thereby bringing it on a
par with real estates and commercial complexes.

Nath, however, told FE that the government is trying to justify the
revenue loss by putting in place a mechanism that would ensure that the
“SEZs establish forward and backward linkages.”

http://www.financialexpress.com/fe_full_story.php?content_id=147356

ICICI Bank may lend Rs 750 cr to White Field Paper's SEZ


Our Bureau

Rajahmundry , Nov. 23

The ICICI Bank's special economic zone division is considering a
long-term loan of Rs 750 crore to the special economic zone — White
Field Paper Mills Ltd — coming up at Kovvuru in West Godavari district.

According to Mr T. Srinivasa Rao, the Chairman of the company, it is the
first SEZ in the paper sector being set up in the country. The mill,
being set up at a cost of Rs 1,200 crore, will have the capacity to
produce 2 lakh tonnes per annum. The company has taken possession of 271
acres of land out of a total of 500 acres allotted to it.

Mr Rao said the machinery would cost Rs 900 crore, land and building Rs
100 crore, other fixed assets Rs 100 crore, and the rest would be used
as working capital and for technical know-how. The mill would begin
production in 2008.

He said the company had signed a memorandum of understanding with Elof
Hansson Group, Sweden, for supply of wood pulp. He expressed hope that
the ICICI would grant the loan and as an alternative the company was
also approaching the Hansson group for supplier's credit.

Mr Rao said the financial closure may be achieved by the end of the
year. The Elof Hansson group would supply pulp and also buy back the
finished product — high quality coated paper, special variety of
printing paper.

http://www.thehindubusinessline.com/2006/11/24/stories/2006112405190300.htm

AP working on aerospace SEZ, foundry park


Our Bureau

Applies to the Centre for clearance of proposal

Hyderabad , Nov. 23

Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC) is in
the process of setting up a special economic zone (SEZ) for aerospace
industries focussing on MRO (maintenance, repair and overhaul) near the
upcoming Greenfield International airport.

The State has applied to the Centre for clearance of the proposal as
many companies have evinced interest in locating such units in the
State. Land near Nadragul and Adabatla has been identified for the SEZ
and the APIIC, which is the nodal agency, may invest up to Rs 250 core
in the project, once the Centre's clearance is received. The matter is
slated to come up in the next meeting.

While the project will require about 500 acres, Mr Kota Harinarayana,
former Director of LCA project, will be the advisor for this SEZ.

Science city

Speaking at a meeting hosted by the small-scale industries (SSIs), the
Chief Minister, Dr YS Rajasekhara Reddy, said the State had plans to
establish a Science City about 100 km from Bangalore City in the
Anantapur district, which would be spread across a 1,000-acre area, and
a Foundry Park, at Lakdaram in Medak near Hyderabad.

It is estimated that there are about 1,000 SSIs which could contribute
to the automotive industry and the APIIC is in the process of
identifying about 200 acres for the Foundry Park and invest about Rs 100
crore. This would potentially help attract automotive companies to the
State, it is felt.

Earlier, handing over awards to some of the successful entrepreneurs in
the State, Dr Reddy said SSIs have contributed significantly to the
growth of several sectors in the State and have traditionally helped
generate employment.

SSIs need special care and support and that the State would do its best
to help them, both by providing necessary infrastructure and also bring
down power tariffs.

Already, the State has brought down power tariff to the industrial
consumers and plans to bring it down further from April 1, 2007, aimed
at providing an attractive investment climate, he said.

The State Industries and Commerce Secretary, Ms Y. Sreelakshmi, said the
State is working towards a cluster development approach for SSIs and is
close to finalising a marketing policy framework for SSIs.

http://www.thehindubusinessline.com/2006/11/24/stories/2006112401552100.htm

Plan to give SEZ status to proposed Food Tech Parks


Our Bureau


SEZ STATUS: The Minister for Food Processing Industries, Mr Subodh Kant
Sahai (right), with the Assocham President, Mr Anil K. Agarwal, at a
summit on Green Revolution - 11 Knowledge Agriculture, in the Capital on
Friday. - Ramesh Sharma

New Delhi , Nov. 24

The Ministry of Food Processing Industries has moved a comprehensive
proposal to give SEZ status to proposed mega Food Technology Parks with
a provision of 50 per cent produce for domestic consumption and
remaining for exports.

Announcing this at the `Summit on Food Processing', organised by
Assocham on Friday, the Minster of State for Food Processing Industries,
Mr Subodh Kant Sahai, said the proposal has been moved to the Group of
Ministers, Planning Commission and would also be shortly forwarded to
the Cabinet for its consideration.

The minimum and maximum land area prescribed for the parks is between 10
and 100 hectares with adequate refinancing facilities from Nabard with a
minimum Central allocation of Rs 1 lakh crore, said the Minister.

Mr Sahai added the Finance Ministry has also agreed to make the food
processing industry a zero excise tax-based industry by fiscal 2007-08
following recommendation from the Food Processing Ministry.

He added that in the last two and a half years, the excise taxation
rates have been brought down to eight per cent from 32 per cent and by
next fiscal, the taxation would be zero based with minimum possible
local levies in view of growing significance of this sector.

http://www.thehindubusinessline.com/2006/11/25/stories/2006112505790300.htm

SEZ tax sops to cost over Rs 1 lakh cr in 4-yr period'


Our Bureau

Revised figure is Rs 8,717 cr higher than the previous estimate

--------------------------------------------------------------------------------
`The generation of additional economic activity and employment would
offset the loss of tax revenues'
--------------------------------------------------------------------------------

New Delhi , Nov. 24

With more special economic zones (SEZs) getting Government approval, the
Finance Ministry has upped the estimated revenue loss from tax
concessions to such zones to over Rs 1 lakh crore for the four-year
period 2006-07 to 2009-10.

The revenue department has now estimated that revenue loss for this
period could be as high as Rs 1,02,621 crore. Of this, the loss on
direct taxes account is estimated to be Rs 53,740 crore and indirect tax
concessions are expected to generate additional losses to the tune of Rs
48,881 crore.

The latest loss estimates were provided to Parliament on Friday by the
Minister of State for Finance, Mr S.S. Palanimanickam, through a written
reply.

About six months ago, that is, May 2006, the Finance Ministry had said
that the estimated revenue loss on account of concessions extended to
SEZs would be in the region of Rs 93,904 crore. The revised figure is Rs
8,717 crore higher.

On the steps taken by the Government to make good the estimated revenue
loss, the Finance Ministry has said the Government was engaged in a
continuous process of improving compliance and augmenting revenue
collection.

"However, such initiatives are intended to collect the full amount of
tax due from the legally defined tax base. To the extent, tax
concessions to units in SEZs erode the legally defined tax base, the
revenue loss is permanent," Mr Palanimanickam said.

While the Finance Ministry has been highlighting the magnitude of
revenue loss to the exchequer from the tax concessions, the Commerce
Ministry, however, contends that there would be a positive gain in
revenue for the Government in the next five years. On their part, the
Left Parties have been urging the Government that the tax concessions
under the SEZ law should be revisited.

The Commerce Ministry is of the view that the generation of additional
economic activity and employment would more than offset the loss of tax
revenues due to the tax concessions given under the SEZ Act.

Senior officials of the Commerce Ministry had recently observed that an
additional direct employment of 80,000 would be created in the zones by
December this year. The indirect employment would be three times the
number of direct employment. By December 2007, over five lakh additional
jobs are likely to be created within the SEZs and 15 lakh jobs outside.

The Commerce Ministry has also estimated total investment to be around
$10 billion and additional employment in the construction phase to be
2.6 billion man-days by December 2007. Within five years, the total
investment is expected to be around $30 billion and additional
employment of 15 lakh to be created within the zones.

http://www.thehindubusinessline.com/2006/11/25/stories/2006112506280100.htm

Aerospace SEZ in Hyderabad proposed

Special Correspondent

Plan to establish Foundry Park in Medak district

HYDERABAD: A Rs. 250-crore Aerospace SEZ with focus on maintenance,
repair and overhauling (MRO) is proposed to be set up near the Hyderabad
International Airport. Andhra Pradesh Industrial Infrastructure
Corporation will be the nodal agency in promoting the SEZ on a 500-acre
site at Nadargul and Adibatla.

The State Government has already made an application for the SEZ to the
Centre, said B. P. Acharya, vice-chairman and managing director, APIIC.
He said that many big players in the aerospace field were interested in
the proposed SEZ on which Kota Harinarayana, former director, Light
Combat Aircraft project, is advising the Government.

The APIIC is also planning to create infrastructure with an investment
of Rs.100 crores for establishing a Foundry Park at Lakdaram in Medak
district as the Government feels that foundry units can serve as a
platform for establishing an automobile unit.

The announcements on the Aerospace SEZ and the Foundry Park were made by
Chief Minister Y. S. Rajasekhara Reddy at the `Small Scale Industries
Day-2006 celebrations" here on Thursday. He said that a Science City
would also be set up near Anantapur and declared that efforts would be
made to further reduce the power tariff for industries from April next.
Pointing out that a huge potential existed in garments and food
processing sectors, he urged entrepreneurs to set up clusters. Referring
to "resistance" from farmers to land acquisition, he said there was a
lot of land in Anantapur and advised industrialists to set up units there.

http://www.hindu.com/2006/11/24/stories/2006112407240600.htm

Wednesday, November 22, 2006

Serving ‘outsiders’ may trim SEZs’ tax sops limit


KG NARENDRANATH

TIMES NEWS NETWORK[ FRIDAY, NOVEMBER 17, 2006 01:01:14 AM]

NEW DELHI: The finance ministry has initiated a dialogue with the
commerce ministry to frame a new set of norms, prescribing that only
those non-processing activities which are based on the needs of SEZ
units will qualify for tax sops. If the proposed norms come into effect,
tax sops for SEZ developers would be commensurate to the use of urban
infrastructure by the SEZ units. Norms will be laid down to define the
needs of SEZ units.

This means that a developer won’t get excise and customs duty exemptions
for building urban infrastructure in these zones insofar as he intends
to offer the services to consumers outside the SEZ. Also, to compute the
developer’s income tax liability, the deduction won’t be permitted on
the income generated by offering such services to outsiders.

The revenue department feels developers should not be allowed to make
available facilities built for SEZ units to others for commercial gains
and still claim tax benefits. “The department feels that in the absence
of these checks, the SEZ policy could prove to be disastrous for the
real estate sector,” an official told ET.

The government has already notified the authorised non-processing
activities in SEZs. Non-processing area in multi-product SEZs can be up
to 65%, while for product-specific zones the upper limit is 50%.

“The revenue department now wants to define the extent of tax sops a
developer can get vis-a-vis the “needs” of the SEZ concerned. The
commerce ministry is, however, keen to dub the issue as a “closed
chapter”. “Why can’t the developer get tax sops for creation of the
infrastructure and its sale, too? This is anyway less expensive for the
government than building the infrastructure on its own,” said a commerce
ministry official. Finance ministry officials, however, said since a
major part of the SEZ land can be outside the processing areas, it is
imperative that the tax sops are restricted.

“We are in the process of preparing the norms for tax sops with regard
to non-processing areas,” a revenue department official told ET. It may
be noted that the RBI had virtually endorsed this view, when it
initially refused to grant infrastructure status to SEZs and advised
banks to treat exposure to SEZ projects at par with lending to
commercial real estate projects. The Left parties has also exhibited
similar sentiments.

Core facilities in the non-processing segments of SEZs include power
plants, sewage plants and roads , schools, hospitals, hotels, cinema
halls and shopping malls

http://economictimes.indiatimes.com/articleshow/461257.cms

SEZs to create 80,000 jobs: GovT

PTI[ FRIDAY, NOVEMBER 17, 2006 10:30:17 PM]

NEW DELHI: The Government on Friday said the Special Economic Zones
(SEZ) are expected to create 80,000 jobs in just nine months.

"Policy initiatives taken by the government in laying out the new policy
on SEZs would lead to creation of over 80,000 jobs," Commerce Secretary
G K Pillai said at a conference organised by PHDCCI here.

He said so far SEZs that have been cleared in 16 states would come up
over an area of 35,510 hectares.

Pillai said 35 per cent of the land area of a SEZ would be for setting
up processing facilities, while the rest would be utilised for
infrastructure and other facilities.

http://economictimes.indiatimes.com/articleshow/462776.cms

Revenue dept pitches for closure of export promotion schemes


DEEPSHIKHA SIKARWAR

TIMES NEWS NETWORK[ MONDAY, NOVEMBER 20, 2006 02:19:14 AM]

NEW DELHI: With special economic zones (SEZs) expected to create a
massive Rs 26,000 crore crater in government revenues in ’07-08, other
export promotion schemes should be prepared to bear the brunt in Budget
’07. The revenue department is likely to push for winding up of other
export promotion schemes.

Currently, the government has close to 11 export-incentive and promotion
schemes including SEZs.Finance minister P Chidambaram has already made
it clear that there was a need to review tax exemptions. Mr Chidambaram,
who has indicated evolving a moderate tax structure ahead of next
Budget, has made it contingent to slashing of sops.

In fact, parliamentarians, cutting across party lines, favoured pruning
of sops for SEZs at the meeting of consultative committee attached to
the finance ministry. While the revenue department subscribes to the
view that duties and taxes should not be exported, it wants the commerce
ministry to clear the maze. The plethora of export promotion schemes,
excluding SEZs, cost the exchequer a whopping Rs 34,430 crore in ’05-06.

Besides being a costly affair for the exchequer, having a large number
of export promotion schemes also poses problems in implementation,
increasing chances of misuse. With the revenue department holding this
view, it is likely that all the existing schemes may be rolled into one.
According to revenue department sources, for neutralising the duties, a
single scheme with more scientific criterion should be brought in place
to prevent any misuse as also to make the implementation easier.

Currently, the schemes aimed at promoting exports in various ways
include the duty entitlement passbook scheme, drawback, export promotion
capital goods scheme, duty-free import authorisation, advance licence,
export-oriented units, Software Technology Park of India and Vishesh
Krishi Upaj Yojana.

http://economictimes.indiatimes.com/articleshow/482208.cms

RIL, Birlas head for Vizag SEZ


SREEKALA G

TIMES NEWS NETWORK[ TUESDAY, NOVEMBER 21, 2006 02:24:15 AM]

HYDERABAD: The 9,200-acre SEZ project in Visakhapatnam is attracting
major industry players including Reliance Industries and Aditya Birla
Group. It is learnt that RIL is planning to set up a chemical fertiliser
plant while Birlas are zeroing in on a site for a rayon manufacturing
unit. Besides, Ludhiana-based Ralson Tyres is also planning to acquire
100 acres for setting up a facility.

“We are in talks with RIL and Aditya Birla Group for land allotment in
the SEZ. RIL is looking at acquiring 1,500 acres, while Aditya Birla
Group wants 250 acres,” said a senior government official. RIL’s plan is
to set up a gas-based fertiliser unit in the proposed site.

When contacted, an RIL spokesperson said the company would finalise its
business plans only after studying the chemical composition and
availability of the gas. “It is a proposal from the state government and
we have not taken any decision on setting up a plant,” he said. An
Aditya Birla Group spokesperson said the company would not like to
comment on projects, which are in the initial stages of negotiations.

The Vizag SEZ developer, the Andhra Pradesh Industrial Infrastructure
Corporation (APIIC), has already allocated land to Sri Lanka-based
Brandix, BARC, HPCL and Chennai-based WS Industries.

“WS Industries has acquired 50 acres for setting up a Rs 100-crore
insulator manufacturing facility. It is expected to be ready in a year,”
said the government official. Brandix has acquired 1,000 acres and has
lined up investment to the tune of Rs 600 crore. BARC will pump in Rs
1,000 crore for setting up its R&D centre spread over 2,800 acre while
HPCL, which has received 1,500 acre, would invest Rs 3,000 crore for a
petrochemical complex, it is learnt.

http://economictimes.indiatimes.com/articleshow/498212.cms

Social welfare? Some SEZs not bothered


AMITI SEN

TIMES NEWS NETWORK[ TUESDAY, NOVEMBER 21, 2006 02:28:27 AM]

CHENNAI: The controversy over possible land scams in special economic
zones (SEZs) notwithstanding, the government is now grappling with a
problem totally opposite in nature. A number of SEZ developers,
especially in the IT and ITeS sectors, are not showing any interest in
building residential accommodation and related infrastructure for their
workers. This could lead to serious logistical problems in the years to
come.

The trouble is that while the Centre has a legislation in place to check
the creation of excessive social infrastructure, there is no law making
it mandatory for developers to build houses and schools in SEZs.

The Nokia and Flextronics SEZs near Sriperumbudur started production
earlier this year and between them employ about 6,000 men and women. The
number of employees is expected to be about 20,000 in the next four
years. But, both the companies have no plans of providing houses,
schools or hospitals for their employees.

Nokia India operations director Jukka Lehtela, in-charge of the Nokia
Telecom SEZ in Sriperumbudur, is apprehensive that there might be a big
transportation problem in the future, but is clear that building houses
is not on the company's agenda. "We are into manufacturing of phones.
Building houses is not our forte," Mr Lehtela said.

He, however, is hopeful that either the government or private players
will do the needful. With a number of other SEZs coming up in this
stretch, Mr Lehtela fears that if something is not done about housing
soon, the entire highway stretch connecting Chennai with Sriperumbudur
will be jammed with buses transporting SEZ employees. The same
apprehensions are reflected in the neighbourhood Flextronics SEZ which
gained SEZ status in April this year. While it has already employed more
than 2,000 workers, it doesn't have any immediate plans of building
houses. "Let us see how things shape up in the years to come," said
Flextronics Technologies GM, India operations, Gururaj A.

Giving the entire issue a political touch, ETL Infrastructure Services
MD S Thiagarajan, who has developed an ITeS SEZ in Pallikaranai village
near Chennai, said, "There is so much controversy about the possible
misuse and land scam that I do not want to get into social
infrastructure. I am sure that private builders will find it lucrative
to build houses around our SEZ," he said.

The export promotion council for export-oriented units and SEZs, which
feels that there is a need for the government to step in and take some
action, has not yet taken up the issue in a big way with the commerce
department. “The commerce department is aware of the problem. It is yet
to be decided how it is to be dealt with," an official said.

http://economictimes.indiatimes.com/articleshow/498242.cms

TN SEZs facing infrastructure hurdle

ARUN S
Posted online: Wednesday, November 22, 2006 at 0041 hours IST

NEW DELHI, NOV 21: Tamil Nadu might have got a good share of Special
Economic Zones (SEZs), but the state is still struggling to provide
quality infrastructure in the areas leading to SEZs.
Roads leading to SEZs like Nokia, Flextronics, ETL are barely motorable.
On the other hand, all these sector-specific SEZs are hardly making any
effort to build social infrastructure like housing and other amenities.

Of the 237 formally approved SEZs across the country, 25 are from Tamil
Nadu. Among the 166 SEZs, which have got in-principle approvals, 12 are
from the state. Majority of these SEZs are situated in and around Chennai.

Said Jukka Lehtela, director, India operations, Nokia India Pvt Ltd, a
company developing the 85-hectare telecom and IT hardware SEZ: “When our
total number of employees hit the 20,000-mark soon, given the current
state of roads, one can see a 5 km-long queue of buses. The highway
cannot take that kind of a traffic. We want the government to start a
dedicated railway line to our SEZ. We are even willing to pay more than
the normal fare”. But on the social infrastructure inside the SEZ,
Lehtela said, “We would like others to develop that as it is not our
forte”.

Flextronics’ GM and director (India operations) A Gururaj, said: “This
area, housing Nokia and Flextronics SEZ, will soon become a telecom hub.
Besides, we will soon have over 5,000 employees. We will have to push
the government harder for better roads and railways”. Flextronics,
developing the 101.2 hectare SEZ, is also waiting for experts to handle
their social infrastructure.

About 45,000 people are expected to work in the 10.57 hectare IT/ITES
SEZ, being developed by ETL Infrastructure Services Ltd. But the SEZ is
situated at a site where there is large-scale dumping. The state
government officials, who have so far not done anything about it, said
they are looking at shifting the waste to four different sites. On the
social infrastructure, ETL said they would rather leave that to real
estate developers.

State government officials, however, said they were planning to complete
the IT corridor–a world-class six-lane road and a few other roads to
connect these SEZs.

http://www.financialexpress.com/fe_full_story.php?content_id=147024

150 acres leased for Formulations SEZ in AP


Our Bureau

Hyderabad , Nov. 19

Pharma majors - Aurobindo Pharma Ltd (APL) and Hetero Drugs Ltd have
come forward to be anchor tenants in the proposed Formulations SEZ at
Jadcherla in Mahboobnagar district of Andhra Pradesh.

The SEZ, approved recently by the Centre, will come up on a 250-acre
land, located about 35 kms from the upcoming International Airport, on
the Hyderabad-Bangalore national highway. APL and Hetero Drugs would set
up latest formulations facilities with an export orientation. The two
companies are expected to invest around Rs 200 crore. The employment
potential has been put at about 2,000.

ALLOTMENT LETTERS

The Chief Minister, Dr Y.S. Rajasekhara Reddy, formally handed over
allotment letters for a lease of 75 acres of land each to Mr K.
Nityananda Reddy, Managing Director of APL, and Mr B. Parthasaradhi
Reddy, Chairman and MD of Hetero Drugs, on Saturday.

The formulations SEZ at Jadcherla is also expected to attract other
leading formulations companies in the country.

With Hyderabad already a strong centre for pharma formulations and bulk
drug industry in the country, the State Government hopes that it will
gather momentum quickly.

The construction of work of the two units would begin in January 2007
and would be inaugurated in December, 2007 as per initial milestones.

The Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC),
has promoted the Formulations SEZ with an intention of consolidating the
State's position in the pharma sector.

http://www.thehindubusinessline.com/2006/11/20/stories/2006112004111500.htm

TN special economic zones get going


G. Srinivasan

--------------------------------------------------------------------------------
`Manufacturing corridor'
Flextronics Technologies will invest Rs 430 crore over a five-year period.
The total employment in Mahindra World City is 3,862 so far, and they
have generated Rs 337.52 crore in exports.
--------------------------------------------------------------------------------

Sriperumbudur , Nov. 20

The industrial profile of Tamil Nadu is getting transformed
unobtrusively but decisively by the first batch of newly sanctioned
Special Economic Zones, with world majors in telecom and information
technology segments, and reputed domestic manufacturers of auto
components and textiles pitching for space here.

A group of journalists from the Capital visiting the emerging
"manufacturing corridor" located some 50 km west of Chennai, saw Nokia
manufacturing plant set up at a cost of $150 million producing mobile
handsets and base station controllers.

Mr Jukka Lehtela, Director India Operations, said that Nokia has been
able to cross the milestone of manufacturing the 20 millionth `Made in
India' handset in a short span of 11 months. He said that Nokia was the
first equipment vendor to manufacture both devices and network
equipment, and export to South East Asian countries.

Nokia & Flextronics

Nokia already employees 3,500 people here, mostly women, in the
production of handsets and has tied up with six component suppliers,
including Salcomp, Apscomp, Foxconn, Perlos, Jabil and Laird in the
Nokia Industrial Park spread over 210.87 acres. The employment to be
generated by these units would be more than 15,000 in three years' time.

Mr Lehteka was full of praise for Chennai, given the city's large pool
of skilled resources and conducive business milieu, but also highlighted
the need to create transport and other infrastructure to leverage this
growth and to create manufacturing eco system.

Flextronics Technologies (India) Pvt Ltd, which has set up the
Flextronics SEZ here in 250 acres, would invest Rs 430 crore over a
five-year period by undertaking advanced electronics manufacturing
services (EMS) focused on delivering supply chain services to technology
companies.

The Director and GM of India operations of the Company, Mr A. Gururaj,
was gong-ho about the zone's potentials in mobile phones, set top boxes
for conditional access system (CAS) and base stations for
infrastructure. By co-locating manufacturing and logistics operations
onsite with strategic suppliers, the Flextronics SEZ would minimise
logistics costs throughout the supply chain and improve the
manufacturing cycle many times. He said the company completed the
construction work of the first phase early this month and would begin
commercial production next month.

Third SEZ

The third functioning SEZ is the Mahindra World City located on National
Highway 45 and just an-hour drive from Chennai city, being developed by
Mahindra Gesco Developers Ltd with a proposed investment of Rs 280 crore
out of which it had already invested Rs 236 crore. The Chief Operating
Officer, Ms Anita Arjundas, said three companies out of the 17 granted
permission are already working here and they include Infosys
Technologies Ltd, Nera Electronics (I) Pvt Ltd and Srinvasa Fashion
Exports.

The total employment in this SEZ is 3,862 so far and they have generated
Rs 337.52 crore in exports during the first half of 2006-07. She said,
eventually, the zone would employ 50,000 persons and absorb investment
of Rs 5,000 crore, and generate export turnover of Rs 8,000 crore
annually by 2010.

Fourth SEZ

Another SEZ being developed by way of the country's largest
infrastructure provider for IT and BPO enterprises is by ETL
Infrastructures Services Ltd with equity participation by IL&FS. The
company has acquired 26 acres of land in Pallikaranai village on the
outskirts of the city, where the first phase of 12.9 lakh sq ft has been
completed and the whole space for operation has been booked by big names
like TCS, Wipro, HCL Technologies, Tata Teleservices, Bharati
Televenturs Ltd, Essar Telecom Retail Ltd and Siemens Information
Processing Services Ltd.

The Director of ETL Infrastructures Services Ltd, Mr C. Ramachandran,
said the company is commencing the second phase of the project on 2.5
million sq ft, which would be operational by September 2007. He said the
IT Park would eventually employ 40,000 graduates, besides providing
indirect job by way of security services, food and beverage, courier and
transport services. It will have a foreign exchange potential of $800
million every year by way of exports of software and other services.

http://www.thehindubusinessline.com/2006/11/21/stories/2006112101780700.htm

`Sales to SEZ units eligible for VAT refund'


Our Bureau

The cardinal principle behind VAT is tax paid on purchase is deductible
from tax payable on sales.

Chennai , Nov. 20

Sales of goods made to units in special economic zones would be eligible
for refund of Value Added Tax, Mr G. Shanmugam, Joint Commissioner
(Commercial Taxes) of VAT Cell,Government of Tamil Nadu, clarified on
Saturday.

In an interactive session on VAT organised here by the Rotary Club of
Esplanade, Mr Shanmugam said that when a unit in Tamil Nadu sells goods
in other States, the unit would be entitled to input tax credit of all
but 4 per cent of the input tax paid. For example, if a company buys a
product that had suffered a 12.5 per cent tax and sells it in Andhra
Pradesh, the company could claim an input tax credit of 8.5 per cent.
The State Government would retain 4 per cent tax, he said.

Eligibility

Same for inter-state stock transfers, provided they are done with the C
forms, the Joint Commissioner said

Answering a barrage of questions, Mr Shanmugam stressed that the
cardinal principle behind VAT was `tax paid on purchase is deductible
from tax payable on sales'.

http://www.thehindubusinessline.com/2006/11/21/stories/2006112100681900.htm

SEZs help TN Govt attract Rs 2,750-cr investment'


G. Srinivasan

Will turn Chennai `Shenghzen of India'

Chennai , Nov. 20

The rest of the country is debating over the long-term implications of
allowing vast tracts of land for sale to private entrepreneurs to
establish special economic zones. But Tamil Nadu is demonstrating that
at the end of the day there are upgradation of skills, employment to
women and general improvement in basic amenities, both social and
physical, through these SEZs.

In a presentation here to a group of journalists from the Capital, the
State Secretary to Government Industries Department, Mr Shaktikanta Das,
the IT Secretary, Dr C. Chandramouli, the Special Secretary to
Government, Mr K. Rajaraman, the TIDCO Chairman, Mr S. Ramasundaram, and
senior officials said that the pace of frenetic economic activity
currently under way in the various approved SEZs in the State
particularly in and around Chennai would make the city the "Shenghzen of
India" in no time.

They said that within six months Tamil Nadu had attracted Rs 2,750 crore
of investment, turning it into an important investor destination.

The SEZ policy of the State stipulates that land is to be preferably
barren or wasteland or unproductive or marginal land and double-cropped
land should not exceed 10 per cent of the area acquired. All lands have
to be privately purchased by SEZs.

The State had got 45 SEZs, out of which 19 were granted in-principle
approval and 26 formal approvals. The largest segment of SEZ is in
information technology at 20, followed by product-specific at 19 and
multi-products at six.

whetting interests

They said that the functioning and the prospective SEZs as also the ones
in the pipeline have enhanced brand equity of Chennai to attract further
foreign direct investment and whetted investor interests.

They said that these zones are fostering a lot of spin-off and
multiplier effects in the form of providing employment to women through
imparting skills. They cited the example of an industrial unit put up in
the Mahindra World City SEZ where 700 rural women are employed in the
textile factory in garmenting and fabrics.

There are plans to augment industrial training institutes so that in
collaboration with industry, the curriculum of engineering colleges
would be upgraded and modernised in accordance with the demands of the
industry for absorption of skilled people.

Senior officials did concede the need for improving the general
infrastructure facilities outside these zones in order to make the
scheme a successful model.

Various agencies within the State administration are coordinating action
to improve the general infrastructure comfort level for investors so
that the State does not present an island of beauty amid chaotic and
rickety infrastructure.

They are confident that with the various SEZs going on stream in the
coming years, the associated activities would generate sufficient
resources for the exchequer to undertake massive public investment in
the peripheral and main areas within the city to provide a comfort level
to the investors. Efforts are also on to extend the concept down to
other districts within the State to spread out the benefits.

Mr L. B. Singhal, Director General, Export Promotion Council for SEZs
and EoUs, said that the actual implementation of SEZ in Tamil Nadu has
shown that the objectives of the policies are being realised.

He said that it is imperative that both the Central and the State
Government agencies work in tandem. He further said implementation of
the single window clearance by the Development Commissioner in each SEZ
zone and the State Government agencies would be a key to the scheme's
success. Alongside, SEZ developers should work at a faster clip to
extend the requisite infrastructure within the zone so that the units
could focus on their core activity of exports.
http://www.thehindubusinessline.com/2006/11/21/stories/2006112100701900.htm

Tuesday, November 21, 2006

CITU slams government's SEZ policy

SHILLONG: The Central government's policy on Special Economic Zones
(SEZ) in line with a Chinese model has led to land being given to
private promoters, CITU leader and MP Chittabrata Majumdar has said.

The promoters are trying to build real estate in these zones, Majumdar
said here while addressing a convention of the Meghalaya Joint Council
of Trade Unions and Associations (MJCTUA) on Monday.

He said China's example was being said to be emulated but in that
country, land is under government control. Private companies are given
land "on lease" and it is not sold to them.

In India, Majumdar said, private parties like Reliance are becoming
owners of land.

The government is trying to earn foreign exchange by creating SEZs but
it is not giving subsidies to farmers who find it difficult to sustain
their activities.

Majumdar said thanks to liberalisation and the WTO regime, Indian
markets were thrown open to foreign products and the country's farmers
are unable to compete.

The advent of imported products, reduction of subsidy and escalation of
price of agricultural inputs has led to farmers taking the extreme step
of ending their lives, he said.

In the WTO forum, a debate is on as developing countries are not allowed
to offer subsidies on agri-products as developed countries wanted to
sell their goods in those markets.

Majumdar called for a united protest by workers to make the government
see reason and change its policy.
http://timesofindia.indiatimes.com/NEWS/India/CITU_slams_governments_SEZ_policy/articleshow/507868.cms

Monday, November 20, 2006

Supremely Erroneous Zones

SEZs, notified last Friday, are wrong — economically, politically, morally

As a person of the conservative persuasion, I am almost always on the
side of minimal government and low taxes. But I have profound objections
to Special Economic Zones (SEZs), the rules for which came into force
last Friday. My objections are economic, political and, need I say, with
the morality of its political economy.
I remember some 16 years ago, when our current finance minister, who was
then commerce minister talked about SEZs. His vision was to create
islands of entrepreneurial freedom, islands of excellent infrastructure,
islands not hobbled by the paralysing stranglehold of suffocating labour
laws, import restrictions and exchange controls. These islands would
succeed, grow and eventually transform the whole country. This vision
meant that we would be able to learn from our Chinese neighbours how to
create millions of productive jobs and, in the process, create wealth
that will lead our country out of its poverty.

Thanks to our vam-panthic friends (who at the risk of repetition seem to
behave as if they are the agents of Chinese capitalists who want to
prevent Indian businesses from succeeding on the world stage), the move
to have more employment-friendly labour laws has been jettisoned. SEZs
will doubtless create an environment where our residual import and
exchange controls do not operate. They might create better physical
infrastructure than our crumbling cities. Without reformed labour laws,
these may not add up to much. But we Indians are like that only. And
that’s about what we can do.

Suddenly, from an unexpected direction a new “sop” is added on to SEZs.
Firms operating in SEZs are expecting to get prolonged income tax
holidays. This I submit is a profound mistake. There is no economic, or
for that matter social, logic to suggest that value added in the export
market is superior to that in the domestic market. Exports do not
justify an income tax rebate. In the distant past, when we were starved
of foreign exchange (due to other distorting economic signals), we
decided to give exports a special break. To the extent that this is a
state commitment, it is in order to let it run its course, which is at
the most for the next couple of years. But to now create a new set of
“upper caste” tax-exempt businesses in the SEZs is totally without
justification.

Tax rates should be low, stable and predictable for all economic actors.
To create another pampered, subsidised rich people’s enclave is fiscally
not prudent and defeats the very basis of economic reform. We are now
encouraging people to “play games”, set up new units on paper, transfer
tax-paying businesses into these tax havens, open up businesses which
have no economic logic except that of tax management and so on. The
great peninsula of India will be dotted with Cayman Islands, Bahamas and
Monacos. The totally unwarranted and misconceived waiver of excise
duties in Himachal and Uttaranchal (a gift of the NDA government) has
lead to numerous units “shifting” their production to these states and
has cost the exchequer a bomb. An unfortunate side effect has been the
considerable harm caused by chemical and other polluting units getting
located in these ecologically fragile, beautiful states!

The real estate magnates who are “developing” the SEZs are quite openly
selling them as tax havens, no more, no less. And the tragedy is that no
business can afford to walk away. Any management that does not try to
leverage these emerging tax havens would be committing a folly in
strictly selfish business terms. And once several large companies
acquire stakes in these fiscal giveaways, they will acquire a life of
their own. They will lobby to keep them and keep extending them. All of
this at the cost of the country’s public finances. It is important that
this be cut off at the pass before it acquires an unstoppable momentum.

And now for the “moral” issues involved. I do not want to sound
sanctimonious....but clearly if wage-earners can pay income taxes, if
domestic businesses can pay income taxes, I see no reason why the
businesses located in SEZs should be exempt. After all income taxes
would arise only if they made profits. It is going to become
increasingly difficult to hold the moral high ground and demand good
infrastructure if businesses keep seeking tax-exemptions rather than pay
their fair share. In a poor country, this insensitive behaviour is even
less acceptable. The argument that the government in all probability
will waste the money it collects in taxes is a specious one. On that
basis, anyone who sells medicines in Bareilly or bicycles in Sholapur or
TV sets in Madurai should also not pay taxes — why should only the
exporting denizens of SEZs get away?

The political economy issues are even more staggering. In 1789, the
ancien regime collapsed in France precisely because the rich aristocrats
refused to pay taxes; George III lost the thirteen colonies for reasons
of perceived fiscal injustice. We certainly don’t need the return of the
capricious estate duty and 97 per cent “Krishnamachari” income tax
rates. But we also do not need a regressive tax regime that works as a
reverse Robin Hood.

Net-net, SEZs are not what they were meant to be or could have been if
we had allowed labour law reform (as originally intended and as
practiced by the communists of China). If we want to go ahead with SEZs
with some benefits in the form of tariff relief and better
infrastructure, and hope the labour law reform will eventually follow,
then so be it. There is a second order sub-optimality to this and it is
in line with our finance minister’s original vision.

But to make the SEZs a source of fiscal loss by stealth and for the
benefit of profitable businesses (they have to be, in order to benefit
from income tax-exemption) is completely unjustified. It will send
needlessly distorting signals through the economy. It will erode our
public finances and will create islands of subsidy that will become
permanent sores (like the LPG subsidy) which we will find difficult to
escape from.

The writer is chairman and CEO, Mphasis. Write to him at
jerryrao@expressindia.com

http://iecolumnists.expressindia.com/full_column.php?content_id=87771

Saturday, November 18, 2006

Serving ‘outsiders’ may trim SEZs’ tax sops limit


KG NARENDRANATH

TIMES NEWS NETWORK[ FRIDAY, NOVEMBER 17, 2006 01:01:14 AM]

NEW DELHI: The finance ministry has initiated a dialogue with the
commerce ministry to frame a new set of norms, prescribing that only
those non-processing activities which are based on the needs of SEZ
units will qualify for tax sops. If the proposed norms come into effect,
tax sops for SEZ developers would be commensurate to the use of urban
infrastructure by the SEZ units. Norms will be laid down to define the
needs of SEZ units.

This means that a developer won’t get excise and customs duty exemptions
for building urban infrastructure in these zones insofar as he intends
to offer the services to consumers outside the SEZ. Also, to compute the
developer’s income tax liability, the deduction won’t be permitted on
the income generated by offering such services to outsiders.

The revenue department feels developers should not be allowed to make
available facilities built for SEZ units to others for commercial gains
and still claim tax benefits. “The department feels that in the absence
of these checks, the SEZ policy could prove to be disastrous for the
real estate sector,” an official told ET.

The government has already notified the authorised non-processing
activities in SEZs. Non-processing area in multi-product SEZs can be up
to 65%, while for product-specific zones the upper limit is 50%.

“The revenue department now wants to define the extent of tax sops a
developer can get vis-a-vis the “needs” of the SEZ concerned. The
commerce ministry is, however, keen to dub the issue as a “closed
chapter”. “Why can’t the developer get tax sops for creation of the
infrastructure and its sale, too? This is anyway less expensive for the
government than building the infrastructure on its own,” said a commerce
ministry official. Finance ministry officials, however, said since a
major part of the SEZ land can be outside the processing areas, it is
imperative that the tax sops are restricted.

“We are in the process of preparing the norms for tax sops with regard
to non-processing areas,” a revenue department official told ET. It may
be noted that the RBI had virtually endorsed this view, when it
initially refused to grant infrastructure status to SEZs and advised
banks to treat exposure to SEZ projects at par with lending to
commercial real estate projects. The Left parties has also exhibited
similar sentiments.

Core facilities in the non-processing segments of SEZs include power
plants, sewage plants and roads , schools, hospitals, hotels, cinema
halls and shopping malls.

http://economictimes.indiatimes.com/articleshow/461257.cms

SC rejects plea against Reliance’s land buy for SEZ

TIMES NEWS NETWORK[ TUESDAY, NOVEMBER 14, 2006 12:49:49 AM]

NEW DELHI:: The Supreme Court has declined to stay the acquisition of
land by Reliance Infrastructure for the Jamnagar SEZ. Farmers had
approached the apex court, appealing against a verdict of the Gujarat HC
which was not in their favour.

A two-judge bench said farmers whose land has been acquired could
approach the court if they were not satisfied with the compensation
amount. The bench made it clear that it would not interfere with the
high court’s verdict. Reliance has acquired 9,000 acres in Jamnagar for
its petro-product SEZ.

The Mukesh Ambani group company plans to increase the size of the
project beyond 10,000 acres and convert it into a multi-product SEZ. The
SC’s decision means that SEZ developers would not face legal resistance
in terms of land acquisition if they provided 'satisfactory' compensation.

The SEZ policy has been facing turbulence due to protests from various
political parties who feel states are buying land at rates that are
below market prices only to hand it over to corporates. In some cases,
companies have been told to acquire land directly and states like West
Bengal have decided that only wasteland should be taken over for SEZs.

Farmers had opposed the Jamnagar SEZ, alleging that rules had been
violated in the acquisition of land. Initially they approached the
Gujarat High Court, which dismissed their plea against allotment of land
to Reliance in five villages.

The farmers approached the SC and sought the cancellation of the
allotment since the Central government was of the view that only
non-agriculture land should be used for SEZs. While declining to cancel
the allotment, the apex court said grievances related to compensation
could be considered but the petition cannot be entertainment.

http://economictimes.indiatimes.com/articleshow/432611.cms

New model of SEZ developed in Gujarat

PTI[ THURSDAY, NOVEMBER 09, 2006 10:30:26 PM]

MUMBAI: Gujarat chief minister Narendra Modi said on Thursday that
Gujarat has developed a new model for Special Economic Zones, which
would not harm agricultural land.
"When there is a nationwide debate going on SEZs, we in Gujarat have
developed a policy in such a way that farm land will not be harmed. We
are way ahead in the SEZ race as compared to other states," Modi said at
a FICCI meet.
"Of the 25 SEZs, work has already started on most of them. We have three
separate SEZs for IT. Given the interest in Gujarat shown by the
Japanese business community, I have even offered to set up a Japanese
SEZ," Modi said.
"The Vibrant Gujarat Investors Summit, which will be held on January 12
and 13 in 2007, will focus on SEZs. We want to market our SEZs and the
new culture of SEZs," he said.
Elaborating on his state's position as number one in terms of
investment, Modi said, "We have focussed on a proactive approach rather
than blindly offering incentives. We have created a investor-friendly
environment rather than giving incentives, because incentives will
always have a limit but our investor-friendly environment will always
remain."
Modi also welcomed investment in food processing sector as a value
addition to agriculture and said Gujarat would take "special care" of
those who came forward to invest in this sector.

http://economictimes.indiatimes.com/articleshow/385662.cms

SEZs to create 80,000 jobs: Govt

PTI[ FRIDAY, NOVEMBER 17, 2006 10:30:17 PM]

NEW DELHI: The Government on Friday said the Special Economic Zones
(SEZ) are expected to create 80,000 jobs in just nine months.

"Policy initiatives taken by the government in laying out the new policy
on SEZs would lead to creation of over 80,000 jobs," Commerce Secretary
G K Pillai said at a conference organised by PHDCCI here.

He said so far SEZs that have been cleared in 16 states would come up
over an area of 35,510 hectares.

Pillai said 35 per cent of the land area of a SEZ would be for setting
up processing facilities, while the rest would be utilised for
infrastructure and other facilities.

http://economictimes.indiatimes.com/articleshow/462776.cms

Reliance request for multi-product tag on Jamnagar SEZ goes to law ministry


AMITI SEN & G GANAPATHY SUBRAMANIAM

TIMES NEWS NETWORK[ TUESDAY, NOVEMBER 07, 2006 12:21:51 AM]

NEW DELHI: Reliance group is planning to convert its sector-specific
special economic zone (SEZ) at Jamnagar in Gujarat into a multi-product
SEZ.

The Mukesh Ambani group company has sought permission from the
government for the conversion so that provisions could be made to
include industries other than refineries. Reliance is looking at
inclusion of petrochemical and heavy manufacturing units in the Jamnagar
project, highly-placed government sources said.

The Board of Approval (BoA), which clears SEZs, is looking into an
application from Reliance Infrastructure for converting the
product-specific SEZ into a multi-product SEZ, sources said. Reliance is
already setting up two multi-product SEZs near Mumbai and the scope of
the Jamnagar project is also being expanded now. When contacted, a
Reliance spokesperson declined to comment. Industry sources said the
company was making provisions to accommodate key partners, including
foreign companies, at the Jamnagar SEZ.

Government sources said the BoA has referred the issue to the law
ministry, as some aspects related to ‘contiguity’ of land area need to
be addressed. It is understood that some railway lines pass through the
area and Reliance has to fence them and ensure secure access in line
with SEZ rules. At the same time, seamless contiguity needs to be
maintained to ensure that infrastructure bottlenecks do not bother SEZ
units.

The minimum land requirement for multi-project SEZs is much larger than
sector-specific projects. Therefore, Reliance is acquiring more land
now. The matter has been referred to the law ministry, which will decide
whether the contiguity norms for the project could be relaxed,
government sources said.

In March ’05, the BoA had granted formal approval to the Reliance
Jamnagar petroleum and petrochemical SEZ on an area of 440 hectares. The
company has also been given an in-principal approval for its expansion
in a multi-product SEZ as and when the minimum area of 1,000 hectares is
acquired by the developer. The final approval, however, will be granted
only after the land acquisition is completed.

http://economictimes.indiatimes.com/articleshow/347047.cms

Govt to change access control norms for SEZs

[ FRIDAY, NOVEMBER 10, 2006 07:20:23 PM]

NEW DELHI: The government is planning to modify the access control norms
for Special Economic Zone, which prescribes for a wall and a fencing of
a particular height, and make them flexible on demands from the developers.
The norms were prescribed to monitor the movement of goods, but now they
would be modified on demands of the IT industry, senior officials said.
The developers of IT SEZs do not want the walls topped with fences to
damage the look of their glass and concrete buildings and moreover the
export of software cannot be monitored by putting barricades, they said.
Now instead of insisting on the height of the walls the promoters would
be given an option to decide how they want to control access to the
zones - either electronically or physically or by resorting to both.
Officials said the norms laid down for access control in the new SEZ
rules were copied from those laid down for SEZs that came up earlier.
The earlier norms were in turn based on the very first SEZ that came up
in the country in the 1960s.
"With new access control and monitoring technologies available in the
market it has been decided to make the norms flexible," officials said.

http://economictimes.indiatimes.com/articleshow/398939.cms