Centre proposes investor-friendly norms for SEZs

Written by Rituparna Bhuyan | New Delhi | Updated: Nov 23 2009, 06:22am hrs
As India is trying to improve its ranking in the doing business index of the World Bank by getting states to improve the investment environment in their jurisdictions, the commerce ministry has initiated a process that seeks to make procedural and infrastructure requirements of Special Economic Zones conform to the best practices.

The commerce ministry has proposed a set of guidelines to ensure that investors in the tax free industrial enclaves are not hassled by delays in permissions from states and have access to world class industrial infrastructure.

To improve the prospects of the zones, the commerce ministry has now circulated a set of draft guidelines to state governments and SEZ developers seeking to give the central government more say in the state level clearances and introduce time bound permission schedules. The proposed norms have been sent to state governments and SEZ developers for comments in the second week of November.

Broadly, the draft guidelines not only specify the to-do list for state governments, but also lay down norms related to development of infrastructure in the zones that is expected from the developers. Though SEZs are administered by an act and related rules, these policy documents specify only the benefits that developers and units are entitled to.

The draft norms propose that the power to approve building plans within the SEZs should be delegated to the centres administered approval committees headed by a development commissioner, who reports to the commerce ministry. While state government will have the relevant department represented in the committee, analysts see this as a move to ensure speedy approvals.

Moreover, the draft guidelines also dictate the states to clear SEZ master plans within 45 days of receiving applications. In addition, it also directs state governments to declare SEZ as industrial townships so that they do not fall under administrative control of any municipality or panchayat, and instead managed by a board. The Centre has been concerned about the lack of seriousness of many states in the setting up of the promised one-stop-shop arrangement that clears state level approvals related to SEZs. For speedy clearance of SEZ permissions at the central level, commerce minister Anand Sharma has asked to clear permissions and applications by SEZs within two weeks. Commerce ministry had also appealed to states to ensure the states play a more pro-active role in dealing SEZ matters.

As for developers, the draft norms prescribe how SEZ infrastructure should be developed. The norms insist a developer should have his plans spread across 20-25 years, divided in to five year phases. Moreover, developers will have to ensure that 5% of the housing area within the zones should be low cost projects, which will then be provided in long-term lease to employees of the zones.