SEZ developers in India will be able to get easier access to funds and at cheaper interest rates if the government goes ahead with a proposal to give infrastructure status to the sector. The commerce department has decided to make a strong case for grant of the status to SEZs with the Reserve Bank of India. Officials from the commerce department and the RBI are scheduled to meet soon to reach a decision on the issue.
Commerce secretary G K Pillai is scheduled to meet RBI deputy governor Usha Thorat shortly to discuss whether SEZs deserve to be included in the core sector.
Since half the area on which SEZs are built have to mandatory be part of the processing area which constitutes industrial infrastructure and a large part of the non-processing area is social and commercial infrastructure to support the processing area, the commerce department believes that the sector qualifies for infrastructure status.
Since SEZs are classified under the real estate sector, funds earmarked for real estate by banks are often exhausted and there is not enough funding available for SEZ projects. If given infrastructure status, SEZ developers would be eligible for funds earmarked for infrastructure projects. To top that, funds would also be cheaper as banks lend to the core sector at a 2% lower interest rate.
While initially, multi-product SEZs were allowed to have 35% processing area, under the revised guidelines all SEZs mandatory have to have processing activities in 50% of the total SEZ area. In the non-processing area there is infrastructure to support the processing area like power plants, sewage treatment plants, roads, hospitals and educational institutions.
According to figures furnished by the export promotion council of EOUs and SEZs, the exports from EOUs and SEZs in the last five years have gone up from Rs 33,647 crore to Rs 1,91,638 crore, showing a 5.7 times growth. Last year, exports from SEZs have gone up from Rs 34,787 crore to Rs 66,638 crore, showing a growth of 93%.
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The real estate sector in India is on a high growth path. Several government initiatives have contributed to this high-growth environment – liberalization of foreign direct investment norms in real estate in 2005, introduction of the SEZ Act, and allowing private equity funds into real estate.Ever since the government decided to allow companies to set up SEZs, India Inc has rushed in with big plans for projects across the country. Corporate giants such as Tata Consultancy Services, Reliance Industries (Mukesh Ambani group), Reliance Anil Ambani Group, DLF Ltd., Unitech Group, Parsvnath Developers and Videocon Group are all into developing SEZs.Foreign direct investment continues to play an important role. India has the opportunity to become a manufacturing hub for textiles, automobiles, steel, metals, petroleum products etc. for the world market. In 2005, FDI was estimated at $ 4 billion, without counting reinvested earnings and other capital. The ministry of commerce estimates an investment of Rs 1 trillion in these SEZs in the next few years and employment generation of 5, 00,000.For more view- realtydigest.blogspot.com
On the face of it, setting up a special economic zone (SEZ) seems to be the hottest business to get into. At last count, 263 companies had received formal approvals to set up SEZs, and another 169 had been granted in-principle clearance by the government. Reliance Industries is pumping in Rs 30,000 crore into two SEZs in Maharashtra and another Rs 40,000 crore into a third in Haryana; DLF is investing over Rs 31,000 crore in four units in Amritsar, Ambala, Ludhiana and Gurgaon; and the DS group has a Rs 12,000-crore plan for two SEZs in Haryana and Himachal Pradesh. Others such as Bharat Forge, Videocon, Suzlon, etc., are investing over Rs 1,000 crore each in SEZs in places such as Pune and Mangalore.
yes SEZ are very good places to be combination for all the companies like IT sector or more.