Prevention of de-notified SEZ land being misused
New Delhi: Following recently announced reduced norms for minimum area requirement (MAR), the Center in a bid to curb the misuse of the de-notified Special Economic Zones (SEZs) land parcels; has derived a set of guidelines for State governments. As per the guidelines, State Governments are required to ensure that the de-notified land parcels are utilized to create and establish infrastructure which would sub-serve the objectives of the originally planned SEZ.
Additionally, it is now mandatory for developers to obtain a ‘no objection certificate’ from the concerned state government before presenting their de-notification proposals before the Center. The Commerce Department in a letter to the Chief Secretaries of States and Union Territories, has requested them to make sure that after de-notification, such land parcels would confirm to the Land Use guidelines and Master Plans of the respective state.
Minimum area requirement:
In August, the Government reduced the minimum area requirement for SEZs across sectors by half, in order to allure investments within the zones which had slowed down, following the imposition of few taxes on both builders and units three years ago.
The Center’s apprehensions:
Presently, the Center is appropriately apprehensive about developers being incentivized to de-notify land parcels from their existing SEZs for the usage of some other unrelated commercial purpose, by the reduction within the land requirement criteria. However, as per experts, in the case of free-hold land, wherein the land is owned by the developer, it would be extremely difficult to legally prevent the developers from using the land parcel which they want to de-notify.
Views of consultants and experts:
Rules and regulations pertaining to land usage would work only in the case the land is owned by the state government.
As per consultants and experts on SEZ laws, preventing developers from using the piece of land which they desire to de-notify for purposes other than the ones prescribed by the Land Use guidelines, would be next to impossible.
Conclusion:
SEZ rules were relaxed by the Government on the 12th of August this year. This was done by reducing the MAR along with the easing of exit norms for zones across the board. Howbeit, there was no change within rules regarding the Minimum Alternate Tax of 18.5 per cent as well as Dividend Distribution Tax of 15 per cent which were imposed three years ago up on both the developers and units.
So far by the Center has approved a total of 576 SEZs, of which 392 have been notified while 173 are in operation.
