SEZ Rules Amended
IN order to revive investors' interest in Special Economic Zones, the Commerce & Industry Minister had announced certain measures on 18th April, 2013. Based on the announcements necessary amendment to SEZ Rules, 2006 have been carried out vide Notification dated12th August 2013.
Definition of "SECTOR' amended:
At present Rule 2(1)(x) reads as:
(x) "Sector” means one or more products or one or more services falling under a category such as engineering, textiles and garments, pharmaceuticals and chemicals, handicrafts, gem and jewellery, electronics hardware and software, including information technology enabled services and bio-technology;
This is amended to add a proviso:
"Provided that various categories comprising their respective products or services, similar or compatible with each other, including related ancillary services and Research and Development services of the sector and additional combination of products and services of a similar or compatible nature as approved by the Board of Approval shall constitute a single sector;"
As per Rule 5(2) (a):
a) A Special Economic Zone for multi product shall have a contiguous area of one thousand hectares or more but not exceeding 5000 hectares:
Provided that in case a Special Economic Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and Kashmir, Goa or in a Union Territory, the area shall be two hundred hectares or more :
Now, this 1000 is changed to 500 and 200 to 100.
Rule 5(2) (b): Important changes:
A Special Economic Zone for a specific sector or for one or more services or in a port or airport shall have a contiguous area of fifty (earlier 100) hectares or more.
For each contiguous fifty hectare land, an additional sector may be allowed:
• Additional land requirement for an additional sector in a Special Economic Zone for a specific sector or for one or more services as per first proviso will be twenty five hectares when the Special Economic Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttarakhand, Sikkim, Jammu and Kashmir, Goa or in a Union territory.
• No minimum area requirement for setting up a Special Economic Zone for Information Technology or Information Technology Enabled Services, but a minimum built up processing area requirement shall be applicable, based on the category of cities.
• In case a Special Economic Zone is proposed to be set up exclusively for handicrafts, the area shall be ten hectares or more:
• In case a Special Economic Zone is proposed to be set up exclusively for biotechnology, non-conventional energy, including solar energy equipments or cell, or gems and jewellery sectors, agro-based food processing, the area shall be ten hectares or more.
Rule 11(11) reads as:
The Special Economic Zone shall be deemed to be a port, airport, inland container deport, land customs station under section 7 of the Customs Act in accordance with the provisions of section 53 from the date notified in this behalf :
A new proviso is added:
"Provided also that addition or inclusion of any land to an existing Special Economic Zone, where such land contains a port, manufacturing unit, or structures in which no commercial, industrial or economic activity is in progress, then such Special Economic Zone shall not be eligible for any duty benefits in respect of the pre-existing structures but any additions or up-gradations to such existing ports, manufacturing units, or structures after their addition or inclusion in a Special Economic Zone shall be eligible for the fiscal incentives as applicable for a new infrastructure in a Special Economic Zone and also the authorised operations being carried on in such infrastructure shall be eligible for benefits as provided for under the Special Economic Zone Act and rules."
A new Rule 74A inserted:
The New Rule reads as:
"74A. Transfer of Assets by Special Economic Zone Units upon their exit .- The Unit may opt out of Special Economic Zone by transferring its assets and liabilities to another person by way of transfer of ownership including sale of Special Economic Zone units subject to the following conditions:-
(i) the Unit has held a valid Letter of Approval as well as lease of land for not less than a period of five years on the date of transfer;
(ii) the unit has been operational for a minimum period of two years after the commencement of production as on the date of transfer ;
(iii) such sale or transfer transactions shall be subject to the approval of the Approval Committee;
(iv) the transferee fulfils all eligibility criteria applicable to a Unit; and
(v) the applicable duties and liabilities, if any, as calculated under rule 74, as well as export obligations of the transferor Unit, if any, shall stand transferred to the transferee Unit which shall be under obligation to discharge the same on the same terms and conditions as the transferor Unit.".
A new Classification of Cities is included as per Annexure IVA.