Reliance seeks nod to de-notify part of Jamnagar SEZ

Amiti Sen New Delhi | Updated on January 07, 2013

Company plans to invest Rs 45,000 cr in de-notified area

Reliance Industries Ltd (RIL) has sought the Centre’s permission to partly de-notify its multi-product special economic zone in Jamnagar.

In the de-notified area, the company proposes to invest Rs 45,000 crore in new projects for catering to domestic demand. The proposed de-notified area is more than a third of the total area over which the zone is currently spread.

“The developer has applied for partial de-notification so as to implement a number of new projects in the domestic tariff area in Jamnagar near the SEZ. The proposed projects will mainly cater to the significant existing domestic demand,” the Development Commissioner (DC) of the zone submitted to the board of approval for SEZs.

“In its proposal to the Government, the company has stated that it wants to implement new projects in the DTA with investments up to Rs 45,000 crore,” a Government official told Business Line.

RIL did not respond when contacted by Business Line for details on the reasons behind its proposal to de-notify.

The BoA, which takes most decisions related to setting up and operations of SEZs , is likely to consider the issue in its meeting on January 18.

With SEZs losing their sheen after the Government introduced minimum alternate tax and dividend distribution tax on units and developers in the Union Budget for 2011-12, a number of developers have got their zones de-notified and approvals cancelled.

There is a significant increase in domestic demand for petroleum products and it would make both economic and logistical sense for the company to operate outside SEZs if it wants to specifically sell within the country from a particular facility, the official added.

While SEZ units are allowed to sell in the local market or DTA, the sales are subject to payment of all domestic taxes and customs.

RIL’s multi-product SEZ in Jamnagar, which mainly comprises refineries, is spread over 1764.14 hectares. The company’s request to the BoA for partial de-notification of an area of 728.43 hectares will reduce the total area to 1035.72 hectares, but it will still be large enough to qualify as a multi-product SEZ.

The DC has recommended that the de-notification be allowed subject to refund of all tax benefits the company received for operating in the de-notified area.

Published on January 07, 2013

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