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The decision to relax minimum land requirements for special economic zones (SEZs) for information technology services will help smaller companies, according to the National Association of Software and Service Companies (NASSCOM).
The Commerce Ministry on Thursday announced that there would be no minimum land requirement for setting up IT and IT enables services SEZs. Currently there’s a requirement of 10 hectares of minimum land area.
Under the new policy only minimum built up area criteria would be needed to be met by SEZ Developers. This has also been considerably relaxed with the requirement of one lakh square meters to be applicable for seven major cities – Mumbai, Delhi (NCR), Chennai, Hyderabad, Bangalore, Pune and Kolkata.
For class B-cities minimum built up area would be 50,000 sq. metres while for other cities 25,000 sq. metres built up area norm will be applicable.
“I am confident that these measures will give a boost to IT SEZs in Tier-II and III cities, creating employment and growth,” said Anand Sharma, Minister of Commerce, while announcing the Foreign Trade Policy 2013-14.
Welcoming the policy, Nasscom said that it was delighted that the Government recognised IT exports as a key growth driver for India’s exports and the SEZ scheme. “Removing the minimum land requirement and reducing the built up area will enable the SEZ scheme to realise its true potential,” Nasscom said in a statement. Exports from IT SEZs during financial year 2012-13 have exceeded Rs 1.40 lakh crore registering a growth of over 70 per cent.
But large mandatory land requirements made it difficult for small companies to take advantage of the SEZ policy. Waiving land requirement and reducing minimum built up area will now make it feasible for IT SEZs to come up in non-metro locations.
“These changes are likely to make the SEZ policy more inclusive by attracting SMEs to consider their options,” said NASSCOM.
The policy also extended the facility to work from home to software technology parks and export oriented units. While this will offer greater flexibility, there are difficulties in its implementation arising out of security requirements.
NASSCOM said it will work with the Government to ensure that ‘work-from-home’ facility is indeed available and operationalised by companies.
Som Mittal, President, NASSCOM added, “We hope that Ministry of Finance will consider removal of Minimum Alternate Tax so that SMEs can truly benefit from this scheme”.
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