ELCOT given more time to make its SEZs in Madurai, Hosur operational

Amiti Sen New Delhi | Updated on January 10, 2020 Published on January 10, 2020

Commerce Minister Piyush Goyal   -  Atul Yadav

Commerce Minister chairs meeting to review Baba Kalyani Committee recommendations

The Government has extended till May the letter of approval (LoA) given to two proposed IT/ITES Special Economic Zones being developed by Electronics Corporation of Tamil Nadu (ELCOT) in Madurai and Hosur, as the developer has expressed its intention to operationalise both zones by then.

“Six companies including HCL, Satyam (Mahindra) and Chain-Sys Software have already acquired land in the SEZ in Vadapalanji, Madurai, and the Board of Approval’s (BoA) decision to extend the validity of the LoA till May 7 keeps alive their dream of setting up their units in the zone,” an official told BusinessLine.

HCL, for instance, is planning to develop the 60 acres of land allotted to it in the SEZ by constructing an IT building over 10 lakh sq ft, in the next three to five to five, according to inputs submitted to the BoA by the developer. The company’s other facility at Mudurai-Ilandhaikulam, covering 5.20 lakh sq ft, in the allotted 6.75 acres of land, is fully occupied and employs 3,500 people, he added.

Chain-Sys Software Exports Pvt Ltd, too, has obtained co-developer status and will construct a one-lakh sq feet building in the next three to five years in the SEZ, the developer stated.

Extension for SEZs

The last extension given to both the ELCOT SEZs lapsed on May 7, 2019 but the government had not extended it as they did not qualify for more extensions under the earlier rules. However, with the recently-amended rules, the BoA, upon request in writing by the developer and after due examination of the case, may grant extension beyond the said period of ten years for a further period of a ten years, but not exceeding one year at a time.

“This means that even if the two SEZs, for reasons beyond their control, are not able to start operations by May 7, 2020, the BoA will have the discretion to grant more extensions,” the official said.

Looking at sops

With investments in SEZs tapering off because of weak investment climate and uncertainty over whether the government would extend the sunset clause on the income-tax exemption under the scheme which will expire on March 31, 2020, the Commerce Ministry is exploring ways to give the SEZ scheme a boost.

Commerce and Industry Minister Piyush Goyal this week chaired a meeting to review the remaining recommendations of the Baba Kalyani report on SEZ policy of India; this was also attended by representatives from the Departments of Revenue and Legal Affairs.

“With the US challenging many of the incentives given to SEZs at the WTO on the ground that they are prohibited, the government is also looking at alternative sops,” the official said.

The objectives of the Baba Kalyani committee were to evaluate the SEZ policy and make it WTO-compatible, suggest measures to maximise utilisation of vacant land in SEZs and changes in the SEZ policy based on international experience, and merge the SEZ policy with other government schemes like coastal economic zones, Delhi-Mumbai industrial corridor, national industrial manufacturing zones and food and textile parks.

Published on January 10, 2020
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