SEZ: Zone of Contention

Just to take the SEZ issue forward, there have been lots of news in the recent past about how many companies have jumped onto the SEZ bandwagon. And simultaneously, there have been calls from a wide range of sources to take a relook at the SEZ Act.

Now, the zone of contention between the Ministry of Finance and the Commerce Ministry are basically these issues: 1. Land size 2. Existing units allowed to relocate to SEZ with "old" plant & machinery 3. Basic scope of activities permitted under the SEZs

The Revenue Department of the Finance Ministry has raised these concerns with the Ministry of Commerce. Another issue seems to be the process of approving applicaitons for SEZs, which has been proceeding at a fairly break-neck speed. Something to be really suspicious about, if we are familiar with the functioning of normal government approvals. For more details on the technical nuances in this Act, you might want to check out http://sezindia.nic.in, a fairly informative site. The site is not too user-friendly though and seems to be quite dated. So, good luck with the mining.

Now, for the statistics. At last count, 15 SEZs are up and running right now. These include 8 old export processing zones. If one were to ignore them, then 7 new SEZs have become operational. 110 new SEZs have been approved.

28 multi-product SEZs, 86 sector-specific SEZs and 3 Free Trade warehousing zones have been approved thus far. Some of the biggest names in India Inc have jumped on to this bandwagon. Of course, the likes of Mahindra & Mahindra, the Tatas, Reliance (as mentioned in an earlier post on this blog), Wipro and Nokia have been marching in with hype, hope and fervour. Some of those that not many might have heard of but have been quietly creeping in, though, include the following:

1. An SEZ exclusively for animation and gaming
2. A very ambitious "Disneyworld, Hollywood and Las Vegas rolled into one" mega-entertainment SEZ proposed by Essel World, owned by Subhash Chandra (from the stables of Zee)
3. Chandra-owned Unitech Limited, which built the South City in Gurgaon (on a totally different note, though, just check out the valuations for this company [BSE: 507878; NSE: UNITECH]

Given the operational and fiscal advantages that companies would enjoy in the SEZ, I would not be one bit surprised if more and more heavyweights venture in as well.

LATEST UPDATE: An empowered group of ministers will soon be taking a decision on the minimum / maximum land size for Special Economic Zones for infotech, biotech, Gems & Jewellery and non-conventional energy sectors. The group includes some of our Union ministers Pranab Mukherjee, Kamal Nath, P Chidambaram, Dayanidhi Maran and Kapil Sibal and the Deputy Chairman of the Planning Commission, Mr. Montek Singh Ahluwalia.

Will keep you posted on the latest on this front.