Frequently Asked Questions
Is there a minimum criterion for built up space?
There is a minimum built-up area requirement of 1 lakhs sq. meters for sector specific SEZ in the IT sector and for FTWZ. [Rule 5(2) of SEZ Rules 2006], Rule 5(2) provides as under:
• A Multi Product SEZ 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.
• Provided further that at least fifty per cent of the area shall be earmarked for developing the processing area
• Provided also that the Central Government may consider on merit the clubbing of contiguous existing notified Special Economic Zones notwithstanding that the total area of resultant Special Economic Zones exceeds 5000 hectares.
• 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 one hundred hectares or more:
• Provided that in case a Special Economic Zone is proposed to be set up exclusively for electronics hardware and software, including information technology enabled services, the area shall be ten hectares or more with a minimum built up processing area of one lakh square metres:
• Provided further that in case a Special Economic Zone is proposed to be set up exclusively for handicrafts, the area shall be ten hectares or more.
• Provided also that in case a Special Economic Zone is proposed to be set up exclusively for bio-technology, non- conventional energy, including solar energy equipments/ cell, or gem and jewellary sectors, the area shall be ten hectares or more with a minimum built up area as under:
i) forty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for biotechnology and non-conventional energy sectors, including solar energy equipments/cells but excluding a Special Economic Zone set up for non-conventional energy production and manufacturing;
ii) fifty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for the gems and jewellery sector.
• Provided also that in case a Special Economic Zone for a specific sector 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 fifty hectares or more for the Special Economic Zones not covered under the first and second provisos.
• Provided also that at least fifty per cent, of the area shall be earmarked for developing processing area.
• Special Economic Zone for Free Trade and Warehousing shall have an area of forty hectares or more with a built up area of not less than one lakh square metres.
• Provided that in a stand alone Free Trade and Warehousing Zone at least fifty per cent of the area shall be earmarked for developing processing area.
• Provided further that a Free Trade and Warehousing Zone may also be set up as part of a Special Economic Zone for multiproduct:
• Provided also that in a Special Economic Zone for a specific sector, Free Trade and Warehousing Zone may be permitted with no minimum area requirement but subject to the condition that the maximum area of such Free Trade and Warehousing Zone shall not exceed twenty per cent, of the processing area.
Will it be possible to include a portion of the non-processing area into the processing area at a later point of time subject to compliance with the boundary wall requirements?
The Development Commissioner is the authority to demarcate the SEZ area into processing and non-processing areas. Conversion of non-processing area into processing area would be permissible subject to the satisfaction of the Development Commissioner. (Rule 11)
What is the procedure for increasing the size of the SEZ with additional land?
As long as the additional land is contiguous and vacant and it makes the entire SEZ area contiguous, the additional area could be included as part of the SEZ by a notification, after approval from Board of Approvals.
Is there any procedure for de-notifying an SEZ?
This can be considered by Board of Approval provided SEZ developer refunds back all benefits availed by it.
Would there be any issue if a rivulet passes through the SEZs?
The requirement of contiguity in respect of a SEZ shall be considered by the Board of Approval on a case-to-case basis. [Rule 7(2)]
Can contractors be appointed by developer and will they be eligible for duty benefits?
Duty benefits available to the Developer shall also be available to the contractor without any approval by the BOA. However, the responsibility for proper utilization of goods rest with the Developer. Relevant documents would have to be filed jointly in the name of the Developer and the contractor. (Rule 10)
Are goods imported/procured before the notification of the SEZ entitled to duty benefits?
No. As per Rule 9 duty benefits are available for authorized operations by the SEZ developer only after the Zone has been notified. Similarly, SEZ units are entitled to import/procure goods for authorized operations only after the processing area has been demarcated. [Rule 9]
Are duty and other benefits available for operation and maintenance of infrastructure facilities in the non-processing area?
Duty exemption for goods and services is not available for operation and maintenance of facilities in the non-processing area. [Rule 27(2)]
A developer is allowed to allot land in the processing area on a lease basis to a person wanting to establish infrastructure facilities; what infrastructure facilities can be located in the processing area?
Authorized infrastructure facilities which may be located in the processing area include, standard design factory buildings, power plant, effluent treatment plant, etc. [Rule 11(5)]
Does a developer have to get environmental clearance or is the approval of the BOA sufficient? Also, whether public hearing is dispensed with in respect of SEZ development?
Yes; environmental clearance as required under the law is required and the BOA approval does not include environmental clearance.
For development of SEZs, public hearing is not exempted and the process of environmental impact assessment (EIA) as laid down in the notification of the Ministry of Environment would have to be adhered to. [Condition of Letter of Approval to developer (Form -B and C)].