Gulf Oil, Hinduja Ventures to co-develop Bangalore SEZ
HYDERABAD, APRIL 26:
Gulf Oil Corporation Ltd and Hinduja Realty Ventures Ltd have performed bhoomi puja for the Rs 1,800-crore special economic zone and mixed use project planned at Yelahanka in Bangalore.
The project is being developed on a 39.67-acre site owned by Gulf Oil Corporation, a Hinduja Group company.
The Managing Director of Gulf Oil, Mr Subhas Pramanik, told Business Line that the project would be developed in a phased manner. It is expected to generate revenues from the fourth quarter of 2013-14.
Designed by architects RSP of Singapore, the mixed use project will consist of 8 million sq. ft. and include a revenue area of 3.82 million sq. ft of IT SEZ and 1.23 million sq. ft of non-SEZ space encompassing a hotel, serviced apartments, a retail mall and commercial offices.
The Rs 1,800-crore project is being taken up jointly with the group company Hinduja Realty Ventures. They are responsible for all architectural scheme design, project funding, development and eventual maintenance of the project when completed.
“The project had taken some additional time mainly because of the permission for a special economic zone. Once we received this, we have begun work on the project,” he said.
To execute the project, there is no additional burden on Gulf Oil. In return for providing land for the project, the company is entitled to 30 per cent of the entire developed area as part of the scheme equivalent to 2.4 million sq. ft. This includes 1.5 million sq. ft of revenue area.
“While the Bangalore project is expected to take up to five-and-a-half years for completion, we will initiate work on the Hyderabad project once the demand for office space picks up,” Mr Pramanik said.
Gulf Oil shares closed the day trade at Rs 83.85, up 4.55 per cent on the BSE.
New Delhi: A Parliamentary panel has castigated the government for not establishing industries in almost half the SEZs set up since 2006 and giving the land to realtors, diverting fertile land of farmers.
The Parliamentary Standing Committee on Commerce said that though land was acquired for special economic zones "but no industries have come up there; only 154 SEZs have become operational out of 389 notified".
"Instead real estate business has become prosperous in the guise of SEZ and the rich fertile land of farmers were being diverted without bringing real development in terms of establishing industry or IT units," the Committee said in its report tabled in Parliament.
Asking the government to "check such a trend which defeat the objective of industrialisation and higher exports", it said such decisions also "deny the country of scarce cultivable land resources and impoverish the farmers".
Such a practice belies the employment opportunities for the people who were promised so while acquiring their land, it added.
It also raised concern over the denotification of special economic zones (SEZs), which is seen as a reflection of policy deficit in guiding the SEZs.
The Committee, headed by Shanta Kumar, noted that from December 2008 and till March 15, 2012, the Board of Approval on SEZ has approved 46 cases of denotification.
It asked the Department of Commerce to tighten the norms so that only genuine cases can get the approval.
The reasons for denotification ranges from economic slowdown, poor market response and imposition of Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs, among others.
The requests for denotification considered by the BoA include those of DLF Ltd, Maytas Ventures SEZ Ltd, Essar SEZ Hazira Ltd, Unitech Infopark, Bata India, JSL Ltd and Satyam Computer Services.
The Committee recommended the government to check such a trend which defeats the objective of higher industrialisation and exports.
During 2011-12 fiscal, exports from SEZs grew by 15 per cent year-on-year to Rs 3.6 lakh crore.
Good morning Ministry of commerce!!..there were exhaustive studies and protests done in 2006 to oppose SEZ formation as economic benefit ..what were you doing then?
India has already inched towards knowledge based economy, full time employment is guaranteed only to folks who have good 10+2+3 education in these SEZ..where will farmers children fit in?
Anyways, at least construction and realty is sector is creating jobs for brokers/construction workers/ builders
In 2002, after com bust, all free money poured into California real estate..full time software engineers left their jobs and became realtors...construction workers / builders/ wall street all enjoyed party till 2007..boosting jobs and GDP growth.
Gujarat HC stops Mundra Port SEZ work until green clearance obtained
The Gujarat High Court has ordered the promoters of Mundra Port Special Economic Zone (MPSEZ) and Alstom Bharat Forge Power to stop construction activity till green clearance is obtained from the environment ministry.
A division bench of Chief Justice Bhaskar Bhattacharya and Justice J.B. Pardiwala observed that till MPSEZ does not get environment clearance even lease of land to interested parties is unlawful.
The bench passed the order on a public suit filed by the residents of Navinal, one of the villages directly affected by the MPSEZ.
MPSEZ is coming up in Mundra block of Kutchh district, 500 km northwest of state capital Gandhinagar.
The commerce ministry granted permission for setting up multi-speciality SEZ at Mundra. It is promoted by Adani Group.
MPSEZ is spread over 18,000 hectares of land, of which, over 6,472 hectares is SEZ.
Petitioner Ramjubhai Jadeja had sought a stay against the construction by MPSEZ and ALSTOM Bharat Forge Power Ltd. as neither of them have got environmental clearance. The petitioner's lawyer, Anand Yagnik, argued that both the companies must get environment clearance before starting any activity in the SEZ.
They brought to the notice of the court that the environment ministry has also constituted an expert committee to study the environment impact assessment, as the company has violated Coastal Regulation Zone Act (CRZ) too.
The respondents in their affidavit argued that the construction activity will not have any impact on humans or the environment but the court did not buy the argument and ordered all construction activity to stop with immediate effect.
Stung by Minimum Alternate Tax, companies seek denotification of Special Economic Zone projects
GURGAON: Stung by the central government's Minimum Alternate Tax (MAT), the industrial houses with SEZs in the Gurgaon region are now planning to seek denotification of their projects.
In 2005, when the government came out with SEZ policy, Gurgaon wooed the maximum number of the investors resulting in formation of over two dozen SEZs.
Due to the imposition of MAT, coupled with economic uncertainties, Ansal SEZ Projects has approached the government requesting denotification of their projects.
Industry insiders claimed that more business houses are now planning to seek denotification of their SEZ projects. Top honchos of two industrial houses with SEZ projects in Gurgaon admitted that they are exploring the option.
"The imposition of MAT has made the SEZ unviable for doing business and under these circumstances the industrial houses have no option but to shed the SEZ tag from the projects," said a senior executive of a real estate developer.
To develop Gurgaon as an industrial hub, the Haryana government encouraged investors for SEZ projects. Many of the SEZ projects are midway in the region but the recent imposition of MAT has been a dampener of sorts.
The SEZ policy had been framed by an Act in 2005. The industrial houses are now uneasy about the viability factor. "Now the SEZ has become restrictive in nature and does not allow a level-playing field for investors. And this is the reason for seeking denotification," said an executive of another industrial house, on condition of anonymity.
The ministry of commerce and industry would soon announce relaxed land-related norms for Special Economic Zones (SEZs) to arrest the slackening pace of growth in these tax-free zones by making certain changes in the SEZ policy.
In a major amendment to the policy, enacted in 2006, for the first time the government will change the minimum land requirement across all sectors. It will reduce the threshold limit for each sector-specific SEZ, in the wake of severe constraints faced by the developers in acquiring huge tracts of contiguous land.
At present, the minimum land required for multi-product, multi-service, information technology and gem & jewellery SEZs is 1,000 hectares (ha), 100 ha and 10 ha each, respectively. This is also referred to as the ‘10-100-1,000’ model. The problem faced by most developers is with acquiring land for multi-product SEZs of 1,000 ha that is ‘vacant’ as well as ‘contiguous’. The government has now planned to reduce the minimum land requirement significantly.
For example, multi-product SEZs would now be required to acquire a minimum of 250 ha. For multi-service and sector-specific SEZs, it will be 40 ha, and for other SEZs such as IT, gem & jewellery and biotech, the threshold would remain 10 ha.
“Acquisition of land has become a serious problem for the developers. They are also facing problems when it comes to expansion, relocation and single-window clearance. As a result, exports have taken a hit. So, we are planning to review the (SEZ) policy and make the necessary changes. We have the finance ministry on board and the announcement would be made soon,” a commerce department official told Business Standard.
During several rounds of inspections, the government found that sometimes land of 1,000 ha was not required at all, especially in cases where the activities were related to clustering of units.
Another significant amendment to the SEZ policy would be with regard to the ‘contiguity’ norms. Several projects have been held up on this particular criterion for the past four to five years. The most controversial amongst these was the 1,233-ha multi-product Navi Mumbai SEZ (NMSEZ) Pvt Ltd, promoted by Reliance Industries Chairman Mukesh Ambani and his associate Anand Jain. The project failed to take off, as it could not meet the contiguity norms ever since it was sanctioned by the government.
Developers had long been insisting on relaxing the contiguity norms for building SEZs, as they were often faced with the problem of a highway, water pipeline, railway track, canal or sewage line passing through the enclaves. The government is likely to amend the policy in such a way that the contiguity norms would be applied only for the processing area where actual manufacturing and export take place, not in the non-processing areas that are to house residential colonies, hospitals and schools.
Besides, for IT SEZs, ring-fencing would be made mandatory, with the installation of more entry and exit gates guarded by security personnel to check those areas where the contiguity is broken due to the presence of some physical barrier such as railway lines, water bodies or highways, among others.
Finally, the government is likely to further dilute the definition of ‘vacant’ land. At present, a lot with buildings is considered vacant if those structures have not been under any commercial use. However, the changed policy would consider even such land vacant that houses a commercial building, but not exceeding 20 per cent of the overall land proposed for an SEZ.
Also, an operational building on that particular land would be delineated and not be meant for duty concessions. Only the new structures that would be built in the SEZ would be entitled for those benefits.
However, the government is not going to make any changes with relation to the Minimum Alternate Tax and Dividend Distribution Tax. Developers complain these are eroding the units' bottom lines.
The government had granted formal approvals to 589 SEZ projects as of March 2012. So far, 389 SEZs have been notified and 153 are in operation. In 2011-2012, total exports from SEZs reached Rs 3,64,478 crore, up 15.4 per cent from Rs 3,15,868 crore a year before.
32 SEZ developers seek more time to execute projects
New Delhi : Reflecting economic slowdown and delays in land acquisition, 32 developers including Uttam Galva Steels, Unitech Infracon and Navi Mumbai SEZ have sought more time from the government for implementing their special economic zone projects.
Mahindra & Mahindra, Mumbai SEZ Ltd and GMR Hyderabad International Airport have also requested for additional time for project implementation from the Board of Approval (BoA), headed by Commerce Secretary S R Rao. The BoA, a 19-member inter-ministerial body that deals with special economic zone (SEZ) related matters, will consider these applications on July 6 meeting.
"The developers have sought one to two more years for implementation of their projects. They have cited reasons like global meltdown and problems in land acquisition for delay in projects," an official said.
Another two promoters - Ansal SEZ Projects and Shyam Steel Industries - have approached the Commerce Ministry for surrendering their projects, citing reasons like imposition of minimum alternate tax and lack of response from infrastructure developers.
Ansal has approached the BoA for surrendering its It/ITeS tax-free enclave at Gurgaon, the BoA agenda note said. According to an industry experts, uncertainty over the tax exemptions for new SEZs has also led to declining interest in the duty-free zones. Investors are very apprehensive about the new draft Direct Taxes Code (DTC).
According to the revised DTC draft, which will replace the Income Tax Act of 1961, tax exemptions for SEZs will be confined to already existing units.
The board will also take up four applications for setting up new zones.
However, to boost investors confidence in these zones, the government is planning incentives for developers who want to set up SEZs in remote and undeveloped areas.
The government is considering to relax minimum land area requirement for different categories of SEZ, besides extending the benefits of export schemes to SEZ units, that are already available to entities outside the zone.
SEZs have been losing appeal among investors since 2008 because of tough global economic conditions and uncertainty over continuation of the tax incentives to these enclaves. Exports from SEZs stood at Rs 3.65 lakh crore in 2011-12. With investment of Rs 2.02 crore, these zones provide employment to over 8.45 lakh. Overseas shipments from the 153 operational tax free havens have come down to 12 per cent in the country's total exports from about 30 per cent in the previous years.