Research and Articles
![](/Content/images/arrow-3-right-red.png)
Hotline
![](/Content/images/arrow-3-right-red.png)
- Capital Markets Hotline
- Companies Act Series
- Climate Change Related Legal Issues
- Competition Law Hotline
- Corpsec Hotline
- Court Corner
- Cross Examination
- Deal Destination
- Debt Funding in India Series
- Deal Talk
- Dispute Resolution Hotline
- Education Sector Hotline
- FEMA Hotline
- Financial Service Update
- Food & Beverages Hotline
- Funds Hotline
- Gaming Law Wrap
- GIFT City Express
- Green Hotline
- HR Law Hotline
- iCe Hotline
- Insolvency and Bankruptcy Hotline
- International Trade Hotlines
- Investment Funds: Monthly Digest
- IP Hotline
- IP Lab
- Legal Update
- Lit Corner
- M&A Disputes Series
- M&A Hotline
- M&A Interactive
- Media Hotline
- New Publication
- Other Hotline
- Pharma & Healthcare Update
- Press Release
- Private Client Wrap
- Private Debt Hotline
- Private Equity Corner
- Real Estate Update
- Realty Check
- Regulatory Digest
- Regulatory Hotline
- Renewable Corner
- SEZ Hotline
- Social Sector Hotline
- Tax Hotline
- Technology & Tax Series
- Technology Law Analysis
- Telecom Hotline
- The Startups Series
- White Collar and Investigations Practice
- Yes, Governance Matters.
- Japan Desk ジャパンデスク
SEZ Hotline
September 27, 2006Minister SEZs: To use or not to use prime agricultural land
The Special Economic Zone (“SEZ”) Act, 2005 (the “Act”) and the SEZ Rules, 2006 (the “Rules”), again came under fire when an issue was raised about the nature of land to be allocated for SEZ purposes1.
The SEZ is a Government of India-notified special geographical area, ear-marked for specific commercial activities and sectors, which are export-oriented. The developer and a unit in an SEZ are entitled to certain income tax benefits over a prescribed period of time, in addition to other taxation benefits. The Rules mandate the minimum area requirements for sector specific / multi-purpose SEZs which are located in different states. The procedure for obtaining an approval for an SEZ is very detailed and is specified in the Act and Rules. The developer of the SEZ has to identify the land and mention it as a vital part of the application to the requisite authorities, which comprise of a Board of Approval instituted under the Act and the State Government.
The Minister for Commerce and Industry, Government of India, Mr. Kamal Nath, in a news report2, has urged the State Governments to ensure that the land that is proposed to be utilized for SEZ is not prime agricultural land. Lands, which are less fertile, or are wastelands, may be used instead. It was also mentioned in the news report that it was vital to formulate a compensation, resettlement and rehabilitation policy for protecting the interests of the persons displaced due to industrial projects
These views come in at a time when the SEZ regime is under a controversy. While the Commerce Ministry is bullish on it due to its impact on boosting industrial development and growth , the Finance Ministry is concerned about the revenue losses that will result due to the various tax concessions under the regime. The revenue loss is estimated to be INR. 1,700,000 million.
Impact: In view of this, the Government of India may modify the Act or the Rules with regard to the land to be identified for the SEZ purposes and the compensation or rehabilitation of the displaced farmers. Mean while, we have to wait and watch the developments.
- Diptee Deshpande & Vyapak Desai |
Source:
-
The Economic Times, September 24, 2006