The Indian government is revising its special economic zone (SEZ) policy to boost declining exports. It is considering relaxing minimum land area requirements for more sectors and cutting it from 100 hectares to 10 hectares for agro-processing SEZs. It is also planning to halve the minimum area for multi-services SEZs from 100 to 50 hectares. These changes aim to rekindle investor interest in SEZs and supplement policy alterations made three months ago to boost exports, which declined 1.41% in the first quarter of the current fiscal year amid pressure on the current account deficit.

1. Govt to Revise SEZ Policy to Push Declining Exports
Beset by falling exports, the government is revisiting its policy on special economic
zones in the hope of rekindling interest among investors. With industry and state
governments citing problems with land acquisition, the commerce department is
considering relaxing the minimum area requirement for more sectors in the final
amendments in the SEZ rules. These changes are being looked at even as the
government is yet to put into effect the announcement made by commerce and industry
minister Anand Sharma three months ago.
The department has identified agro processing SEZs as the main thrust area and plans
to cut minimum land requirement from 100 hectares to 10 hectares for agro-processing
SEZs.
Among the changes being mulled is halving of the area requirement for setting up of
multi-services SEZs to 50 hectares from 100 hectares. Multi-services SEZs would be
considered on a par with single-product SEZs.
As per the new changes, SEZ developers will also be able to add another sector on
additional contiguous 50 hectares on multi-product SEZs.
To give a fillip to exports, the government in April had halved the minimum area
requirement for single-product SEZs to 50 hectares and that for multiproduct SEZs to
500 hectares. While the minimum land requirement norm for IT SEZs was scrapped, it
was left unchanged for multi-services SEZs. These changes, however, are yet to be
implemented.
According to sources, Sharma has put these proposals on the fast track and asked
ministry officials to ensure that the new norms are put in place before the end of the

2. month. The law ministry, however, is yet to vet the proposed notification. If accepted,
these changes will supplement the policy alterations made by the government three
months ago.
Falling exports has put pressure on the current account deficit, which widened to an all
time high of 4.8% of GDP in 2012-13. Continued contraction in exports in the current
financial year has set alarm bells ringing among policymakers who are now casting
about for ways to boost exports.
India’s exports declined 1.41% to $72.4 billion in the first quarter of 2013-14.
SEZs, which witnessed 31% growth in exports despite an overall contraction of 1.86%
in the country’s outbound trade, are seen as the new saviour.
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