The Hindu Business Line : SEZ Act to pave way for FDI flow

SOME of the greenfield special economic zones (SEZ) in the country that had been languishing for lack of regulatory clarity are getting active again with the SEZ Act set to get the nod soon.

Scrapping the `sunset clause' mooted by the Finance Ministry will pave the way for smooth flow of FDI.

While the Finance Ministry had argued that the sunset clause would fasten the pace of investment in SEZs, the industry was not convinced as it was seen as a restrictive rule.

The Commerce Ministry had been supporting the industry's stance on this issue, and the impasse could be solved only with the intervention of the Prime Minister's office.

As per the SEZ Bill, which was cleared on Wednesday, an income tax holiday spanning 15 years has been proposed, where the first five years is 100-per cent tax free and the ensuing blocks of five years each will have partial and conditional tax holidays. While it is still shy of 20 years as demanded by the industry, it was only too glad to take it.

In the case of the Mumbai SEZ, the promoters are understood to be talking to the US-based Hines Corporation and Starwood Capital, Jebel Ali Free Trade Zone and the Singapore Government for equity participation in the project.

The equity portion of the $1.1-billion project has been kept at $330 million. The financial institutions in talks include IDBI, IDFC, HDFC, Hudco and IL&FS.

The Mumbai SEZ, which has set itself a four-year time frame to get going, is targeting a soft opening in two years.

The viability of the SEZ will also hinge on whether the 22.5-km Mumbai trans-harbour link, connecting Nhava and Sewri at a cost of Rs 4,000 crore, can be completed in 40 months as envisaged.

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