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Slowdown fails to suppress SEZ lure

Business

Even in the midst of a liquidity crunch, Special Economic Zones (SEZs) still remain a lucrative investment option among developers.

The government has cleared 22 of these tax-free industrial enclaves.

The inter-ministerial Board of Approval on SEZs has approved 19 out of the 38 proposals that were considered by it. Besides, three zones were given the in-principle nod, as they are yet to acquire land.

According to a commerce ministry press release, 531 zones have been formally approved since early 2006, out of which 271 have been notified. As much as Rs83,450 crore have already been invested in the notified zones.

Meanwhile, developers of existing zones continue to face problems in accessing credit from banks because of the Reserve Bank of India’s categorisation of SEZ projects as a real estate activity, which invites stringent capital adequacy norms. As a result, the zones have to incur higher borrowing costs on loans.

An Empowered Group of Ministers (EGoM) on SEZs has recommended that the construction of the processing area should be recognised as infrastructure development, which will allow the zones to access cheaper loans.

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June 2020
10 Jun 2020