SEZ developers need more time to finish projects

SEZ developers need more time to finish projects
The Financial Express, April 15, 2009, Page 3

Press Trust of India, New Delhi

Faced with a severe financial crunch, several special economic zones (SEZ) developers have approached the commerce ministry seeking more time to complete their projects.

“Some companies have asked for extension of time,” commerce secretary GK Pillai said. Pillai heads the inter-ministerial board of approval which clears the proposals for setting up of SEZs where units are given tax exemptions. Export Promotion Council for export-oriented units (EOUs) and SEZ units director general L B Singhal said, “It is natural because of the current economic slowdown ... demand for space has also come down.”

After each stage of approval—in principle and formal—the developer is given time to proceed and return to the government for final notification. Even after final notification, the promoter gets time to make the SEZ functional.

While Pillai did not disclose the companies approaching the commerce ministry for extension of time, sources said developers, mainly from the real estate sector, have put their SEZ plans on the back-burner. The real estate majors such as DLF, Parsvanath Developers, Rahejas and Emmar have received formal approvals for tax-free enclaves. Several of these projects have been deferred.

The valuations of realty firms have crashed in the last few months after a meltdown in the stock markets, making it difficult for them to tap the capital market for resources. Besides, several of them have sought their debt restructuring from banks.

With exports contracting and IIP in the negative zone, investments into SEZ seems to have slowed down.