The Ministry of Commerce, vide issue of Notification No. G.S.R 940(E) dated December 17, 2019, notified the Special Economic Zones (3rd Amendment) Rules, 2019. By issue of this notification, the Government recently announced reforms under Rule 5 of Special Economic Zones Rules, 2006, whereby provisions for minimum land area and sector-specific and multi-product SEZs have been amended.

The key amendments notified are as follows:

1.      Henceforth, all existing and new SEZs would become multi-sector SEZs thereby enabling coexistence of an SEZ unit from any sector along with any other SEZ unit.

2.      Provisions governing the minimum land area requirement for setting up of SEZs have also been relaxed and simplified. For instance, amended legal framework mandates a minimum land area requirement for setting up a multi-product SEZ to be 50 hectares from an earlier 500 hectares.

3.   For setting up SEZ in the States of Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttarakhand, Sikkim, Goa or in Union territory, the minimum area should be 25 hectares

4.     There will be no minimum land area requirement for setting up SEZ for Information Technology (IT) or Information Technology enabled Services (ITeS), Biotech or Health (other than hospital) service. However, minimum built up processing area requirement has been prescribed based on category of cities

 Impact :

This move is likely to provide a boost to the SEZs in India. Many IT- ITES SEZs are developed by IT companies themselves. As per the erstwhile rules, excess land in such SEZs could have been utilised only by bringing in IT-ITeS companies. The new proposal to allow multi-sectoral SEZs will provide flexibility to SEZ developers to use un-utilised land parcels by inviting units from other sectors too. This will benefit the developers to use excess land in SEZ. Further, Reduction in minimum land area will provide a boost to smaller companies to develop SEZ.

Copy of the notification is attached for your reference.

 We will keep you posted on further developments in this regard.

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