BANGALORE: During the release of the Annual Supplement 2013-14 to the Foreign Trade Policy 2009-14 on April 18, the Union Minister for Commerce, Industry and Textiles, announced reforms to the SEZ Policy in order to revive investor interest.
Presently, 389 SEZs have been notified of which 170 are functional, employing over one million. There has been an investment of over Rs 2.36 lakh crores in SEZs, and exports from SEZs during the last financial year registered a growth of over 31 percent over the previous year.
The Minister announced, “Due to difficulties in aggregating large tracts of uncultivable land which is vacant and contiguous, we have decided to reduce the Minimum Land Area Requirement by half for different categories of SEZs. For a multi-product SEZ, it has been brought down from 1,000 hectares to 500 hectares and for a sector-specific SEZ it has been brought down to 50 hectares from 100 hectares.”
Since IT SEZs have made a significant contribution to export promotion, the ministry decided that there would be no minimum land requirement for setting up IT/ITeS SEZs. Only the minimum built-up area criteria would be needed to be met by SEZ developers. Minimum built-up area requirements have also been considerably relaxed with the requirement of one lakh square metres to be applicable for the seven major cities – Mumbai, Delhi (NCR), Chennai, Hyderabad, Bangalore, Pune and Kolkata. For the other Class B cities, the minimum built-up area is 50,000 square metres.
Till March 2012, in Bangalore, there were around 24 notified SEZs. According to research by Jones Lang LaSalle India, the geographic distribution of IT/ITeS spaces (existing stock at the end of 2012), both SEZs as well as non-SEZs, shows highest concentration in the Secondary Business District (SBD), capturing around 51 percent of the pie with 34.92 million sqft. Whitefield holds 32 percent with 23.70 million sqft.
Around 6.52 million sqft is present in the Central Business District (CBD) i.e. 10 percent of the stock, and seven percent of the stock is in Electronics City with 4.81 million sqft.
On the cards
According to the Ministry of Commerce and Industry, 38 SEZs have been granted formal approvals in Bangalore.
Research by Cushman & Wakefield shows that approximately 9.10 million sqft of SEZ space is planned and coming up over the next couple of years. Around 17 percent of the space is expected to come up in the eastern micro-market in Whitefield and the rest is expected to come up in the peripheral micro-market of the Outer Ring Road (ORR).
Nearly 37.50 hectares of SEZ land has been notified for a biotechnology SEZ in Electronics City. Also, engineering SEZs are notified to be operational in north Bangalore at Yelahanka and Devanahalli.
Areas with potential for SEZ
The 38 SEZs which have been granted formal approvals are concentrated in the north, south, and east. According to Girish K S, Local Director – Strategic Consulting, Jones Lang LaSalle India, “In terms of IT/ITeS development, the city is likely to witness further development of SEZs in micromarkets such as Whitefield, Electronics City, the Marathahalli-ORR belt, Sarjapur Road and Bellary Road (between Yelahanka and the airport). The international airport also has plans to develop IT SEZ space as part of its landside development and KIADB is developing the Devanahalli Industrial Area, which also has SEZ space. The eastern part of the city is likely to witness development of SEZs due to the existing economic drivers (concentration of large SEZs and IT Parks) and well-developed support infrastructure and facilities. Growth along Bellary Road is due to augmentation of city-level infrastructure all along the road up to the airport supported by fast-developing support infrastructure and facilities.”
Naveen Nandwani, Director – South India, Cushman & Wakefield, adds, “Though land is available in the peripheral parts of the city, the cost has gone up considerably in the last few years. Further development of SEZs will make economic sense for a developer only if he has acquired the land at relatively lower rates. Considering the shortage of land parcels measuring 50 hectares or more, the presence of good hard infrastructure, and the financial aspects, the eastern parts of Bangalore and along the Old Madras Road towards Hoskote hold potential for the development of new SEZs.”