Special Economic Zones Rules, 2006

Chapter 2

Procedure for establishment of Special Economic Zone

5. Requirements  for establishment of a  Special Economic Zone.-  

(1) The Board may approve  as  such  or  modify and  approve  a  proposal for establishment of a Special  Economic  Zone,  in  accordance  with  the  provisions  of  sub-section  (8)  of section 3, subject to the requirements of minimum area of land and other terms and conditions indicated in sub-rule (2).

¹⁶[(2) The requirements of minimum area of land for a class or classes of Special Economic Zone in terms of subsection (8) of section 3 shall be the following, namely: -

(a) A Special Economic Zone or Free Trade Warehousing Zone other than a Special Economic Zone for Information Technology or Information Technology enabled Services, Biotech or Health (other than hospital) service, shall have a contiguous land area of fifty hectares or more:

Provided that in case a Special Economic Zone is proposed to be set up in the States of Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttarakhand, Sikkim, Goa or in a Union territory, the area shall be twenty-five hectares or more.

(b) There shall be no minimum land area requirement for setting up a Special Economic Zone for Information Technology or Information Technology enabled Services, Biotech or Health (other than hospital) service, but a minimum built up processing area requirement shall be applicable, based on the category of cities, as specified in the following Table, namely: –

TABLE

(c) The minimum processing area in any Special Economic Zone cannot be less than fifty per cent. of the total area of the Special Economic Zone.

(d) All existing notified Special Economic Zone shall be deemed to be a multi-sector Special Economic Zone.

Explanation. – For the purpose of this clause, a “multi-sector Special Economic Zone” means a Special Economic Zone for more than one sector where Units may be setup for manufacture of goods falling in two or more sectors or rendering of services falling in two or more sectors or any combination thereof including trading and warehousing.]

^[helldodold[(2) The requirements of minimum area of land for a class or classes of Special Economic  Zone  in terms  of  sub-section  (8)  of  section  3 shall be the following, namely:-  

⁵[(a) A Special Economic Zones for multi-product shall have a contiguous area of¹³[five hundred hectares] ^Old[one thousand hectare]  or more but not exceeding 5000 hectares:

Provided that in case a Special Economic Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and Kashmir, Goa or in a Union Territory, the area shall be ¹³[one hundred hectares] ^Old[two hundred hectares] or more:

Provided further that at least fifty per cent of the area shall be earmarked for developing the processing area.]

⁸[Provided also that the Central Government may consider on merit the clubbing of contiguous existing notified Special Economic Zones notwithstanding that the total area of resultant Special Economic Zones exceeds 5000 hectares.]

Note:- As per Annual Supplement 2013-14 Minimum Land Area Requirement has been reduced by half . For Multi-product SEZ from 1000 hectares to 500 hectares  

Referred to HIGHLIGHTS OF ANNUAL SUPPLEMENT 2013-14

^old[(a) A Special Economic Zone for multi product shall have a contiguous area of one thousand hectares or more:  

^2Deleted[Provided  that  such  Special  Economic  Zone  established  exclusively  for services may have a contiguous area of one hundred hectares or more:]  

Provided further that in case a Special Economic Zone is proposed to be set up  in  Assam,  Meghalaya, Nagaland,  Arunachal Pradesh,  Mizoram,  Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and Kashmir, Goa or in a Union territory, the area shall be two hundred hectares or more:

¹[Provided also that at least thirty-five per cent. of the area shall be earmarked for developing the processing area, which may be relaxed upto twenty-five per cent by the Central Government on recommendations of the Board for the reasons to be recorded in writing;]

^Old[Provided  also  that  at  least  twenty  five  per  cent.  of  the  area  shall  be earmarked for developing processing area:]  

^2Deleted[Provided also that the fulfillment of the requirement of the contiguous area shall be considered and decided by the Board on a case to case basis on merits;]]

¹³[ (b)(i) A Special Economic Zone for a specific sector or for one or more services or in a port or airport, shall have a contiguous area of fifty hectares or more:

Provided that for each contiguous fifty hectare land,-

(A)  in a Special Economic Zone; or

(B) which is added to the Special Economic Zone, an additional sector may be allowed:

Provided that the additional land requirement for an additional sector in a Special Economic Zone for a specific sector or for one or more services as per first proviso will be twenty five hectares when the Special Economic Zone is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttarakhand, Sikkim, Jammu and Kashmir, Goa or in a Union territory.

(ii) There shall be no minimum area requirement for setting up a Special Economic Zone for Information Technology or Information Technology Enabled Services, ¹⁴[Bio-technology and Health Sector (excluding hospitals)] but a minimum built up processing area requirement shall be applicable, based on the category of cities, as follows:-

Table

Provided that for a Special Economic Zone proposed to be set up exclusively for electronics hardware and software (including information technology enabled services) the area shall be ten hectares or more as well as a minimum built up processing area requirement as applicable for a Special Economic Zone for Information Technology or Information Technology Enabled Services, based on the category of cities, referred to in the Table:

Provided further that in case a Special Economic Zone is proposed to be set up exclusively for handicrafts, the area shall be ten hectares or more:

Provided also that in case a Special Economic Zone is proposed to be set up exclusively for bio-technology, non-conventional energy, including solar energy equipments or cell, or gems and jewellery sectors, agro-based food processing, the area shall be ten hectares or more with a minimum built up area as under:

(i) forty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for bio-technology and non-conventional energy sectors, including solar energy equipments or cells and agro-based food processing sector but excluding a Special Economic Zone set up for non-conventional energy production and manufacturing;

(ii) fifty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for the gems and jewellery sector:

Provided also that in case a Special Economic Zone for a specific sector is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttarakhand, Sikkim, Jammu and Kashmir, Goa or in a Union territory, the area shall be twenty five hectares or more for the Special Economic Zones not covered under the first, second and third provisos:

Provided also that in respect of Special Economic Zones (other than Information Technology or Information Technology Enabled Services Special Economic Zones) located in Bl category cities as per classification indicated in Annexure-IV, the minimum built up area shall be fifty per cent of the area specified above and in respect of Special Economic Zones located in B2 category cities as indicated in Annexure IV, the minimum built up area shall be twenty five per cent of such area specified above:

Provided also that Board of Approval may allow additional sectors in the category where the minimum land area requirement is ten hectares:

Provided also that not less than fifty per cent of such area shall be earmarked for developing processing area.]

^Old[(b) ³[A Special Economic Zone for a specific sector or for one or more services or in a port or airport] [A Special Economic Zone for a specific sector or in a port or airport], shall have a contiguous area of one hundred hectares or more:

Note:- As per Annual Supplement 2013-14 Minimum Land Area Requirement has been reduced by half . For sector-specific from existing 100 hectares to 50 hectares 

Referred to HIGHLIGHTS OF ANNUAL SUPPLEMENT 2013-14

Provided that in case a Special Economic Zone is proposed to be set up exclusively for electronics  hardware and software, including information technology enabled services, the area shall be ten hectares or more with a minimum built up processing area of one lakh square meters:

Note:- As per Annual Supplement 2013-14, Now there would be no minimum land requirement for setting up an IT/ITES SEZ

Referred to HIGHLIGHTS OF ANNUAL SUPPLEMENT 2013-14

⁶[Provided further that in case a Special Economic Zone is proposed to be set up exclusively for handicrafts, the area shall be ten hectares or more.]

⁷[Provided also] ^Old[Provided further] that in case a Special Economic Zone is proposed to be set up exclusively for bio-technology, non-conventional energy, including solar energy equipments/cell, or gem and jewellery sectors, ¹[the area shall be ten hectares or more with a minimum built up area as under:

(i) forty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for bio-technology and non-conventional energy sectors, including solar energy equipments/cells but excluding a Special Economic Zone set up for non-conventional energy production and manufacturing;

(ii) fifty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for the gems and jewellery sector:]

¹¹[Provided also that in respect of Special Economic Zones located in B1 category cities as per classification indicated in Annexure-I V, the minimum built up area shall be 50% of the area specified above and in respect of Special Economic Zones located in B2 category cities as indicated in Annexure IV, the minimum built up area shall be 25% of the area specified above.]

Note:- As per Annual Supplement 2013-14, the minimum built up area requirement has also been considerably relaxed 

Referred to HIGHLIGHTS OF ANNUAL SUPPLEMENT 2013-14

^Old[the area shall be ten hectares or more:]

Provided  also  that in  case a Special Economic Zone for a specific sector is proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh,  Mizoram, Manipur,  Tripura,  Himachal   Pradesh,   Uttaranchal, Sikkim, Jammu and  Kashmir, Goa or in a Union territory, the area shall be fifty hectares or more for the Special Economic Zones not covered under the first and second proviso:  

Provided also that at least  fifty per cent of the area shal be earmarked for developing processing area;]  

(c) Special Economic Zone for Free Trade and Warehousing shall have an area of forty hectares or more with a built up area of not less than one lakh square meters:

¹[Provided that in a stand alone Free Trade and Warehousing Zone at least fifty per cent. of the area shall be earmarked for developing processing area:

Provided further that a Free Trade and Warehousing Zone may also be set up as part of a Special Economic Zone for multi-product:]

^Old[Provided that a Free Trade and Warehousing Zones may also be set up as part of a Special Economic Zone for multi-products:] 

¹[provided also] ^Old[Provided further] that in a Special Economic Zone ¹²[having area less than¹³[five hundred] ^old[one thousand hectares]] ^Old[for a specific sector], Free Trade and Warehousing Zone may be permitted with no minimum area requirement but subject to the condition that the maximum area of such Free Trade  and  Warehousing Zone  shall  not exceed  twenty per cent.  of  the processing area.  

⁴[(d) If a Developer subsequent to approval or. notification of a Special Economic Zone acquires more' Contiguous and vacant land which makes the total area available, including the. area already notified as Special Economic Zone, more than the minimum area required for another class of SEZ, the Board may consider_ such case on a case-to-case basis for allowing conversion to anther class of Special Economic Zone by subsuming such already approved or notified Special Economic Zone.]]^helldod] 

(3) The  requirements  of  the  minimum  area  of  land  for  the  Special  Economic Zones, -

(a) which had been, before the commencement of these rules ,-

(i)   recommended by the Board of Approval constituted by the notification of the  Government  of  India, in the Ministry of Commerce  and  Industry (Department   of  Commerce)   Number   14/1/2001-EPZ  dated   the  7th

August, 2001;and  

(ii) approved by the Central Government;  

(b) which had acquired or taken possession of the land required for setting up of the Special Economic Zones before the commencement of these rules; and  

(c) which   are situated in any of  the States mentioned under column (2) of the Annexure II to these rules, shall, for each  sector  under column (3) of the Annexure II, be such as mentioned in the corresponding entries under column (4) against each such sector situated in the State mentioned under column (2) of the said Annexure II.

(4)  The  Developer  or  Co-Developer  shall have  at  least  twenty-six  percent of the equity in the entity proposing to create business, residential or recreational facilities in a Special Economic Zone in case such development is proposed to be carried out through a separate entity or a special purpose vehicle being a company formed and registered under the Companies Act, 1956 (1 of 1956).

(5) Before recommending any proposal for setting up of a Special Economic Zone, the State Government shall endeavor that the following are made available in the State to the proposed Special Economic Zone Units and Developer, namely: -  

(a)  exemption  from the State and  local taxes ¹⁵[State Goods and Services Tax], levies  and duties, including stamp duty,  and taxes  levied by local bodies  on  goods  required for authorized operations by a Unit or Developer, and the goods sold by a Unit  in  the  Domestic  Tariff  Area  except  the  goods  procured  from domestic tariff area and sold as it is;  

(b)    exemption from electricity duty or taxes on sale, of self generated or purchased  electric  power  for  use  in the  processing area of a  Special Economic Zone;  

⁹[(c) allow generation, transmission and distribution of power within a Special Economic Zone]

^Old[(c)  allow generation, transmission and distribution of power within a Special Economic  Zone  subject  to  the  provisions  of the Electricity  Act,  2003 (No. 36 of 2003);]  

(d) providing water, electricity and such other services, as may be required by the developer be provided or caused to be provided;  

(e)  Delegation  of  power  to  the  Development  Commissioner  under  the Industrial Disputes Act, 1947 (No. 14 of 1947) and other related Acts in relation to the Unit;

(f)  Delegation  of  power  to  the  Development  Commissioner  under  the Industrial  Disputes  Act,  1947  (No.  14  of  1947)  in  relation  to  the workmen employed by the developer.  

(g)  Declaration of  the Special Economic Zone as  a Public  Utility Service under the  Industrial Disputes Act, 1947 (No.14 of 1947);  

(h) Providing single point clearance system to the Developer and unit under the State Acts and rules;  

(6) The State Government shall, while recommending a proposal for setting up of Special  Economic  Zone to the  Board  indicate  whether  the proposed area  falls under reserved or ecologically fragile area as may be specified by the concerned authority.

¹⁰[(7) The Developer or Co-developer shall have to construct the minimum built up area specified in this rule within a period of ten years from the date of notification of the Special Economic Zone in which at least fifty percent of such area to be constructed within a period of five years from the date of such notification.]

¹⁷[Provided that the Board of Approval may, upon request in writing by the Developer, and after being satisfied that it is necessary and expedient to do so, grant extension beyond the said period of ten years for a further period of not exceeding one year, at a time, subject to maximum upto ten such extension.

(8) In case of a Special Economic Zone for Information Technology or Information Technology enabled Services, letter of approval shall be issued by the Approval Committee for services, which can be broad-banded with Information Technology or Information Technology enabled Services such as financial services, consultancy services, design services, architect services, commercial training or coaching services.]

1. Substituted vide Notification Dated 10/8/2006

2. Deleted vide Notification Dated 16/3/2007

3. Substituted vide Notification Dated 16/3/2007

4. Added vide Notification Dated 16/3/2007

5. Substituted vide Notification No. G.S.R. 1744(E) Dated 12/10/2007

6. Inserted vide Notification Dated 14/11/2008

7. Substituted vide Notification Dated 14/11/2008

8. Inserted vide Notification Dated 20/05/2009

9. Substituted vide Notification Dated 14/06/2010

10. Inserted vide Notification Dated 14/06/2010

11. Inserted vide Notification Dated 12/07/2010

12. Substituted vide Notification Dated 12/07/2010

13 Substituted vide Notification Dated 12/8/2013

14 Inserted vide Notification Dated 19/9/2018

15 Inserted vide Notification Dated 19/9/2018

16. Substituted vide Notifications Dated 17/12/2019

17. Inserted vide Notifications Dated 17/12/2019