RBI to respond to Commerce Ministry's query on SEZ in 15 days

Mumbai, Nov 29 (UNI) The Union Commerce secretary Mr Gopal K Pillai today said his Ministry has asked the Reserve Bank of India (RBI) to clarify the controversial issue of treating Special Economic Zones (SEZ) as real estate entities, and it is expected that the RBI will respond within the next 15 days.

RBI, through one of it's recent circulars, has asked commercial banks to treat SEZs at par with any other real estate project when it comes to lending.

Talking to mediapersons on the sidelines of the US-Indo Business Summit here, Mr Pillai said, ''We have had some communications with the RBI which is likely to respond within the next 15 days.'' However, he maintained that ''As there was no infrastructure development involved in the construction of SEZ, it was not wrong on the part of RBI to term them as any other real estate.

Referring to the forthcoming electronics hardware SEZ at Sriperumbadur in Tamil Nadu, he asked ''Why can't it be treated on par with real estate when there was no infrastructure development involved there at all?'' Giving another example of another SEZ being developed by Infosys in Bangalore, he said that there too no infrastructure development was involved.

As per the norms set for SEZ development, while 35 per cent of SEZ area should be developed as processed area, the remaining area should be treated as non-processing area. However, it it has been observed that the unprocessed area was being used by the SEZ developers for the welfare of their employees in the forms of power plant, school, housing, water supply and others. It simply means that the non-processing area of an SEZ had nothing to do with the outside world, he emphasised.

Talking to a journal few days ago he had questioned the RBI's stand on SEZ. He had then said, ''As early as September, the RBI in it's annual report said SEZs are an engine of growth and 20 days later, they are calling it a real estate activity.'' Hence he had asked ''How can a manufacturing unit inside an SEZ be a real estate activity?'' UNI KKD WD AW1557