Central Government alters rules, permits non-processing area demarcation in IT SEZs

In a significant development, the Ministry of Commerce and Industry announced amendments to the Special Economic Zones (SEZ) Rules-2006, allowing for the demarcation of specific portions of the built-up area within an SEZ unit on a floor-by-floor basis, designating them as non-processing or non-SEZ areas.
Under the new amendment, the Board of Approval may permit the demarcation of a portion of the built-up area as a non-processing area. This is applicable only upon request from a developer of Information Technology or Information Technology-enabled services SEZs. Developers can proceed with demarcation only after the repayment, without interest.
Notably, a non-processing area must encompass an entire floor, and partial floor demarcation is strictly prohibited. Demarcation of a non-processing area will not be allowed if it results in decreasing the processing area to less than 50% of the total area or less than 50,000 sq meters area for category A cities, 25,000 sq meters area for category B cities and 15,000 sq meters area for category C cities.
The floor-wise denotification offers various leasing prospects, contributing to increased office occupancy rates in SEZ assets. The recent amendment to the IT SEZ policy in India paves the way for a harmonious co-existence of SEZ and non-SEZ entities within a unified campus, enhancing the ease of doing business for corporate developers and investors.
The recent amendment stands as a key initiative that would boost the attractiveness of the Indian commercial space for investors. The timing of this amendment is right when global companies are seeking office space in India and the Indian REIT market seeks to move out of a lacklustre performance this year.

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Central Government alters rules, permits non-processing area demarcation in IT SEZs

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