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ANNEXURE-VI
(To be given on the letterhead of Chartered Engineer)
CERTIFICATE OF CHARTERED ENGINEER For obtaining approval of material for authorized operation
by DeveloperC-Deve)oper
This is to certify that the list of items certified in the attached Annexure(s) are required by Mis developer of notified Special Economic Zone for sector al to carry on defauli authorized operations I authorized operations as approved by Board of Approval in terms of letter No dated_ ______ _
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SNo Name of authorized operation Estimated material cost (in Rs Lacs) Import LIndigenous Total
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(1) (2) (3) I (4) (5) I 1 I 2 I I 3 I 4 I Grand Tota l I-
This is also to certify that the material annexed herewith is required by the Developer to develop the following infrastructure and materia l would be utilized within a period of six monthsshy
SNo Infrastructure to be deve loped Quantum I Space in Sqm I Sqf
1 I
2 I 3
4
Signature and StampSeal of Chartered Engineer -Name
Place Full Address -- Date Membership No --
Note Each page of Annexure(s) is to be cert ified by the Chartered Engineer and authonzed signatory of the developer is also required to pul hiS signatures thereon Annexure(s) shOWing list of goods IS to be furnished separate for each of authorized operation
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Annexure
1 Name of SEZ
2 Sector
3 Location
4 Authorized Operation
SNo Description of item Unit Quantity Estimated Source (import Amount or indigenous)
f---shy1 2
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(Rs Lacs)
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3 I I
4 I -5 I
-- shy Grand Total shy I
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No D 1225201 2-SEZ Government of India
Ministry of Commerce amp Industry Department of Commerce
SEZ Division
Udyog Bhavan New Delhi Dated zZ October 2014
To All Development Commissioners Special Economic Zones
Subject Harmonization of Rules formats and fees in all zones- regarding
SirlMadam
It was observed that there is a variance in implementation of Rules formats and fees in the Special Economic Zones Therefore in order to harmonize the Rules formats and fees in all SEZs formats (copy enclosed) for the following procedures have been standardized for adaption in all Zones
a) For utilization of the goods by the DeveloperCo-Developer (Certificate of
Chartered Engineer)
b) For obtaining approval of material for authorized operations by tbe
DeveloperCo-developer (Certificate of Chartered Engineer)
c) Information required for renewal of LoA for 5 years
d) Lease Deed
e) Annual Performance Report of the Unit
2 All the zones are requested to host all these formats on the zonal web-site and take necessary action accordingly
Encl As above
Yours faithfully
(S st~ww OJ r Under Secretary to the Gov of India
Tel OIl 23062496 e-mail kumarssnicin
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(to be given on the letter head of independent Chartered Engineer)
CERTIFICATE OF CHARTERED ENGINEER For utilization of the goods by the DeveloperCo-Developer
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INJe certify that the records maintained by Ms developer of Special Economic Zone for sector at _ _ ___------_-_ in respect of duty free import and procurement of goods required to carry on authorized operations in their SEZ has been examined by meus The authorized operation wise details of utilization of these goods as certified by meus in the following format are enclosed shy
2 It has been ensured thai the infonmation furnished is true and correct in all respect no part of it is false or misleading and no relevant information has been concealed or withheld
Opening Details of Actual import Goods utilized Closing Balance goods allowed Iprocurement of Balance
-Loads 1 )+(3)-(4)=
(1 ) (2) I (3) (4) I (5) I I
3 Neither I nor any of My partnersdirector is a partner director or an employee of the above-named entity or its associated concerns
4 INJe fully understand that any statement made in th is certificate if proved incorrect or false will render meus liable for any penal or other consequences as may be prescribed in law or otherwise warranted
Signature of MDCEO of SEZ Signature and StampSeal of the Signatory Name-
Chartered Engineer Name of the Signatory
Place Full Address Date Membership No -
Note Authorized operation wise details of utilization of goods are to be certified by the Independent Chartered Engineer and authorized signatory of the developer is also reauired to put his signatures thereon
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INFORMATION REQUIRED FOR REN EWA L OF LOA FOR 5 YEARS
Name of Uni t shy I Address
middot U I lt1gt cl 6 un lt
~A FCf a ille od exports in five years Name of Ye ars Tol al (S Total
1 sl 2nd 3rd 4th 5th y(5) (Ii yrs)
Rs In la khs in Th US$
Fo reiln ExchanQt ou tliO on
0) Import o f m a( llnerv
Iii) Im port o r law mat~ lia s and ( o m pOne 1l t)
(ii i) Imporl or spares and consuJnflbles
Iv) RegIstration of dividellds and pro fits to foreign collaborators
Iv) Royalty
(VI) l urn Sum know how fe~
Design amp drawing fee --( ~ f-Jvii ) PaYl ll ent o f fOl eigrt te chni ci ans
l ix) Payment on trai ning of Indian technician s adro ad
Ix) f o reign tril vel - shy
(xii) Amount of mteres t to be paid on external
commercial borrowingjdeft lled payment credit
(speci fy detail s)
(xlii ) Any o l h r paympnls (speuro ( ify details)
Tot ll) to (Xiii)
Net foreign Exchange earning in five years (A-B)
2) Projected Indigenous requirement (In five years)
I
(l1s In lakhs)
_ICeil1 goo~lt IRaw ma teria ls I (llllpOlients consu1ables packtng matenals amp Spares l
Total =shy
Note Pl eils~ atta ch add Shee t if requ ired Abo ve details should be duly Signeds tamped by th e Auth DirectorSign(lt nry Partner Of pro prietor o f the
un ll ilS the case ma y be
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Sub Revised Consolidated projection for broadbandingdiversificationenhancemenl
(1) Projected Foreign Exchange Ba lance Sheet
Particular
FOB Value of exports on Five years
U Foreign Exchange outgo for nve years
Net Foreign Exchange earning for live years
(1- (2)
YEARS I 1st Year 2nd Year 3rd Year 4lh Year 5th Yea
PrOjected Projected PrOJected PrOjedelt1 Projected Projected Pro eOed PrOjecleo Projected Proreclao ( eXlsling) ( Revised ( eXISting) ( Revised ( eXisting) ( Revised ( existing) ( Rell1sed ( eXlshng) ( ReVl~
AC1ual) Actual) Actual) Actual ) Acuall
I l Details of projected requlre rllent of Planl amp Machmary I capllal goods and raw malenal
consumablesconsumables I components etc
(Value In Rupees In Lakhs)
PARTICULAR IMPORTEO INDIGENOUS fpuiNT amp MACHINERY I CAPITAL
GOOOS
RAW MATERIAL I CONSUMBALES I COMPONENTS
3 Approved Annual ProdUCllon Capacity ( to be gwen In apphcatlon unit of manufacture such as KgPcs Noselc)
tI In case enchancement In existing production capacity IS envisagedgive details ther of ( In application und of manufacture as per r (2) above
5 employment (in numbers)
Existing Proposed
Foregn eltchange outgo shallindude the elF alue Of Impon of machineryraw material componenISconsumaoessparespackIOQ material and amount and pronls royauyJumsum knownow feedeSlgn and draWing fee payment of foreign teChlilcianspayment on Irailing of ndaln lechnooans abroadc0mrnr5 external commerCial borrowmgs Ulleresl on deferred payment o edlt snd any other payments
middotmiddotmiddotlist or reqUired plant amp machinery capital goods and raw mnle1iallconsuma les elcmay be aUacheo in case of broadbanolng f diversification Items in I
Note Please attach addJSheettr reqUired Above detal1s shou ld Oe du ly signed f stamped by the Auth Dlrector f Signatory f Partner or Propnetol may be
~ UgtlVIgt O ltO U fluer tne
menclature of Fa lta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
est Bengal and accordingly developing the said area constructed buildingsindustrial
sheds In portions of the said notified area for se tting up of export oriented industry
tradingservice units In the sa id buildings industrial sheds andor the residual area of
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ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
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land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
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entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
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Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
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In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
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The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
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- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
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The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
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protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
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becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
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appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
r
2
Annexure
1 Name of SEZ
2 Sector
3 Location
4 Authorized Operation
SNo Description of item Unit Quantity Estimated Source (import Amount or indigenous)
f---shy1 2
I I
-
(Rs Lacs)
I
I
3 I I
4 I -5 I
-- shy Grand Total shy I
shy
-
No D 1225201 2-SEZ Government of India
Ministry of Commerce amp Industry Department of Commerce
SEZ Division
Udyog Bhavan New Delhi Dated zZ October 2014
To All Development Commissioners Special Economic Zones
Subject Harmonization of Rules formats and fees in all zones- regarding
SirlMadam
It was observed that there is a variance in implementation of Rules formats and fees in the Special Economic Zones Therefore in order to harmonize the Rules formats and fees in all SEZs formats (copy enclosed) for the following procedures have been standardized for adaption in all Zones
a) For utilization of the goods by the DeveloperCo-Developer (Certificate of
Chartered Engineer)
b) For obtaining approval of material for authorized operations by tbe
DeveloperCo-developer (Certificate of Chartered Engineer)
c) Information required for renewal of LoA for 5 years
d) Lease Deed
e) Annual Performance Report of the Unit
2 All the zones are requested to host all these formats on the zonal web-site and take necessary action accordingly
Encl As above
Yours faithfully
(S st~ww OJ r Under Secretary to the Gov of India
Tel OIl 23062496 e-mail kumarssnicin
bull
3
(to be given on the letter head of independent Chartered Engineer)
CERTIFICATE OF CHARTERED ENGINEER For utilization of the goods by the DeveloperCo-Developer
-
INJe certify that the records maintained by Ms developer of Special Economic Zone for sector at _ _ ___------_-_ in respect of duty free import and procurement of goods required to carry on authorized operations in their SEZ has been examined by meus The authorized operation wise details of utilization of these goods as certified by meus in the following format are enclosed shy
2 It has been ensured thai the infonmation furnished is true and correct in all respect no part of it is false or misleading and no relevant information has been concealed or withheld
Opening Details of Actual import Goods utilized Closing Balance goods allowed Iprocurement of Balance
-Loads 1 )+(3)-(4)=
(1 ) (2) I (3) (4) I (5) I I
3 Neither I nor any of My partnersdirector is a partner director or an employee of the above-named entity or its associated concerns
4 INJe fully understand that any statement made in th is certificate if proved incorrect or false will render meus liable for any penal or other consequences as may be prescribed in law or otherwise warranted
Signature of MDCEO of SEZ Signature and StampSeal of the Signatory Name-
Chartered Engineer Name of the Signatory
Place Full Address Date Membership No -
Note Authorized operation wise details of utilization of goods are to be certified by the Independent Chartered Engineer and authorized signatory of the developer is also reauired to put his signatures thereon
bull
INFORMATION REQUIRED FOR REN EWA L OF LOA FOR 5 YEARS
Name of Uni t shy I Address
middot U I lt1gt cl 6 un lt
~A FCf a ille od exports in five years Name of Ye ars Tol al (S Total
1 sl 2nd 3rd 4th 5th y(5) (Ii yrs)
Rs In la khs in Th US$
Fo reiln ExchanQt ou tliO on
0) Import o f m a( llnerv
Iii) Im port o r law mat~ lia s and ( o m pOne 1l t)
(ii i) Imporl or spares and consuJnflbles
Iv) RegIstration of dividellds and pro fits to foreign collaborators
Iv) Royalty
(VI) l urn Sum know how fe~
Design amp drawing fee --( ~ f-Jvii ) PaYl ll ent o f fOl eigrt te chni ci ans
l ix) Payment on trai ning of Indian technician s adro ad
Ix) f o reign tril vel - shy
(xii) Amount of mteres t to be paid on external
commercial borrowingjdeft lled payment credit
(speci fy detail s)
(xlii ) Any o l h r paympnls (speuro ( ify details)
Tot ll) to (Xiii)
Net foreign Exchange earning in five years (A-B)
2) Projected Indigenous requirement (In five years)
I
(l1s In lakhs)
_ICeil1 goo~lt IRaw ma teria ls I (llllpOlients consu1ables packtng matenals amp Spares l
Total =shy
Note Pl eils~ atta ch add Shee t if requ ired Abo ve details should be duly Signeds tamped by th e Auth DirectorSign(lt nry Partner Of pro prietor o f the
un ll ilS the case ma y be
-----
bull
Sub Revised Consolidated projection for broadbandingdiversificationenhancemenl
(1) Projected Foreign Exchange Ba lance Sheet
Particular
FOB Value of exports on Five years
U Foreign Exchange outgo for nve years
Net Foreign Exchange earning for live years
(1- (2)
YEARS I 1st Year 2nd Year 3rd Year 4lh Year 5th Yea
PrOjected Projected PrOJected PrOjedelt1 Projected Projected Pro eOed PrOjecleo Projected Proreclao ( eXlsling) ( Revised ( eXISting) ( Revised ( eXisting) ( Revised ( existing) ( Rell1sed ( eXlshng) ( ReVl~
AC1ual) Actual) Actual) Actual ) Acuall
I l Details of projected requlre rllent of Planl amp Machmary I capllal goods and raw malenal
consumablesconsumables I components etc
(Value In Rupees In Lakhs)
PARTICULAR IMPORTEO INDIGENOUS fpuiNT amp MACHINERY I CAPITAL
GOOOS
RAW MATERIAL I CONSUMBALES I COMPONENTS
3 Approved Annual ProdUCllon Capacity ( to be gwen In apphcatlon unit of manufacture such as KgPcs Noselc)
tI In case enchancement In existing production capacity IS envisagedgive details ther of ( In application und of manufacture as per r (2) above
5 employment (in numbers)
Existing Proposed
Foregn eltchange outgo shallindude the elF alue Of Impon of machineryraw material componenISconsumaoessparespackIOQ material and amount and pronls royauyJumsum knownow feedeSlgn and draWing fee payment of foreign teChlilcianspayment on Irailing of ndaln lechnooans abroadc0mrnr5 external commerCial borrowmgs Ulleresl on deferred payment o edlt snd any other payments
middotmiddotmiddotlist or reqUired plant amp machinery capital goods and raw mnle1iallconsuma les elcmay be aUacheo in case of broadbanolng f diversification Items in I
Note Please attach addJSheettr reqUired Above detal1s shou ld Oe du ly signed f stamped by the Auth Dlrector f Signatory f Partner or Propnetol may be
~ UgtlVIgt O ltO U fluer tne
menclature of Fa lta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
est Bengal and accordingly developing the said area constructed buildingsindustrial
sheds In portions of the said notified area for se tting up of export oriented industry
tradingservice units In the sa id buildings industrial sheds andor the residual area of
-
bull
1
ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
No D 1225201 2-SEZ Government of India
Ministry of Commerce amp Industry Department of Commerce
SEZ Division
Udyog Bhavan New Delhi Dated zZ October 2014
To All Development Commissioners Special Economic Zones
Subject Harmonization of Rules formats and fees in all zones- regarding
SirlMadam
It was observed that there is a variance in implementation of Rules formats and fees in the Special Economic Zones Therefore in order to harmonize the Rules formats and fees in all SEZs formats (copy enclosed) for the following procedures have been standardized for adaption in all Zones
a) For utilization of the goods by the DeveloperCo-Developer (Certificate of
Chartered Engineer)
b) For obtaining approval of material for authorized operations by tbe
DeveloperCo-developer (Certificate of Chartered Engineer)
c) Information required for renewal of LoA for 5 years
d) Lease Deed
e) Annual Performance Report of the Unit
2 All the zones are requested to host all these formats on the zonal web-site and take necessary action accordingly
Encl As above
Yours faithfully
(S st~ww OJ r Under Secretary to the Gov of India
Tel OIl 23062496 e-mail kumarssnicin
bull
3
(to be given on the letter head of independent Chartered Engineer)
CERTIFICATE OF CHARTERED ENGINEER For utilization of the goods by the DeveloperCo-Developer
-
INJe certify that the records maintained by Ms developer of Special Economic Zone for sector at _ _ ___------_-_ in respect of duty free import and procurement of goods required to carry on authorized operations in their SEZ has been examined by meus The authorized operation wise details of utilization of these goods as certified by meus in the following format are enclosed shy
2 It has been ensured thai the infonmation furnished is true and correct in all respect no part of it is false or misleading and no relevant information has been concealed or withheld
Opening Details of Actual import Goods utilized Closing Balance goods allowed Iprocurement of Balance
-Loads 1 )+(3)-(4)=
(1 ) (2) I (3) (4) I (5) I I
3 Neither I nor any of My partnersdirector is a partner director or an employee of the above-named entity or its associated concerns
4 INJe fully understand that any statement made in th is certificate if proved incorrect or false will render meus liable for any penal or other consequences as may be prescribed in law or otherwise warranted
Signature of MDCEO of SEZ Signature and StampSeal of the Signatory Name-
Chartered Engineer Name of the Signatory
Place Full Address Date Membership No -
Note Authorized operation wise details of utilization of goods are to be certified by the Independent Chartered Engineer and authorized signatory of the developer is also reauired to put his signatures thereon
bull
INFORMATION REQUIRED FOR REN EWA L OF LOA FOR 5 YEARS
Name of Uni t shy I Address
middot U I lt1gt cl 6 un lt
~A FCf a ille od exports in five years Name of Ye ars Tol al (S Total
1 sl 2nd 3rd 4th 5th y(5) (Ii yrs)
Rs In la khs in Th US$
Fo reiln ExchanQt ou tliO on
0) Import o f m a( llnerv
Iii) Im port o r law mat~ lia s and ( o m pOne 1l t)
(ii i) Imporl or spares and consuJnflbles
Iv) RegIstration of dividellds and pro fits to foreign collaborators
Iv) Royalty
(VI) l urn Sum know how fe~
Design amp drawing fee --( ~ f-Jvii ) PaYl ll ent o f fOl eigrt te chni ci ans
l ix) Payment on trai ning of Indian technician s adro ad
Ix) f o reign tril vel - shy
(xii) Amount of mteres t to be paid on external
commercial borrowingjdeft lled payment credit
(speci fy detail s)
(xlii ) Any o l h r paympnls (speuro ( ify details)
Tot ll) to (Xiii)
Net foreign Exchange earning in five years (A-B)
2) Projected Indigenous requirement (In five years)
I
(l1s In lakhs)
_ICeil1 goo~lt IRaw ma teria ls I (llllpOlients consu1ables packtng matenals amp Spares l
Total =shy
Note Pl eils~ atta ch add Shee t if requ ired Abo ve details should be duly Signeds tamped by th e Auth DirectorSign(lt nry Partner Of pro prietor o f the
un ll ilS the case ma y be
-----
bull
Sub Revised Consolidated projection for broadbandingdiversificationenhancemenl
(1) Projected Foreign Exchange Ba lance Sheet
Particular
FOB Value of exports on Five years
U Foreign Exchange outgo for nve years
Net Foreign Exchange earning for live years
(1- (2)
YEARS I 1st Year 2nd Year 3rd Year 4lh Year 5th Yea
PrOjected Projected PrOJected PrOjedelt1 Projected Projected Pro eOed PrOjecleo Projected Proreclao ( eXlsling) ( Revised ( eXISting) ( Revised ( eXisting) ( Revised ( existing) ( Rell1sed ( eXlshng) ( ReVl~
AC1ual) Actual) Actual) Actual ) Acuall
I l Details of projected requlre rllent of Planl amp Machmary I capllal goods and raw malenal
consumablesconsumables I components etc
(Value In Rupees In Lakhs)
PARTICULAR IMPORTEO INDIGENOUS fpuiNT amp MACHINERY I CAPITAL
GOOOS
RAW MATERIAL I CONSUMBALES I COMPONENTS
3 Approved Annual ProdUCllon Capacity ( to be gwen In apphcatlon unit of manufacture such as KgPcs Noselc)
tI In case enchancement In existing production capacity IS envisagedgive details ther of ( In application und of manufacture as per r (2) above
5 employment (in numbers)
Existing Proposed
Foregn eltchange outgo shallindude the elF alue Of Impon of machineryraw material componenISconsumaoessparespackIOQ material and amount and pronls royauyJumsum knownow feedeSlgn and draWing fee payment of foreign teChlilcianspayment on Irailing of ndaln lechnooans abroadc0mrnr5 external commerCial borrowmgs Ulleresl on deferred payment o edlt snd any other payments
middotmiddotmiddotlist or reqUired plant amp machinery capital goods and raw mnle1iallconsuma les elcmay be aUacheo in case of broadbanolng f diversification Items in I
Note Please attach addJSheettr reqUired Above detal1s shou ld Oe du ly signed f stamped by the Auth Dlrector f Signatory f Partner or Propnetol may be
~ UgtlVIgt O ltO U fluer tne
menclature of Fa lta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
est Bengal and accordingly developing the said area constructed buildingsindustrial
sheds In portions of the said notified area for se tting up of export oriented industry
tradingservice units In the sa id buildings industrial sheds andor the residual area of
-
bull
1
ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull
3
(to be given on the letter head of independent Chartered Engineer)
CERTIFICATE OF CHARTERED ENGINEER For utilization of the goods by the DeveloperCo-Developer
-
INJe certify that the records maintained by Ms developer of Special Economic Zone for sector at _ _ ___------_-_ in respect of duty free import and procurement of goods required to carry on authorized operations in their SEZ has been examined by meus The authorized operation wise details of utilization of these goods as certified by meus in the following format are enclosed shy
2 It has been ensured thai the infonmation furnished is true and correct in all respect no part of it is false or misleading and no relevant information has been concealed or withheld
Opening Details of Actual import Goods utilized Closing Balance goods allowed Iprocurement of Balance
-Loads 1 )+(3)-(4)=
(1 ) (2) I (3) (4) I (5) I I
3 Neither I nor any of My partnersdirector is a partner director or an employee of the above-named entity or its associated concerns
4 INJe fully understand that any statement made in th is certificate if proved incorrect or false will render meus liable for any penal or other consequences as may be prescribed in law or otherwise warranted
Signature of MDCEO of SEZ Signature and StampSeal of the Signatory Name-
Chartered Engineer Name of the Signatory
Place Full Address Date Membership No -
Note Authorized operation wise details of utilization of goods are to be certified by the Independent Chartered Engineer and authorized signatory of the developer is also reauired to put his signatures thereon
bull
INFORMATION REQUIRED FOR REN EWA L OF LOA FOR 5 YEARS
Name of Uni t shy I Address
middot U I lt1gt cl 6 un lt
~A FCf a ille od exports in five years Name of Ye ars Tol al (S Total
1 sl 2nd 3rd 4th 5th y(5) (Ii yrs)
Rs In la khs in Th US$
Fo reiln ExchanQt ou tliO on
0) Import o f m a( llnerv
Iii) Im port o r law mat~ lia s and ( o m pOne 1l t)
(ii i) Imporl or spares and consuJnflbles
Iv) RegIstration of dividellds and pro fits to foreign collaborators
Iv) Royalty
(VI) l urn Sum know how fe~
Design amp drawing fee --( ~ f-Jvii ) PaYl ll ent o f fOl eigrt te chni ci ans
l ix) Payment on trai ning of Indian technician s adro ad
Ix) f o reign tril vel - shy
(xii) Amount of mteres t to be paid on external
commercial borrowingjdeft lled payment credit
(speci fy detail s)
(xlii ) Any o l h r paympnls (speuro ( ify details)
Tot ll) to (Xiii)
Net foreign Exchange earning in five years (A-B)
2) Projected Indigenous requirement (In five years)
I
(l1s In lakhs)
_ICeil1 goo~lt IRaw ma teria ls I (llllpOlients consu1ables packtng matenals amp Spares l
Total =shy
Note Pl eils~ atta ch add Shee t if requ ired Abo ve details should be duly Signeds tamped by th e Auth DirectorSign(lt nry Partner Of pro prietor o f the
un ll ilS the case ma y be
-----
bull
Sub Revised Consolidated projection for broadbandingdiversificationenhancemenl
(1) Projected Foreign Exchange Ba lance Sheet
Particular
FOB Value of exports on Five years
U Foreign Exchange outgo for nve years
Net Foreign Exchange earning for live years
(1- (2)
YEARS I 1st Year 2nd Year 3rd Year 4lh Year 5th Yea
PrOjected Projected PrOJected PrOjedelt1 Projected Projected Pro eOed PrOjecleo Projected Proreclao ( eXlsling) ( Revised ( eXISting) ( Revised ( eXisting) ( Revised ( existing) ( Rell1sed ( eXlshng) ( ReVl~
AC1ual) Actual) Actual) Actual ) Acuall
I l Details of projected requlre rllent of Planl amp Machmary I capllal goods and raw malenal
consumablesconsumables I components etc
(Value In Rupees In Lakhs)
PARTICULAR IMPORTEO INDIGENOUS fpuiNT amp MACHINERY I CAPITAL
GOOOS
RAW MATERIAL I CONSUMBALES I COMPONENTS
3 Approved Annual ProdUCllon Capacity ( to be gwen In apphcatlon unit of manufacture such as KgPcs Noselc)
tI In case enchancement In existing production capacity IS envisagedgive details ther of ( In application und of manufacture as per r (2) above
5 employment (in numbers)
Existing Proposed
Foregn eltchange outgo shallindude the elF alue Of Impon of machineryraw material componenISconsumaoessparespackIOQ material and amount and pronls royauyJumsum knownow feedeSlgn and draWing fee payment of foreign teChlilcianspayment on Irailing of ndaln lechnooans abroadc0mrnr5 external commerCial borrowmgs Ulleresl on deferred payment o edlt snd any other payments
middotmiddotmiddotlist or reqUired plant amp machinery capital goods and raw mnle1iallconsuma les elcmay be aUacheo in case of broadbanolng f diversification Items in I
Note Please attach addJSheettr reqUired Above detal1s shou ld Oe du ly signed f stamped by the Auth Dlrector f Signatory f Partner or Propnetol may be
~ UgtlVIgt O ltO U fluer tne
menclature of Fa lta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
est Bengal and accordingly developing the said area constructed buildingsindustrial
sheds In portions of the said notified area for se tting up of export oriented industry
tradingservice units In the sa id buildings industrial sheds andor the residual area of
-
bull
1
ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
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Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
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6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
INFORMATION REQUIRED FOR REN EWA L OF LOA FOR 5 YEARS
Name of Uni t shy I Address
middot U I lt1gt cl 6 un lt
~A FCf a ille od exports in five years Name of Ye ars Tol al (S Total
1 sl 2nd 3rd 4th 5th y(5) (Ii yrs)
Rs In la khs in Th US$
Fo reiln ExchanQt ou tliO on
0) Import o f m a( llnerv
Iii) Im port o r law mat~ lia s and ( o m pOne 1l t)
(ii i) Imporl or spares and consuJnflbles
Iv) RegIstration of dividellds and pro fits to foreign collaborators
Iv) Royalty
(VI) l urn Sum know how fe~
Design amp drawing fee --( ~ f-Jvii ) PaYl ll ent o f fOl eigrt te chni ci ans
l ix) Payment on trai ning of Indian technician s adro ad
Ix) f o reign tril vel - shy
(xii) Amount of mteres t to be paid on external
commercial borrowingjdeft lled payment credit
(speci fy detail s)
(xlii ) Any o l h r paympnls (speuro ( ify details)
Tot ll) to (Xiii)
Net foreign Exchange earning in five years (A-B)
2) Projected Indigenous requirement (In five years)
I
(l1s In lakhs)
_ICeil1 goo~lt IRaw ma teria ls I (llllpOlients consu1ables packtng matenals amp Spares l
Total =shy
Note Pl eils~ atta ch add Shee t if requ ired Abo ve details should be duly Signeds tamped by th e Auth DirectorSign(lt nry Partner Of pro prietor o f the
un ll ilS the case ma y be
-----
bull
Sub Revised Consolidated projection for broadbandingdiversificationenhancemenl
(1) Projected Foreign Exchange Ba lance Sheet
Particular
FOB Value of exports on Five years
U Foreign Exchange outgo for nve years
Net Foreign Exchange earning for live years
(1- (2)
YEARS I 1st Year 2nd Year 3rd Year 4lh Year 5th Yea
PrOjected Projected PrOJected PrOjedelt1 Projected Projected Pro eOed PrOjecleo Projected Proreclao ( eXlsling) ( Revised ( eXISting) ( Revised ( eXisting) ( Revised ( existing) ( Rell1sed ( eXlshng) ( ReVl~
AC1ual) Actual) Actual) Actual ) Acuall
I l Details of projected requlre rllent of Planl amp Machmary I capllal goods and raw malenal
consumablesconsumables I components etc
(Value In Rupees In Lakhs)
PARTICULAR IMPORTEO INDIGENOUS fpuiNT amp MACHINERY I CAPITAL
GOOOS
RAW MATERIAL I CONSUMBALES I COMPONENTS
3 Approved Annual ProdUCllon Capacity ( to be gwen In apphcatlon unit of manufacture such as KgPcs Noselc)
tI In case enchancement In existing production capacity IS envisagedgive details ther of ( In application und of manufacture as per r (2) above
5 employment (in numbers)
Existing Proposed
Foregn eltchange outgo shallindude the elF alue Of Impon of machineryraw material componenISconsumaoessparespackIOQ material and amount and pronls royauyJumsum knownow feedeSlgn and draWing fee payment of foreign teChlilcianspayment on Irailing of ndaln lechnooans abroadc0mrnr5 external commerCial borrowmgs Ulleresl on deferred payment o edlt snd any other payments
middotmiddotmiddotlist or reqUired plant amp machinery capital goods and raw mnle1iallconsuma les elcmay be aUacheo in case of broadbanolng f diversification Items in I
Note Please attach addJSheettr reqUired Above detal1s shou ld Oe du ly signed f stamped by the Auth Dlrector f Signatory f Partner or Propnetol may be
~ UgtlVIgt O ltO U fluer tne
menclature of Fa lta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
est Bengal and accordingly developing the said area constructed buildingsindustrial
sheds In portions of the said notified area for se tting up of export oriented industry
tradingservice units In the sa id buildings industrial sheds andor the residual area of
-
bull
1
ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
-----
bull
Sub Revised Consolidated projection for broadbandingdiversificationenhancemenl
(1) Projected Foreign Exchange Ba lance Sheet
Particular
FOB Value of exports on Five years
U Foreign Exchange outgo for nve years
Net Foreign Exchange earning for live years
(1- (2)
YEARS I 1st Year 2nd Year 3rd Year 4lh Year 5th Yea
PrOjected Projected PrOJected PrOjedelt1 Projected Projected Pro eOed PrOjecleo Projected Proreclao ( eXlsling) ( Revised ( eXISting) ( Revised ( eXisting) ( Revised ( existing) ( Rell1sed ( eXlshng) ( ReVl~
AC1ual) Actual) Actual) Actual ) Acuall
I l Details of projected requlre rllent of Planl amp Machmary I capllal goods and raw malenal
consumablesconsumables I components etc
(Value In Rupees In Lakhs)
PARTICULAR IMPORTEO INDIGENOUS fpuiNT amp MACHINERY I CAPITAL
GOOOS
RAW MATERIAL I CONSUMBALES I COMPONENTS
3 Approved Annual ProdUCllon Capacity ( to be gwen In apphcatlon unit of manufacture such as KgPcs Noselc)
tI In case enchancement In existing production capacity IS envisagedgive details ther of ( In application und of manufacture as per r (2) above
5 employment (in numbers)
Existing Proposed
Foregn eltchange outgo shallindude the elF alue Of Impon of machineryraw material componenISconsumaoessparespackIOQ material and amount and pronls royauyJumsum knownow feedeSlgn and draWing fee payment of foreign teChlilcianspayment on Irailing of ndaln lechnooans abroadc0mrnr5 external commerCial borrowmgs Ulleresl on deferred payment o edlt snd any other payments
middotmiddotmiddotlist or reqUired plant amp machinery capital goods and raw mnle1iallconsuma les elcmay be aUacheo in case of broadbanolng f diversification Items in I
Note Please attach addJSheettr reqUired Above detal1s shou ld Oe du ly signed f stamped by the Auth Dlrector f Signatory f Partner or Propnetol may be
~ UgtlVIgt O ltO U fluer tne
menclature of Fa lta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
est Bengal and accordingly developing the said area constructed buildingsindustrial
sheds In portions of the said notified area for se tting up of export oriented industry
tradingservice units In the sa id buildings industrial sheds andor the residual area of
-
bull
1
ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
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9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
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--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull
1
ANNEXURE-VII
LEASE - DEED
(To be executed on a sta mp paper with appropriate fees as determined by the respective State
Government)
THIS LEASE is granted on this xxxx day of xxxxx 20xx BY the Development Commissioner and
Chairperson cum Chief Executive Officer Falta Specia l Econom ic Zone Authority Government of
India Ministry of Commerce and Industry (Department of Commerce) having his office at 2 MSO
Building Niza m Palace 4th floor 2344 AJC Bose Road Kolkata 700020 hereinafter referred to
as the GRANTOR w hich term or expression unless excluded by or repugnant to the subject or
context shall mean and include his successors of the ONE PART AND M s
Company Partnership firmProprietorshipother legal entity having its principal place of
business and office (Registered Office in case of company registered under the Companies
Act1956 at Mr son of by faith
carrying on business under the name and style of as sole proprietor or any
other legal entity thereof from hereinafter referred to as The GRANTEE
which term or expression unless excluded by or repugnant to the subject or context shall mean - and include its successors her histheir heirs executors administrators and permitted assigns
of the OTHER PART
WHEREAS
With the rational nexus and discernible criteria to augment revenue earning for the
country in terms of foreign exchange by facilitating export from India in tune with its EXIM Policy providing an internationally competitive duty free environment the
Government of India in the Min istry of Commerce and Industry (Department of
Commerce) established an Export Processing Zone Free Trade Zone in an area
comprising of 280 Acres of land as enclave notified as Customs area under the
nomenclature of Falta Export Processing Zone (FEPZ) in Falta 24-Parganas (South)
West Bengal and accordingly developing the sai d area constructed bUildingsindustrial
sheds in portions of the sa id notified area for setting up of export oriented industry
- tradingserv ice units in the said buildings industrial sheds andor the residual area of
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
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9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
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--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
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lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
2
land thereat by privatepublic entrepreneurs subject to Letter of Permission (LOP)
thereforg granted by the Development Commissioner of the said FEPZ
With the advent of Special Economic Zone Scheme in tune with its Foreign Trade Policy
(FTP) by publishing Notification in that behalf the Central Government converted the said
FEPZ to ~a lt a Special Economic Zone (FSEZ)
With the avowed object to provide for the establishmen t development and management - of the Special Economic Zones for the promotion of exports and for matters connected
therewith and incidental thereto bringing the existing SEZ within the fo ld of the said 2005
Act including the said FSEZ on the Fifty-Sixth year of the Republic of India the Parliament - of India enacted the Special Economic Zones Act 2005 for short the said 2005 Act
In exercise of the powers conferred by clauses (zb) (zc) (zd) (ze) (zf) (zg) (zhl (zi) and
(zil of sub-section (2) of section 55 read with section 31 of the said 2005 Act by
publishing Notification being GS R NoBll(E) dated 11November 2009 in the Gazette of
India extra Ordinary dated U November 2009 the Government of India introduced the
SEZ Authority Rules 2009
By the said SEZ Authority Rules 2009 constituting the Special Economic Zone Authority
and the Development Commiss ioner cum Chief Executive Officer of the SEZ as the
Ch airperson thereof the Government of India vested [he incidental powers necessary for --- the carriage of the purposes functions and management of the affairs and admiOlistration
of the Special Economic Zones including the matters apropos allotment of the area of
land buildingindustrial shed comprised in the notified area of the SEZ for setting up of
export oriented industry servicestrading units thereat by private public sec tor
entrepreneurs with the said SEZ Authority
Setting up of export oriented industry services trading units in the Customs notified
area as above and carriage of the authorised operation therefrom in compliance w ith the
provisions of the said 2005 Act and 2006 Rules made thereunder and amendments
thereafter time to time Customs Act 1962 and Foreign Trade (Development and
Regulation) Act 1992 and the FTP made thereunder and amendments thereafter time to -
time by the intending private public sector entrepreneurs are subject to grant of Letter-of permiSSion (LoP) by the Development Commissioner of the concerned SEZ
Corresponding to the grant of LoP as above subject to the execution of the formal lease
in respect thereof by way of grant containing the terms and co nditio ns therefore the
COQcerned SEZ Authority alot demarcated area of land bu ilding industrial sheds andor
the portion portions thereof comprised in the FSEZ to the intending publicprivate
-
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
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9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
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--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
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lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
3
entrepreneurs by issuance of the letter of Aliotment~oA) for setting up of their unit- thereat and ca rriage of the authorised operation therefrom
The building known as Standard Design Factory Building (SDFB)Industrial shed
constructed by the Central Government on a portion of land comprised in the sa id FSEZ
area meant for setting up of such export oriented industrialservicetrading units lying
va cant under the control of the SEZ Authority corresponding to the gran t of LoP to the
Grantee for carriage of t he authorised operation on the undertaking t o execute the-corresponding Lease Deed allo ttin g the demarcated area of the said SDF build ing
-Iindustrial shed with fixtures thereto the SEZ Authority having granted the LoA dated
xxxxxxxxx allotted the Grantee applying to the FSEZ Authority for grant of lease in
respect thereto t he FSEZ Authority do hereby and hereunder grants thi s lease in respect
of the al lotted area of land portion of the said SDF building fixtures measuring an area
of xxxxxxxxxxxxxxx full y described in the respective Schedules below by these presents
Vide order No lSSS-FR dated 8t Jul y 2003 and order NOlSS6-FR dated Sth Ju ly2003
the Government of West Benga l having exempted FSEZ units for payment of Registration
charges and stamp duty this instrument is not required to be pa id with Stamp duty not
required to be paid with fees for registration
NOW THESE PRESENTS WITNESSES
That co rre sponding to the gra nt of LoP by the C~airperson and Chief Executive Officer
FSEZADevelopment Commission er Falta Special Economic Zone in favour o f the Grantee
and in consideration of the quarterly lease rental hereby reserved and the Grantees
cove nants hereinafter contained the Grantor do hereby and hereunder gra nt this lease in
respect of the demarcate d portion of the said SDF building In dustrial Shed measuring
xxxxxxxxxxxxxxxx with fixtures ad measuring an area of xxxxxxxxxxxxxxxxxxxxxxxse mt
fully described in th e Schedule below hereinafter referred to as the said area unto and
in favour of the Grantee for setting up of its unit thereat and carriage of the authori sed
operation therefrom for the term of five years computed from the 1st day of the month of
possession or t he 16 day of the allotment whichever is earlier or co -terminus with the
validity of the sa id LoPAnd the Grantee do hereby and hereu nder ta kes on rent the said
demarcated portion of the said SDF building Industrial Shed measuring xxxxxxxxxxxxxxxx
with fixture s as above within the notified area of FSEZ
bull During the tenure of the Lease hereby granted the Grantee sha ll pay a con so lida ted sum
of Rsxxxxxxx- [Rupees xxxxxxxxxxxxx) only towards lease rental and applicable
tox~sincludmg service tax if any in respect of the said area on yearly basis by bonk
oraftRTGSECS or through an y other bonking instrument in favo ur of the Falta Specialbull
bull
-
-
shy
bull --shy-
4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
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--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
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~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
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lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
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14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
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17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
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shy
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4
Economic Zone Authority Kolkata (FSEZA) or by any other mode as may otherwise be
required by the Grantor w ithout delay deduct ion or de fau lt
The said unit will give standing Instruction to their bonk for ECS of all charges including
rent to be paid to FSEZ favouring bank Ac no on yearly basis or as
and when re quired
The Grantee sha ll pay all other charges that may be fi xedlevied by the FSEZA from time
to time in respect of the sa id area on the days and in the manner prescribed wi thout any
de lay deductions or default
On or before the execution of these p resents the Grantee shall pay in advan ce the lease
renta l and applicable taxesincluding service tax if any in respect of the said area for the
first fina ncial year ca lcul ated at Rs (Rupees only) clear of all
deduc tions to the FSEZ Authority First year means for a period from the dote oS
mentioned in pora No-1 to 31 day of Ma rch Next year means fina ncial year starting fram
1n april and ending on 31 March
The Lease rental in respect of the said area for the second yea r onwards shall be paid on
yearly basi s in advance on or before the 15th day of Apri l of every year without any delay
deduction or de fau lt whatso ever
The Grantee has on or before the execution of these presents deposited with the FSEZ
Authority a sum of Rs xxxxxxxxxxx- only equivalent to the annual re nt in respect of
the said are a in advance whi ch the Grantor do hereby adm it and acknowledge and
exonera te the Grantee of and from the liability towards the said sum
The Grantee sha ll be liable for payment all charges for electricity telephone fa x water
consumption ex isting and future rates and taxes assessments and o utgoing of every
description for the t ime being payable in respect of the sa id unit and anything for the
time being the reon
The Grantee shall make provision for all safety and fi re fighting measures and eradication
of all environmental hazards and pollutants and obtain all nece ssary clearance from the
appropriate authorities therefore and shall be liable for all damages and future
cont ingencies on the said cou nts
The FSEZ Authority or the Deve lopment Commissioner and Chairperson cu m Chief
Executive Officer of FSEZ shall not be liable for any damage by fire or accid ent or by
o fT ission of the Grantee or under any act ofGod or riots of other unforeseen incidents or
any Civi l Commotion beyond the co ntrol of the Grantee
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
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6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
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The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
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9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
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becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
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agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
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1
2 I I I l
r----Ji------------------------------------l 5
6
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~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
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t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
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Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
s
Immediately after [he execution of these presents the Grantor shall undertake the
necessary works for setting up of its unit and commence the authorised operation therefrom as per the schedule appended to the LoP-
The Grantee shall furnish legal undertaking as may be prescribed for the fulfilment of
export obligations set out in their application from for setting up industries in the FSEZ
The Grantee shall manufacture such productscarry out such activities from the said unit
set up in the said area as may be authorised by the Development Commissioner and
Chairperson cum Chief Executive Officer FSEZA from time to time
The Grantee shall not undertake any activities or manufactureprocess any article thing
materials components and instruments which do not in anyway relate to the industry
other than the authorised one for which the Letter of Permission has been granted
The Grantee shall commence commercial production or service activitiest rading for -- export within the period as specified in the Letter of Permissio n (LoP)
- The Grantee shall make full utilisation of the said area within a period of one year from
the date of commencement of this Grant Provided alwa ys that in the event for cause
beyond the control of the Grantee the Grantee is unab le to utilize fully the floor space as
aforesaid the Chairperson and Chief Executive Officer FSEZADeve lopment
Commissioner FSEZ may at his discretion extend such period or a further period as he
conside rs necessary within which extended period the Lessee shall complete the work so
-- as to fully utilize the floor spa ce subject nevertheless that the lessee waswere not
prevented from any cause beyond histheir control to uti lize full y the floor space as
aforesaid within the period as originally stipulated or within the extended period as
allowed by him as aforesaid the Grantee shall be liable to pay the rent at five times the
normal rent as provided herein in respect of the area remaining unutilized
Notwithstanding anything contained herein the monthly rental hereby reserved shall be
revised at the rate of 10 pa over the existing rental every years with effect from April or
notificationcircularsinstruction issued in this behalf whichever is earlier-The lease hereby granted shall subject to satisfactory performance of the unit be -renewable on the expiry of every 5 yeaTS or as may be renewable by the Central - Government from time to time whichever is earlier- Notwi thstanding anything contained in these presents the lease in respect of the said area hereby granted will be ceased middot10middot exist in case of the expiry or cancellation of the
Letter of Approvalpermission (LoP)
---
6
In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
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1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
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15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
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A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
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7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
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9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
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Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
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17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
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In case of any delayedlate paymentdefault in payment of rent the Grantee shall be
charged with on interest 12 pD jrom (he 6 day of every quarter for every day oj
delay In addition to interest Development Commissioner reserves the right for an y penal
action including cancellation of LOPLOA finan cial penalty an d others as Development
Commissioner may deem fit in case to case basis
- In case of surrender of said area one month prior notice should be given to the Authority
in written
The Grantee shall not create any security interest in respect of the landbui lding hereby
granted on lease nor shall mortgage or charge the same w ithout the approval of the
Development Commiss ioner
The Grantee shall be liable to pay to the FSEZ Authority the proportionate amount of the
premiumpremium s in respect of the area hereby leased in the event the FSEZ Au thority
- insures and or keeps insured the SDF build ingIndustrial shed including the said area
hereby leased within fiheen days from the notice of the FSEZ Authority requiring
payments on the said score without demur Prov ided always in the event of any dispute
arising between the FSEZ Authority and the Grantee apropos the liability of the Grantee
to pay the proportionate amount of insuran ce premium as above the decision of the
Development Commissioner and Chairperson cum Chief Executive Officer FSEZA shall be
final and binding upon the Grantee
The Grantee shall submit to the FSEZ Authori ty plans and the schemes of the particular
industry to be established in the said area together with such other details as may be
- required by the FSEZ Auth ori ty from timE to time
The Grantee shall arra nge for the forwa rdingclearan ce of manufacturedprocessed
goods fo r export or import of raw materials spa res and such other materials as are
required for manufacture process ing by the Chairperson and Ch ief Executive Officer
FSE ZADevelopment Commissioner FSEZ or age ncies authorised by the Chairperson and
Chief Executive Officer FSEZA Development Commissioner FSEZ
The Grantee shall not allow in so far as it is not inconsistent with the SEZ Acts amp Rules -any of the products manufactured processed in the FSEZ by the Lessee to enter or pass
into and l or sold in any market in India or anywhere in India provided always that the
Chairperson and Chief Executive Officer FSEZADeve lopment Commissioner FSEZ may
permit the Lessee to sell andor dispose of the products or to enter or pass into ando r to
be sold in an y marke tin Indiaocl anywhere in India ---
-
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
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- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
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9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
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--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
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1
2 I I I l
r----Ji------------------------------------l 5
6
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Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
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C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
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-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
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1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
7
The Grantee shall se ll all or part of its products manufactured and processed in the FSEZ- unii of the Grantee in the local market of the Domestic Tariff Area through the prescribed
authority which may be essential for nationa l defence or responding to natural disaster or
for the national economy In the event considering the overriding public interest apropos
--- the same the Development Commissioner FSEZ may direct the Grantee to do so against
consideration without however any claim for compensation for delivering the products -as aforesaid in any manner whatsoever
- The Grantee shall carry out the activities as authorised in the letter of Approva l in
compliance with the SEZ Act and Rules and shall not v iolate any of the conditions laid
- down in the letter of App roval
The Grantee shall always permit the Deve lopment Commissioner and Chairperson cum
Chief Executive Officer FSEZA or any officer surveyor workmen or other persons under
the employ of the said Autho rity authorised in that behalf from time to time at any time
and without any prior notice being given to enter into and upon the said area hereby
leased and to inspect the general state thereof and also processing plant and machine ry
etc and the books of account and other documents and vouchers conce rning the
products manufactured in the said Unit
The Grantee shal l not carry ou t or allow carriage in the said area any unlawful or immoral
activities and shall not perm it anything to be done or smiddot(ored (except those for product io n
of products approved for manufacture in the demised premises) which may be a
nu isance annoyance danger or disturbance to the other entrepreneurs in the vicinity
The Grantee shall not assign transfer change or alienate interest in the said area hereby
leased or any part thereof without the prior approva l of the Chief Executive Officer FSEZA
Development Commissioner FSEZ and prior consent in writing of the FSEZ Authority and
subject to such terms and conditions as the FSEZ Authority may prescribe in granting the
permission to assign the said area or any part thereof as herein beforE mentioned
The Grantee shall not subletsub lease the said area or any part thEreof and shall not- without the consent in w riting of the FSEZ Authority permit any labour or workmen to
reside upon the said area or un it and in th e event of such consent been given sha ll comply
strictly with the terms and conditions thereof
The Grantee shall intimate in writ ing to the FSEZ Authority within a fortnight of any
changes made or effected in the corporate structure or the constit utio n of the Lessee
- The Grantee shall allow all persons and vehicles entering into and leaving the FSEZ to be
examined by the Staff of the FSEZ Authority or any agency authorised by the Chief --
--
bull bull 8
- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
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17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
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The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
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- Executive Officer FSEZADevelopment Commissioner FSEZ in that behalf and prevent
movement of any unauthorised persongoodsmaterials to and fro the FSEZ
The Grantee shall not make any structural alterations additions or changes of any nature
whatsoever of the said area or make any additions alterations or changes of any nature
whatsoever to the building so erected and shal not make any excavation upon any part of- the said land hereby granted nor remove any stone sand gravel clay or earth there from
or for forming foundations at building without the prior written permission of the FSEZ
Authority and if permitted to carryout the same in accordance with building bye-laws
rules and regulations that may be prescribed
-~
The Grantee shall not cause any annoyance or hindrance to other tenants lessees or- conduct any activities which will impede the other lessees in manufacturing or processing
their products or services AND in the event any other lessee of the Lessor experiences or
finds any difficulty in conducting itshistheir authorised operation connected therewith
smoothly and efficiently by reason of the user by the grantee or if the grantee
experiences or finds any difficulty in conducting itshistheir authorised activities
connected therewith smoothly and efficiently by reason of the user by other occupiers of
any buildings or portions thereof in the FSEZ the same shall be referred to the
Development Commissioner and Chairperson cum Chief Executive Officer of the FSEZ and
any directions or orders issued by the said Authority in relation tnereto shall be complied
with by the Grantee
The Grantee shall comply with all rules and regulations prescribed under all Labour
Legislations including Industrial Disputes Act Workmens Compensation Act Payment of- Wages Act Minimum Wages Act Factories Act and Fatal Accidents Act or any other
statutes governing employer employee relationships and to obtain fire licence approval
from the Chief Inspectorate of Factories and clearance from the Pollution Control Board The Grantee shall strictly comply with the conditions laid down in the agreement
executed by the FSEZ Authority and the Grantee on supply of water power treatment of
industrial and domestic effluents including payment of all charges and other demands
made there under and to comply with the parking regulations and other general
instructions laid down by the FSEZ Authority from time to time and to permit
construction if necessary of utilities such as electric sub-station etc in the demised bull premises and to allow laying of underground cables through the demised premises or as
bull may be as directed by the Chief Executive Officer FSEZADevelopment Commissioner
r FSEZ
bull The Grantee shall keep the said area clear from all sorts of wastages garbage etc causing
nuisance o f any type and to keep the water and air free from pollution and sufficient bull bull
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9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
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I
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becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
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-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
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2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
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1
2 I I I l
r----Ji------------------------------------l 5
6
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Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
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t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
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C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
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1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
--
9
protection and preventive measure must be taken 50 as to avoid accumulation of water
and poisonous gases and other dangerous materials within or around the demised
landpremises and also to keep adequate safety measures for prevention of fire and
corrosive erosion in and around and to comply with all instructions and orders issued - from time to time with regard to disposal of waste and general maintenance of the Zone
- and agree to pay to the FSEZ Authority the penalties as imposed and demanded for non
compliance with the instructions -The Grantee shall remove all machinery equipments and other movable assets installed
therein leaving intact the buildings and other permanent structures and fittings fixtures
and erections permanent or temporary thereat without causing an y damage to or
defacing the main structure at the cost of the Grantee within a period of SIXTY days from
the termination of this grant andor expiry or cancellation of the LOP and deliver up
peaceful and vacant possession of the area hereby granted on lease to the FSEZ
Authority Provided always that in the event the Grantee fails to deliver vacant and
peaceful possession of the said area as aforesaid or abamiddotndons the said area without
removing the same as above on the expiry of the above mentioned period of SIXTY days it
shall be lawful for the FSEZ Authority to re-enter into the said area and take possession of
the left out articles and belongings of the Grantee which may be found lying there and
forfeit the sale proceeds thereof by public auct ion with or without notice to the Grantee
Provided further that the Grantor shall remain liable to pay compensation for the period
of unauthorised occupation of the said area till the ~ FSEZ Authority do no~ get vacant
possession of the said area
The Grantee paying the rent hereby reserved and performing the covenants and
obligations agreed hereinbefore and on the Grantees part to be perfo rmed may
peaceably use occupy and possess the said area for the term of the lease hereby granted
without any interruption or disturbance from or by the SEZ Authority or any person or -persons lawfully claiming by from or under the said Authority
If the said rent hereby reserved shall be in arrears for a period of 30 days whether the
same shall have been legally demanded or not or if within a period of ONE year from the -date of commencement of this Le~se or the said area are not utilised for t he purpose for
which the same has been granted or if the Grantee ceases to carry on the manufacture of
products andor activities authorized for a period of six consecutive months for whatever
cause including strike or lockout or injunction from the Court in any sort of litigation or if- and whenever there shall be a breach of any of the covenants and conditions herein set
out or referred to or under any agreement entered into by the Grantee including breach -01 any conditions of meeting the export obligations already undertaken by the Grantee
and or as my be notified from time to time by the FSEZ Authority or the Grantee ---
-
---
--
--
I
t 10
-
-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
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17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
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The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
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--
I
t 10
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-
becoming insolvent or is wound up or amalgamated or merged with other body corporate
or otherwise pursuant to the Court s orders or under the provisions of the Law then in
force the FSEZ Authority may re-enter upon the demised premises and every part thereof
and thereupon the lease hereby granted shall stand absolutely ceased and determined
Provided always the FSEZ Authority shall in addition middotto the right of termination of this
Lease and to effect the re-entry as mentioned aforesaid be entitled to recover as and by
wa y of compensation such amounts as may be considered by the FSEZ Authority as
-
appropriately recoverable from the Grantee including recalling of al l those va rious
concessions and variety of facilitie s granted to the Grantee The above shall be without
prejudice to the right of the FSEZ Authority to take steps to recover the arrears of rent as
arrearS of land revenue or invoking the provisions of the Public Premises (Eviction of
Unauthorised Occupants) Act 1971
If the Grantee shall have duly performed and observed the cove nants and conditions on
the part of the Lessee herein contained and is desirous of receiving a new lease of the
demised premises on the expiry of the period of this lease the Grantee shall give notice in
writing to the FSEZ Authority at least six months before the expiration of the period of
this lease of its desire and in such an event the FSEZ Authority shall at the cost and
expense in every respect of the Grantee grant new lease in respect of the said area for a
further term of five years on payment of yearly rent as may be determined by the FSEZ
- Authority AND WITH all the other covena nts provisions and stipulations herein contained
except this provision for renewal and such new lease shall contain in lieu of this clause a
covenant that at the end of the said renewed term of five years the Grantee may in
similar manner and subject to having duly performed and observed th e covenants and
conditions on the part of the Grantee to be performed and observed request for fu rthe r -extensions of lease and the FSEZ Authority shall in similar manner and at the cost and
expense of the Lessee grant to the Le ssee further renewals and that every such renewal
shall be for such terms and sublect to such covenants provisions and stipulations as may -be decided by the FSEZ Authority
-
Notwithstanding to any of the above failure to comply with any or all of the above
clauses will be liable for eviction in terms of the Public Premises (Eviction of Unauthorised
Occupants) Act 1971 This will be without prejudice to any other action in terms of any
other law in force
The Chainman FSEZADevelopment Commissioner Falta Special Economic Zone reserves
the right to alteramend changemodify any of the terms and conditions
ervisagedenumerated in this agreement that may become necessary due to change-i B r- shy-- iaws rules bye-rules taxation policy or any other leviesfees by the Government of
IndiaState Government or any other Authority under any Rule However it is specifically-----
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-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
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2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
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1
2 I I I l
r----Ji------------------------------------l 5
6
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~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
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t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
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C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
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Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
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1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
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6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull 11
-
agreed that the change referred to in this paragraph shall only be made where the
appli cable RulesTaxation is altered by any Government Policy and will not apply to
change of covenants governing mutually reciprocal relation ship
The Courts at Kolkata shall have exclusive jurisdiction with respect to any matter or
dispute arising out of or in any way touching or concerning this Agreement
IN WITNESS WHEREOF the parties hereto have executed these
presents on the day and year first above written
SIGNED SEALED AND DELIVERED
-For and on behalf of Falta Special Economic Zone Authority
in the presence ofshy
Signature
Signature
- SIGNED SEALED AND DELIVERED
for and on behalf of M s
the Lessee aforesaid by its
and the COM MON SEAL of the above named Lessee
was pursuant to a resolution of its Board of Directors
passed in that behalf on the day of
affixed hereto in the presence of
1Name So Address
lOr
lOr
-
Signature
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
f
12
2 Name S o Address Signa ture
FIRST SCHEDULE JI
Description of Building
All thar p1rcd of Iao d and or prerruscs numbered as ===~ at Falla Special Ec nOilllC
- witlun tneZooe
No ~ Extenr sg meter
coOtllln by admeasurement = == j meter or thereabou ts and bounder as follows with -particioos fittin ana frrur
The sa id land is comprised in _
On o r towards the North say
On o r towards the South say
On o r towards the East say - On o r towards the West say
ilerepoundO lls ted in Second Schedule anoexed ro that is pound0 say
___ _ and situated in __________
SECOND SCHEDULE
D escription of Partitions Fittings amp Fixtures
bull
1
2 I I I l
r----Ji------------------------------------l 5
6
bull
~ 1 bull
Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
bull
t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
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Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
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The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
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Annual Performance Report for Units ANNEXURE-VIII Ij ~J --I - PART-A (PROFILE) Remarks-
Period (Ap~ liIorch) II No ~ l- UNIT DETAILSI
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t-Name of Unit
Registered Office
Factory address
I Correspondence Email 10 ~
t Email 10 of anyone DirectorPartnerProprietor
Name ampContact No OJ AuthorLied Signotory
IECNa
Hem of manufacture Na ture of service (as stated11 bullbull t in LOlli
LOA No amp Datei Annuoj capacity and ProductionI~
~ Date oj commerlce ment of productionservice Area Alotted ~
~ PAN No Of the Co Proprietor -
CAPITAL STRUCTURE OF THE ENTERPRISE Amountt il
(i) Authorized CapitalProprietors
Partners Capital fJrtJ A (ii) Pai d-up capital p I
--Overseas Inv(stme~t made itl the entity FDI NRI1B -a Approved l Automati S Route
t1 b AC luallnflow during the year
c Cumulative Investm en t nlOde till datet1 t
b-~
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
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Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
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lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
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6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
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17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
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The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
2
bull
C Investmen ts m n to by-
I o Nms --
I
b fo rt lt i Direct Investment
c OthPrs (I e Indians) - - -I
d Cumuatfve actual investment for 5 years
hlVesmetlt mode by tile lJJjj III unit zane
I D to repoce Unit with Entit y
Building Land Plan t amp Machinery Others Total -
o Durlfl g the year
b Cumulatfve actual Investments
since Inception
E Employment (During the vear) Male Female Total
-a Direct Emp lo yment
) Contfoctunl Employment
To show as on 31st March amp during the
Current Yeor SepararteJy
III OTHE B INFQR MATIQ N
(i) Ex[ernii Comm ercial Borrow ing commercial
borrowing pendilg at the end of last year
(i ii Cases pending fo r fo reign exchange reali zation (more
than 12 month) r Details thereof Date o t Export and Invu lce N()-
Name of impOllermiddot
IIddresc middot
AmQun t middot Amount in Fe amp Amount in INR - - - -
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
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bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
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Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
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(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
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lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
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----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
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6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
3
ftmiddot PART-BIPERFORMANCE APPRAISAL)
IV-- - lXPO~ IIflow) -(Rs n Crore)
(I) FOG value o f eKport rot t il e year rother supplies to DTA countedor NFf in terms of Rule 53(A) of srz Rule 2006
Yeor Value (Rs ln (rore)
b) Cllmufotlve value of eKports for number alyears failing ill the current block
c) TOp 5 countries of export
Value (Rs In Crore) - - -IMI O I (O utfl ow)
v (R s n ( rore)
A Ra w material amp other jnpu~s utilized
a) Opening balance of imported raw materials consumables co mponents paltkillB olCllerJals elc
b) or Valu e of Raw materials con sum ables components
r ac king 11Iateritt ls e tc Importcrl durilg the year
Year Value fRsln Crare)
c) Cum ulative value of ra w materials consumables
components packing materials e tc (a+b)
cl)Value of impo rted raw materIals com urna bes 1 cornponenls packing ma terial s etc or f in ished
goodsservices received from other units in
SEZI WUs EHTPs Srr during the yea r
e) OTA Procurement - Raw Materlal~
f) Total Ielt d)
--- - --
- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
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17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
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- - - - -
~
bull
bull
I I
g) Vohle of frr10rted row materials cot15umobles
rompof1ent~ packIng mOlerials etcservices tronserred to Add Uits Nome other un $ ift SfZsfOUsSTPs during rhe yeor
h) r-t JJlng balance of Irnpni tetJ raw materials consumables
~nl)onents oackinR materials etc
~ i) VallIE of inlpo rtec1 raw mater ials consumabl es co rnponents packing materials etc actually consumed
liUJing lhe yetlr f (Smiddot h)
ro-shy Ca ~ l tnl Goods
) Opening Bolonce (Year-wIle since Inception)
(actual value without depreclatfon)
Ii) Impaired during the year
iI) Tota l (I + II)
Iv IlIl ermiddot Unit tronsfer (Ill)
I
v) Inter - Unit transfer (out)
vI) Net Inter- lInlt transfer (Iv - v)
viI OTA Procurement middot Capital Goods
viif Totnl value 0 Imporled capitol goods amp spores during
th e year (lIi+vij
h) Proportionale Jlliortized va hle of imported cupltal goods
1(l1lt f ll for NFE calculations as per rule- of Special Economic
Zonfgt$ Rules2006
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
5
bull
Otller outflow ofleelgll exchange (Royalty repat o t fon
C of dlvldend propiS Payment oj soles commissiontechnlcal
know how fe ~ tterest all overseas borrowings etc )
awing til t I _ Ir
D Value o[im12orted Services
E Totnl outflow (4A ij + 4B(iK) IS(a+b) )
VI N p r mcigll Foechaoge E ntn ings poSiUon for the ye~ r 1 (aJ -6
VII Net FOl eign exc hange Ea rning po-sitlotl Cit th e end of pre vious
year Cumulative value of NFE for number of years falling in current block NOTE fOR DETAILS Of CAlCUlA TON Of NFE PLEASE
RfFE n TO RULES 53 OF SEZ RULEs Z006
D1 A Sales
rflshye S(lle of tinished goodsserVices
b Sale or relects ~~-QIQdugt1 d Sale o f Waste scrap Remnan lReject e tc e Tota l
UTA Pr2ur~menr ai Row Material
PTt1 Prounmen t ot Callital GQods
Value (Rs In Crore)
-
I
(I) Details of fllter4 Unit Transfer (For the Yfor)
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull 6
-bull
(ill)
(o) Nome Q wIlts In S EIEOU
trtlclurll4 fj sIster concern)
(b) Un vl e dosslleaton ---- -Detail of goods procuredtransferred Amount
For Purchases of goo dscapitol goods - [1Qy not be cequir~Q For saJe af goodscup f~[ll goods Ma~ not be re~ulred
Custom duty Excise Duty Service Tax VAT Income Tox Duty fo rgon e o n Capitol Goods -
(iv) Duty forgon e on Row Materials arid ( amponents (dtlring tile year)
(v) Duty paid at the time of D TA clearance (during t Il e
yeor)
Date
I
I
SIGNATURE
With Seal of Co
Name of the Certifying CA
Address
Membership No
Note -The in formation given in the f OIIYIi3 t S for APRs should be authenticated by the aut-h oI Ized signator y of the unit an u
eel tifiEd by a Chartered Accountant
lost date oj submission oj APR may be extended up to 30 th September In place oj 30th June eeping in view oj the protcnl difficulties oj unitscompanies In view of their audit which generally ends l i P to 30tf September Relevant SEZ
Rules Bond condition No7 may also be amended accordingly
bull
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull
lt
1
Annexure - XI
SUGGESTIONS-ON THE RECOMMENDATIONS OLTHE SUB-COMMITTEE TO SUGGEST ISSU~QF C4ARIFICATORY INSTRUCTIONS FOR UNIIFORM PROCEDURES PRACTICES TO BE FLLOWED IN ALL CENTRALJLQVIUMENr ~~S
Recommendation of the Sub-Committee The suggestion of the Conunitee comprising DC SEEPZ SEZ DC Kandla SEZ and DC Falta SEZ
1) The functions of the Secretary and Manager (Esta te amp Marketing) can 4 Crerui9nolwampIilruSEz Authorilies be merged and thus separate post of Manager( Estate and
Marketing) will not be necessary 4 I As pertle provisions of the SEZ Act 2005 and SEZ Rules 2006 the responsibility for development and 2) The post of OSD to CEO would not be necessary as Development maintenance of infrastructure in Sp~cial Economic Zones Commissioner is the Ex-Officio Chairperson of the Authority and is vests with the Developer of the Zone In the case of already provided assistance in the DCs Office private SEZs temporary posts on cost recovery basis have been sanctioned for each of the notified Zones for 3) Manager (Administration amp Finance) would not be necessary as the carrying out regulatory functions in respect of tfie SEZs Assistan t Manager (Admn amp Finance) would be adequate under SEZ Act and Rules as follows
4) The Post of Hindi Translator need not be created in the Authority as Mult i product SEZ 26 posts one post of]r Hindi Translator is available as strength in DCs Sector specific SEZ 10 posts Office who can attend all the Official Language work of the
Authority also 42 These posts are on cost recovery basis and are expected to be fille d in a need based manner A list of 5) The functions of Caretaker and Record Keeper can be merged these posts sanctioned fOl Multi Product and Sector specific SEZs is placed at Annexuremiddot3 6) The post of Head Security Guard need not be created as at
Supervisory level the posts SO and ASO will be available as 43 In respect of the Government SEZs for each of the regular staff of the Authority The rest of the security requirements can Zone Authority has been created to discharge the role be outsourced of L~e Developer As a result of creation of the
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull
----- 1 tority the functions of development and maintenance of infrastructul(j utilization of space promotion of industries recovery of unutilized and under utilized space for allotnlent to entrepreneurs for eilher expansion purpose or for setting up of new units other estale related ac tivities etc come under the Authority whereas
the DCs Office will be taking care of the regulatory functions in respect of the SEZ as per the SEZ Act and Rules lCeeping this in view creation of posts have been proposed for the Authority for the efficient management and development of infraslructure required for the Zone thereby enabling the Authority to perform the task as Developer of ttie Zone Wherever the DCs office is able to spare staff handling estate related matters for working in the Authority the same can be consider ed This situation also would vary from Zone to Zone
44 As per Rule 8 of the SEZ Authority Rules the Development Commissioner of the respective Zone is the Chairperson and Chief Executing Officer of the Authority All other posts for the Authority need to be created afresh or ou(sourced as the case may be for effective execution of the powers and functions vested with the Authority as spec ified under Rule 6 of the SEZ Authority Rules Alter due consideration and based on various inputs received from the Zones posts have been identified and proposed for creation for each SEZ Authority as listed in Annexure-4 These are such posts functions of which may not be desirable (0 be outsourced to an outside agency
45 The area of all the seven SEZs varies and therefore the extent of ongoing developme ntal and
2
7) One post of Civil Engineer will be adequate who can also attend to the
[unctions of Electrical Engineer
Based on the above assessme nt the Committee recommends that creation of the fo ll owing posts for each o f the seven SEZ Authorilyshy
SNo Name of the Post Grade Pay No of posts
I Secretary Rs 6600 shy I
2 Law Officer Rs 4800 shy I
-3 Asst Manager (Estate amp Rs 4800 shy I
Marketinql 4 Asstt Manager (Admnamp Rs 4800- I
financel 5 Caretaker amp Record Rs 42001shy I
KeeEer 6 Security Officer Rs 4800 shy I
7 Assistant Security Officer Rs 4200 shy 2
8 Asst Manager (IT) Rs 4800shy I
9 Civil Enqineer Rs 4 6001shy I
Tota l Number of posts proposed lor creation 10
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
3
m~I middot (enance activities also i-bound to vary Further in1 lo lne of the SE2- Ih e availabilily o f vacant plolsready built space is insignificant and in some SEZs like SEEPZ
t there is cllmo5t 100 utilization of space Th erefore while the category o f posts to be created and the level of the posts would be uniform for all SEZ Authorities actual requirement of the posts and the number of posts in each category will depend on the size of the SEZ and volume of work involved While creating posts under the SEZ Authority Rules (or manning various posts uniformity need to be e nsured in terms of the categories of posts scale of pay for the posts and the methods of recruitment For each of the posts Recruitment Rules in the form of Guidelines common to all Authorities need to be drafted There are however certain posts particularly in the lower category which can be outsourced such as Data Entry Operators Multi-tasking Staff additional Security Guards required Drivers etc which are not included in the list annexed
Recomme ndation Indicative list of posts identified for creation in the Authorities is enclosed as Annexure-4 Suitable Guide lines for recruitment to these posts are to be drawn up The respective Authorilles may ilfter taking into account the posts which can be spared out of the present sanctioned strength of the Zone and also considering the existinf level of activities of the Zone draw up the posts required to be created in the respective Zone out of the indicative list Such proposal with adequate justification in respect of each post proposed to be created may be recommended b y the Authority to the
I Ministry for consideration
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
4
5 OutsOU lng of services~ ----
5 1 s per Rule 9(4) of the SEZ Authority Rules the Authority may engage agencies or employees on conlract outsourcing for discharge of its functions and the terms and conditions of such appointment shall be decided by the Authority and preference shall be given to outsource all works to the extent possible and only if ou tsourcing cannot be done as a principle regular staff sh aH be appomted [n this context some of functions of the Authority which can be performGd by entrusting the same to outsourcing agencies are as follows
a Additional requ irement of Security Staff b HOllsekeeping functions c Horticulture d Annual Maintenance Contracts for Lifts o ffi ce equipments DC Set fire fighting equipments electrica l insulations pumps generators etc e Operation Mpoundtintenance and AMes for Sewage Treatme nt Plant Effluent Treatment Plant Bioshymelhanization Plant maintenance of Drainage system including de-sllting etc Water Supply amp Power Distribution g Servlces of Chartered Accountant Firm and Internal luditors h Services of COllnsel for legal matters 1 Fire fighting rela ted services j Technical evaluation of engineering projects OampM projec ts (Major a nd Minor works) ASIDE projects etc
IThe services outsourced of Chartered Accountant Firm and Internal Auditors Counsel for legal matters and techni cal evaluation of projects are 111 the nature of establishment expenditure and therefore may not be included for cost recovery from units
_ --- - --- ------ ----- -- shy
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
15 The expe nditure on the above services rendere d tivugh ou tso urcing will also be taken into account while arriving at and Ixing the user charges to be levie d on the Units by the Au th ority Reconunenda~ ion The Se rvic es lis te d abo ve a re indicative The re s p e ctiv e Authoritie s may ide ntify the s e rvices to be out s ourced for e ffective func tioning of the Authority
6Tr ansfer of Asse ts
6 L Prese n tly only the Au thorities of Noida SEZ CSEZ and KASEZ have transferred all its ass e ts to the Authority by way of a Resolu tion passed In the case of SEEPZ SEZ the CAG Aud it team had raised specific observation that since the owne r ship of the property vests with the Gove rnme n t of India Min is trys approva l is requ ired for transfer of asse ts to the Aut hority In view of this observatio n all SEZs which are yet to e ffe ct the transfer of assets to the Au thority m ay need to pass a Resolution and approach the Ministry for gran t of requ isite approva l for trans fer o f the assets In the c ase of Noida SEZ C SEZ and KASEZ also the co ncerned Authorities may approach Ihe M inistry for rati fication
R e conune ndation The CAG audit obse rvation in r espect of SEEPZ SEZ Authority Mumbai has been that s ince the owne rship of the property ve sts with the Gov errune nt of India Ministry s approv al is re quired for transfe r of As sets and Liabilities in fav our o f the Authority Therefore Authorities who have a lre ady effected tra nsfer of Assets and Liabilities in fa vour of
5
The Committee concurs wi th the recommendation
The Committee concurs with the recommendation
the Authority base d on Re solution passed i n--the--__________________________ _ _____
bull s_~
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
6
A _ lltirlty tnay seel ratification of the Ministry The ller Authorities may based on valuation of the assets by a Government valuer pass the required Resolution and seel approv al of the Ministry for transfer of Assels and Liabilities 1 Funds for incurring of Capital Expenditure by I Committee concurs with the recommendation the Authorityshy
1 I The funds available with the Authority may be adequate for meeting the OampM and minor works to be carried out in the SEZs Since the Authority being the Developer of the Government SEZs is required to provide necessary infrastructure for devel opment of the export industry there in the ASIDE fund ing s hould continue to be avaitable to the Authority for capital expenses to be incurred for creation of new infrastructure and for major maintenance of existing infrastructure
Recommendation As the Government emphasis is to promote SME sectors and labour intensive industries the basic objective of the Authority is not recove ry of the e xpenditure on services as SEZ Authorities cannot be expected to be profit orien~ed organizations ConSidering this Goverrune nl s support to SEZ Authorities through ASIDE funding should continue for creation of new infrastructure and upgradaUon of existing infrastructure
B Levy of lease rent The Committee concurs wi th the suggestion regarding phasing out the difference in lease rent However the period of merging will be decided
BI(a) Lease Rent The Authority Rule s e nVisage levy of by the respec tive Authorities In case where there is difficulty in bringing lease re nt and user c harges by the Authority However the tease re nt charged in old bui ldings which requires huge maintenance there are no common modalities for fixing lease rent cost in such cases the actual maintenance c~~_~r~~Ted may be recovered I
~ - -
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
7
ser and maintenance charges all otment fees etc At I in additi on to existi ng lease rent pTr~e nt there is variation in th e rental across the Au thorities w hich is at a subsidized rate as compared to the prevalent muket rate Th e Authorities may therefore need 10 effect revisions fro m time (0 time in a phased manner so tha t the rentals are not too subsid ized and reve nue is generated b y the Authority to enable it to ulldertake m ore d evelopmental work [or the Zone
Recommendation In the normal course the least rent for a property is arrived at based on the cost of the property ie circle rat e notified by the State local Authority However in the case of SEZs the basic objective is to provide infrastructure for export proInotion at a reasonable rate and thus the eITphasis i s not on cost recovery As the circle rate varies depending on location the lease re nt cannot be uniform for all Authorities Therefore the re spective Authorities may fix the lease rent and rEilise the same annually taldng into acco unt lecovery of maintenance expenditure incurred in the preceding y ear It would be desirable to rationalize the lease lent within the san1e SEZ if variation exists For example the lease rent for the oldest building may be much lower than the lease rent fixed for the recently constructed building as 1he lease rent is fixed based on the cost of construc1ion Such rationalization can be arrived at by effecting suitable increase in respect of lower lease rents in such a i manner that over a period of 5 years the lease rent is brought uniform with the prevailing highes t rent
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
8 1(1 1 Penl Interest SEZ Authori ties are charging pe ~I interest for delayed lease rent payments However the moaalities vary In the case of Noida SEZ ease rentals are ta ken in advance on a quarterly basis Penal interest 12 is charged to the Unit if the payment is not made in the first month of the quarter In the case of CSEZ advance rent for one year is taken as a deposi t to be kept with the Authority Fur ther lease rent is taken for every quarter in advance For default in payment pe nal interest at the ra te of 12 commences from the fifth day of the quarter itself O n the other hand SEEPZ SEZ has a system of collecting lease rental in advance on monthly quarterly half-yearly and yearly ba sis These processes need to b e reviewed and a uniform practice needs to be pu t in place lor all SEZs
Re comme ndation i) 111 the lime of allotment a deposit equivalent to one years lease rent may be take n Thi s will not he adjusted against the rent dues Re fund o f this may b e given only at the time of Unit s exit aft e r adjus ting dues if any The collection of lease rent may be made on s ix -monthly bas is in advance Thus advance rent nlay be deposited by the unit b e fore 31 5
Marc h and 30 September for Ihe billing period April to September and October to March respectively for the billing p e riod April-June July-September October-December and January-Marc h
ii)In case of default in payment b e fore the said dates compound penal intere s t at the rate 18 perc ent pa would be lev ied from l o l April 1s l July l SI October I
and I JanuaryL as the case may be for ~he
8
The Committee concurs wi th the Recommendatio n
Penal interest on compounded basis and 18 proposed by the Sub shyCommittee this Committee is of the v iew that 12 penal interest on compounded basis shall b e adequate
1______________
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
9
IP J ortionate deflted period
Iii) In case of two successive default by any unit the lllthority shall initiat e action under Public Premises (Eviction and Unauthorised Occupants) Act 1911 for s e aling the premises di sconnecting electrical and water supply and eviction of th e unit
BI(c) Allotment of space to Units and I The Committee aUotment period As per Ministry s Ins tructions all SEZ Auth ori ties are now following the bidding process for a ll otment of space However there are practical difficulties face d in implementing the bidding process Since only those Units who wish lo set up their (1perations in an SEZ wilt app ly for space at time there may be only one or two applicants for vacant space In such situa tio ns it may not be feasib le to go with the biddi ng process nor will it achieve the objective of th e biddi ng proc ess since there can ev en be a single bidder Only in those SEZs w here vacant space and number of ap plicants are more the bidding process ca n be e ffectively carried o ut In this regard the procedure followed in SEEPZ SEZ at present appears to be prac tical and tr ansparent SEEPZ SEZ hosts the details of the vacant space on the website inviting applications for se tting up of Unit The applica tions so received aTe
scrulinized by a Committee based on cer tain parameters w hich include projected exports employment NFE whether the unjt is for priority sector as per Government of Indias norms past performance in the case of existing Units etc However in this process there is no quoting of lease rent Hi9hesl erevalen t rent is charged to the new
concurs with the Recommendation
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
10
allotlor So se lected Simi larly NSEZ is also following the pIC edure of scrutjI1~r of appl ica tions based on Projected export s Employment NFE and Nalure of process e tc by an AlJotmen( Ccrtittee Based on above experiences norms can be drawn up and adopted for screening of applications received for allotment of space fix ing certai n parameters such as projected export tur nover vis-a-vis the space generated and NFE pr
applied ojected
for employment to be
Recommendations (1) There have been practic al difficulties experienced ill the bidding process In view of this the following procedure may be adopted in all Gov ernment SEZ Authorities for cons ideration of applications received for allotment of space in SEZs i)Details of the s pac e available for allotment to be hos ted on the website along with the presc rib e d application format (Annexure -6)
ii)Allotrnent COlTllTlitiee may b e constituted for scrutiny of applications based on the following broad paramete rs
a)Projected FoB value of exports over 5 year period
b) Return on space in tenns of projected exports as may be arrived at by the re spective Authority
c) Projec ted NFE over five ye ar p eriod
d) Projected employment generation during 5 year p_e riod L -- shy J
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
11
e) P vj e cted investment during 5 year period
f) Whether the proposed activity falls unde r priority sector for exarnpie hardware manufacturing sector for whch special subsidy is granted by Government
I of India
g) Whether the application is under the SME category
h) Baclltground of the Entrepreneur
iWhether the applic ant is an e x i s ting unit in the Zone
jAny other parameter as may be fi)(ed by the Authority based on specific require ment of the concerned Zone
(2) Allotment period At present there i s no uniformity in the period of allotment among the luthorities It is expected that an SEZ unit sets up its operations as a long term activity Further for obtaining financial assistance from Banlts the financial ins titution expects a minimum lease period j
of at least 15 years In any case in terrrfS of Rule 11 (5) of the SEZ Rules the lease period is co-terminus with the validity period of the LoA irrespective of the lease tenure spe cified in the Sub-Lease Agreement It may therefore be desirable to make the allotment period in ]espeel of built up space for 15 years and for p lots 30 years
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
12
81 (tI Allotment Charges Some of the Zones (viz I The Committee concurs with th e NStl amp CSEZl gt) charging allotment fee on nonshyrefundable basis from the Units at the time of allotment of space Since th may at some point be found to be arbitrary this procedure need to be reviewed so that uniformity across all SEZs is ensured
Recommendation Non-refundable allotment charges equivalent to one years leas e rent may be charged In respect of SDF pre mises at the time of allotment of space so as to ensure that there is uniformity in the practice being followed acros s all th e Government SEZs
0 1(e) Transfer of allotted space to another entity The I The Committee concurs with the procedure being fol lowed w hile transferring allotted 5parr to another en tity is fou nd to vary in different Authorities In the case of Naida SEZ transfer is being allowed from one company to another by charging transfer charges The criteria adopted is that if the majority stake remains with the existing company no transfer charges are levied If the shareholding of the existing company is less than 49 00 the transfer charges are levied which is based on the practice being followed in the loca l Noida Authority CSEZ charges one years advance renl as transfer fee irrespective of change in shareholding pa ttern To ensure uniformity it would be appropriate that each Authority adopts th e modality followed and transfer charges levied by the loc~l Regiona l Development Authorities concerned
Recommenda tion
Recommendation
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
Rp C -~ nmendations
i)ln so far as SDF premises are concerned transfer is not allowed Tile premises i s to b e s urre ndered to th e Authority who in tUrn allots the S aIne as per procedures to e ligible entrepreneurs
i1)ln tIte case of self-built factorie s on plot allotted the super s tructure is constructed by the alloltee Therefore transfer of the lease hold rights for the remaining period of the existing lease period may be considered The transfe r charge in such cases may be in line with transfer charges levied by the resp ective local Regional Development Authority
13
The 81l0iment shall be subject to the scr utiny criteria recommended by the Sub-Committee at 8 1 ( c) above
8I(f) User Charges to be levied by the Authority i The Committee concurs with the Recommendation The Authority incurs expenditure in providing common services such as electricity charges for providing street lights high mast lights in common areas lights in the common area of SDFs housekeeping of the Zone complex opera tiona l expenses in respect of sewerage treatment plant bio-gas plant outsourcing of services for AMCs of Lifl s office equipments DG Set fire fightmg equipments electrical installations pumps etc horticulture private secu rity personnel operation maintenance and AMCs for Sewage Treatment Plan EllIuent Tre8tment Plant Bio-methanization Plant m8intenance of Drainage system m cluding d e-silting elC Wilter Supply amp Power Distribution wh or~ver
Aut hority is providing the service Fire lighting related services disaster management reJated services etc
I
tmiddot
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
14
Re o- lmendation
The service s listed above are indicative and the respective AuHi o 1ities may take into account such services as they may be prov iding in the Zone for arriving at the user charges to be recove re d
91 At presen t the terms and conditions specified for I The Committee concurs wi th the Recommendation gra nt of NOC for mortgage o f assets of Units in favour of fin ancial institutions for availing term loan elc vary fro m SEZ to SEZ It is desirable to have uniform terms and conditi ons w hile granting such NOC The terms and conditions have to be dla fted in line with models avai lable with various Zones
Recomme ndation
In order to have uniform terms and conditions for grant of NOG for mortgage of asse ts of the Units based on inputs received from v arious Zones a model NOG has been drafted and placed at Annexureshy6
1
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
15
10 I In cases where NOC has been granted to a Unit by the Zone Administlal0n lor mortgage of assets and when The Committee concurs with the Recommendation it becomes a Non Performing Asset for the concerned financial institution they initiate action under SARFAESI Ict 2002 which envisages initially taking symbolic possession of lhe premises and thereafter physical possession Normally premise s so taken over are auctioned by the Financial Ins titution by publishing notice in the leading newspapers Since the property is located in the SEZ the bidder(s) need to be made aware of the specific conditions ie the bidder(s) should have a project sui table for granting LoA by the Approval Committee This requirement should be specified by the concerned Financial lnstitution in their Public Nolice so that the bidde~ is aware o f the regulation requires to be fulfilled In case the liabilities of the Unit are more than the sale proceeds then the issue of apportionment and p riority also need to be determined
102 With regard to old cases including cases under SARfAESI Act where banks have initiated action [or possession under SARFAESI Act falta SEZ has s taled that they have constituted a team consisting members fro m both within the Authority and outside to deal with pending old cases and bring them to a logical conclusion The team constitutes of Secretary of the Zone Concerned licenSing ADC Specified OIIicer of the Customs Representative of Chartered Accountant fir m and Legal expert This team monilors all old cases such c~~piresi l oAs where renew~lI~xtension has -notbeen-JI_____________________
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
sought ii4inceled LeAs Units which have not surre ~ Cted space cases under SARFAESI Act where insurance companies lrdve initiated action for possession w i e re FTDR action h as been taken and pe nalty is not paid where Uni ts 11l Ve going into litiga tion and where enforcement action has b een taken by outside e nforcement ag e ncies etc
Re c omrnendation
(i)The financial institution conce rned invokes the SARFAESI Act in case of default in repayment of the term loan etc av ailed by the Unit and proceeds to ta lte symbolic possession of the s uper s truc ture and th e re afte r physical possession for auctioning the pro perty for re cove ry of d u e s As p e r the SEZ ActRules the bidder s hould have a project su itable for gra nt of LoA for setting up of a Unit und e r the SEZ Sche m e The refore the bidde r c ould b e e ither an e xis ting SEZ Unit or an e ntrepre ne ur who has a proje ct suitable for grant of LoA unde r the SEZ Sche m e The LoA is to b e approved b y the Approval Committee In v iew of these it would b e n e c e s s ary that the financial insti1ution in their au ction notic e explic itly s pecifies a condition tha t the successful bidde r shall apply for grant of LoA to the Approval Committ e e and the p os sess ion of the aucti oned prope rty shall be given only aft e r grant of LoA by the Approv al Comnlittee (If pariic ipati on in bid i s esticted only to the existing LoA ho l ders in the SEZ the n the re is le s s scope for wider p articip ation in the bid It i s therefore nec essary that any e ntre pre neur
16
The auction proce ss should involve two stages ieshy(i) eligibility bid (ii) financial bid
Fi nancjaJ bid of eligible bidders only should be considered
~ eis all ow e d to participate in the h i d subject t o-ab=ovoJI_____________________________
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
17
con hllo ns)
(ii)As the Zones have paucity of staff and since legal expertise is rcuired for dealing with such cases ) it would be desirable for Zones to replicate the same method adopted by FSEZ 10 deal with old cases including those under SARFAESI Act by constituting a suitable Committee comprising (I) Secretary of the Zone concerned licensing ADCj Specified Officer of the Cus1omsCentral Excise Representative of Chartered Accountant firm engaged by the Authority and a Legal expert If needed the representative of the Banlt concerned Insurance Agency Enforcement agency as the case may also be co-opted
II Best practices followed by all I Th e Committee concurs wi th the Reco mmendation SEZs l Au thorities -
I I I Zonal DCs were requested to provide the best unique practices being fo llowed in the Zones which have been received
Recommendation
Based on the various inputs received from the Zones it is recommended that following best practices may be considered for adoption by the respective Authorities i)Encourage generation and use of solar powe r
_~i)Green Building Norms 10 be jePrIinveieewforall JI_________________________
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
18
neh jnstructions I I
iv) Adopt rain harvesting and m e thods of prese rvation and conservation of water
v) Cre ation of social infras tructure within the Zone such as de dicated telephone exchange o ptical data fibre link power back-up creche facil ity h ealth care facility banllts amp ATMs post office etc
vi)llstali Security Surveillance System CCTV etc for effec1ive monitoring of movement of man and material into and from the Zone
vll)Hosting all space related sys1ern tender applications and procedures on the respective websites of the Zone v iil)Putting in place Integrated Wat er and Waste Manage ment System ix)Conducting regular fir e drills x) Se tting up of bio-gas plant sewerage treatme nt pi1mt etc
xi) Dlstribution of power as deemed licensee within the Zone by the Authority
xii)Water supply by the Author ity
x iii)Creation of add itional reside ntial a ccommodation for employees wherever there is space available and demand for residential accommodation--_ -- shy12 1 Under SEZ Rules presently th e re is no provision The DC Falla has circulated a draft leas e agreement for-mments of the for SEZ Authority~itiate any action on those Units Government SEZs This format may be finalized whjpoundh can be fo llowed ~
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
19
whicl re achieving NFE positive marginally but are not gre al performers imiddot terms of exports or employment The Development Commissioners do not have any ground for rejcLlii ] the request for extension o f the LoP of a unit so long as it is fulfilling the criteria o f achieving positive NFE Units may thus continue to hold on to the space for 5 years by achieving the NFE targets marginally in the initial years itself and remain inactive thereafter for the remaining period This results in blocking of precious space without generating exports nor e mployme nt Rejecting requests of such units in such circumstances without appropria te provisions in the Rules may result in legal complications
122 In order 10 resolve this issue il IS proposed that the lease agreement with the Unit may contain a condition that exports in accorda nce with the parameters (to be decided) shall be complied with by the Unit on an annual basis and that failure to do so without justification and unless condoned by the Chairperson of the 1uthority shall result in cancella tion of the lease deed and consequent eviction
13 1 ~emJilign from paYJll) of Service Til-X- ~ lilllt2IlsLIjI~
(I) VSEZs proposal The SEZ Authority Rules 2009 notified in the Gazelte of fndia on tl II 2009 is a Central Legislation The Authority is Chaired by Development Commissioner as Chief Executive Officer and supported by Jt Development Commissioner assisted by Secretary and other Staff All the officials are Government officials
all Government SEZ Authorities
There may be practical difficulty in applying space norms across the board since part 01 tJle activi ties particularly in the Gems amp Jewellery Sector are capi tal intensive wherein the automat ion is extensive and some part of processing may be labour intensive also Therefore as an aHernative (0
space norm it may be desirable to specify a condition in the lease agreement to the effect that in case the projected export performance is not achieved during the 5 year block period or space is partly kept unutilized over and above the normal rent penalty shall be imposed uplO the highest 2rcvaiJing lease rent for SDF premises E= an oln _ ________-1erc n u c _ The Commlttee concurs WIth the Recommendauon
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull
bull
The concept for bringing SEZ Policy as already m~ntioned above Lt primarily to make SEZs an engine for economic growth supported by quality infrastructure Functions of the Althority is to take necessary measures [or efficient management o[ the Zone and develop it as a
I financi ally viable organization This is not a Profit oriented organization VSEZ
Authori ty is specially created by an Act of Parhament for providing infrastructure facilities in the Zone in the jnterest of the Nation for encouraging entrepreneurs for setting up Units or earning Foreign Exchange and providing employment VSEZ Authority is an offs hoot of VSEZ hence the Authority should be treated as a wing o[ G overnment and exempted from payment o f Income Tax Service TalC and o ther appJicablp taxes whi le deve loping infrastruc ture fac ilities within the Notified Area
The Lease rentals earned by the Authori ty are reshyI invested for the Development of the Notified area of the
SEZ which is the Government Property Henc e Ministry may initiate necessary steps in this regard
Recornmendation At present there is a laclc of clarity as to whether SEZ Authorities are exempted from the payment of Income Tax As the Authority is an non-profit organization which utilizes the revenue generated for development of notified area of the SEZ which is a Government property the Ministry may talee up Ule matter with the Department of Revenue Ministry of Finance for granting suitable exemption by way of notification As regards Service Tax the services consumed In the SEZ are eligible for service tax exelnption under the existing notifi c ation
r
20
bull