SEZs draw investors as hurdles filter policy

By Janaki Krishnan & Bharghavi Nagaraju

MUMBAI (Reuters) - Special Economic Zones (SEZs), touted as engines of India's industrial growth, are poised to take off in a big way, despite the initial hurdles and after ironing out some regulatory creases.

SEZs are duty-free economic enclaves, with units qualifying for incentives such as income tax holidays for a specified period and other benefits.

In China, SEZs have been major boosters for investment inflows to the current levels of $50 billion, absorbing nearly a quarter of its total inflows, a PricewaterhouseCoopers report said.

India has so far approved 513 SEZs, of which 250 have been notified. Investments are expected to cross 2 trillion rupees by December 2009 and bring incremental employment to 800,000 people, said India's commerce secretary G K Pillai.

In the last three months more than 160 billion rupees of investments in SEZs have been announced by various firms.

Ansal Properties & Infrastructure Ltd is investing about 36 billion rupees for IT SEZs across three states.

Infrastructure Leasing & Financial Services has tied up with Maharashtra Industrial Development Corp (MIDC), to invest up to 80 billion rupees in SEZs in the state.

State-run trading firm, MMTC Ltd, has invited bids to set up SEZs in various sectors. Tata Realty & Infrastructure, in a joint venture with the Tamil Nadu government, has committed to investing more than 30 billion rupees to build a IT SEZ.