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Positive developments for IT/ITES SEZ sector

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As per report by Jones Lang Lasalle, the Government has done away with the mandatory requirement of 10 hectares of minimum land area for setting up an IT/ITES SEZ. With immediate effect, the minimum built-up area requirements to be met by SEZ developers will be 100,000 square meters for the seven major cities, 50,000 square meters for Category B cities and only 25,000 square meters for the remaining cities.

The major impact of these amendments will be that many more IT companies will now be able to launch their own SEZs. Previously, only the largest IT players could have their own IT SEZ’s given the capital required to buy 25 acres land. Developers will now be able to aggregate smaller contiguous land parcels and turn them into SEZs. For example, in cities like Chennai and Bangalore where the FSI for IT Parks is as high as 3.25-3.75, an SEZ development can now be developed on a land parcel as small as seven acres.

IT SEZ developers who have already met the 100,000 square meter built-up area criteria can now convert the balance land for residential use, giving the mixed-use edge while also making the formation of many more walk-to-work residential projects possible. Real estate developers will now be able to divide up their land holdings and allocate smaller parts to IT companies to construct their own IT SEZs.

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