The Central Government is expecting heavy investment flow in sectors like pharmaceuticals and biotechnology with the introduction of the Special Economic Zones (SEZ) that came to effect on February 10, 2006. The SEZ Rules provide for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.

Declaring that the SEZ Act 2005 and SEZ Rules have been legally vetted, approved and are ready for notification, Kamal Nath, Minister for Commerce and Industry, said that the result would be an investment of the order of Rs 1,00,000 crore over the next three years with an employment potential of over 5 lakh.

"Heavy investments are expected in sectors like IT, pharma, biotechnology, textiles, petrochemicals, auto-components etc," he noted.

With the Act and Rules in place, it is expected that many large format, multi-product SEZs that have been unable to achieve financial closure so far will now quickly move towards such a closure. It is anticipated that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities, Kamal Nath said.

While the minimum area requirement stipulated for multi-product SEZs is 1000 hectares or more, sector specific SEZ in biotechnology can be set up over an area of just 10 hectares. The area requirement for multi-product SEZs has been relaxed to 200 hectares and for sector-specific SEZs to 50 hectares, for certain states (Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura Himachal Pradesh, Uttaranchal, Sikkim, Jammu & Kashmir, Goa) and union territories, keeping in view the difficulty in finding large tracts of contiguous land in such states/union territories.

The SEZ Rules provide for simplification of procedures for development, operation, and maintenance of the Special Economic Zones and for setting up and conducting business in SEZs, single window clearance for setting up of a SEZ or a unit in a SEZ and on matters relating to Central as well as State Governments.