Chinese-type investment regions to be launched

A Special Investment Region (SIR) will essentially be a Special Economic Zone (SEZ) covering a much larger area. SIRs will enjoy all incentives — relaxed labour and financial laws and tax holidays — given to SEZs. While a SEZ is of around 200 acres, a SIR will be spread over 2500 acres or more.

Officials say that in China entire provinces are designated investment regions but in India the pilot projects will focus on specific districts.

The first SIRs are proposed in petrochemicals and polymers. The region around the Haldia SEZ in Bengal, where a petrochemical plant exists, will be among the first to be developed. Gujarat and Andhra Pradesh are the other states where the experiment will be tried out. The Haldia SIR will extend over large parts of Midnapore district and will ultimately include the Haldia SEZ.

The Prime Minister’s Office has asked the Planning Commission to work out the final draft of the proposal. Officials say states are being picked based on their potential to become global business hubs.

Sources said the SIR proposal was first placed before Prime Minister Manmohan Singh by a group of NRI CEOs a year ago. They suggested that India follow the Chinese model of huge SIRs instead of small SEZs.

Land acquisition rules for SIRs will be simpler, unlike in the case of SEZs where all the land has to be acquired by the state government. The state will merely notify a particular region as an SIR and leave it to private parties to buy land within the zone directly from the owners.

This can be done through special purpose vehicles — a shell company that can borrow money at low interest rates from the government.