The Food Processing Ministry has sought special policy incentives for special economic zones (SEZs) in the food sector, including a relaxation in the minimum eligibility criterion of 250 acres to set up product-specific SEZs, but sources in the Commerce Ministry said there was little chance that the rules will be eased.
SEZ regulations cite minimum requirements for land areas. For industries like information technology and biotechnology, the minimum area of land to be used is 25 acres, while for others, it is 250 acres.
"The food processing sector deserves special policy support to achieve accelerated growth, which is indispensable for the development of the agriculture sector in the country," the ministry said in a proposal submitted to the National Manufacturing Competitiveness Council (NMCC) last week.
"Relaxation is required for the minimum eligibility criteria of 250 acres for product-specific SEZs. The same status as that of IT/BT sector may be extended to the food-processing sector in terms of requirement of minimum area," it added.
The NMCC, headed by Dr V Krishnamurthy, is examining the draft action plan submitted by the Food Processing Ministry.
The ministry also sought relaxation in the extent of domestic sales of products manufactured in SEZs, which are mainly intended for exports. Under current rules, products made in SEZs but sold in the domestic area are charged customs duties as applicable.
However, the ministry is of the opinion that in the food-processing sector, raw materials will be by and large sourced only from the domestic market, and hence as much as 50 per cent of the output should be allowed to be sold in the domestic tariff area without customs duties.
Moreover, the ministry said that some of the existing units under the food park scheme involving subsidies, which have the feasibility to be upgraded, could be considered to be included under the SEZ scheme if the proposed relaxation in rules is approved.
Out of the 54 food parks approved under the scheme all over the country, most are yet to be commissioned and in the ministry's own words, "those operational are facing a variety of problems."