SEZs: New norms for power generation announced:
● The commerce ministry has notified guidelines for power generation, transmission and distribution in special economic zones (SEZs), almost modelled after the 2009 norms, and reiterated that a power plant, as part of the infrastructure facility, be set up only in the non-processing area of an SEZ.
● It said no fiscal benefits would be extended towards the power plant’s operation and maintenance.
● The latest guidelines, however, made its focus on power generation for IT/ITeS units clearer than earlier. The power plants set up in IT/ITeS zones that require uninterrupted power supply at a stable frequency will get fiscal incentives for establishing and maintenance of generating units.
● In such cases, generation of power will be carried out as a unit within the processing area, and such a power plant including non-conventional energy power plant, will be entitled to all the fiscal benefits covered under Section 26 of the SEZ Act, including the benefits for initial setting up, maintenance and the duty free import of raw materials and consumables for the generation of the power.
● Such duty-free imports of capital goods, raw material and consumables would be counted towards the net foreign exchange (NFE) obligation of the unit.
● According to the latest guidelines, setting up of captive power plants — including non-conventional energy ones — could be permitted in processing areas as units, subject to NFE obligations.
● Such a power plant will be entitled to all the fiscal benefits including the ones for initial setting up, maintenance and duty-free import of raw material and consumables for generation of power.
● SEZs, which are connected to state/national grid, will be allowed to create a back-up power facility. For such a power back-up facility, if it is in the non-processing area, only duty benefits on capital expenditure for setting up will be available.