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Education to get SEZ thrust

After allowing special economic zones for IT, biotech and gems & jewellery, the government is now considering SEZs for educational and health services.

Prime Minister Manmohan Singh on June 12 chaired a meeting to actively decide whether developers of universities and institutions of higher learning should be given special sops and tax exemptions by using the SEZ route.

The idea of having SEZs for education is understood to be based on an application by Manipal University to set up an exclusive learning centre for PIO (persons of Indian origin) students. A minimum area of 100 hectares has been proposed for such SEZs in a government note which outlines the issues discussed in the meeting.

To attract foreign direct investment, the note suggests that fees in these designated universities be taken only in foreign currency. Moreover, all universities set up in SEZs will have to achieve “net foreign exchange positive status” within five years from commencement of activity. In other words, they will have to start making profits by the end of five years. Although 50% of the seats will be reserved for Indian students, they will have to pay in foreign currency.

To enable multi-partnerships, the government note also suggests that a special purpose vehicle (SPV) be set up to play the role of a developer, which will be entitled to income tax and duty exemptions. “The developer is the owner of the zone and responsible for providing infrastructure — units set up by entities in the zone will avail of the infrastructure,” says the note. However, units set up by entities will enjoy different tax concessions than those applicable to the developer.

As part of such infrastructure, the note says that hospitals can also be set up in such SEZs to cater for university students. They should, however, avail of tax exemptions only on basic construction. The concession will not extend to operations and maintenance, and the hospitals will have to cater for the general public too.

The meeting will also have to tackle other aspects — procedures to be adopted for recognition of the institutions in the SEZs, qualification and recruitment of teachers, freedom to design courses and the amount to the charged as fees from foreign as well as Indian students.


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