The Reliance Industries special economic zone at Jamnagar in Gujarat, which had been given a sector-specific status (petroleum and petro-chemicals) earlier, was today modified to a multi-product zone by the board of approval, which met in New Delhi on Thursday.

Reliance Industries' Jamnagar refinery is included in the SEZ.

Subject to fulfilment of certain conditions, the change was granted as the board decided to relax the contiguity norm, which prevented the zone from getting multi-product status.

In a parallel development, the finance ministry is deliberating on the idea of imposing a 50 per cent export obligation on the zones. However, the commerce ministry is opposing this move.

"In any case, the units in the zones are exporting 90 per cent of the products and hence the export obligation is unnecessary. If a SEZ unit exports, it enjoys duty exemption. But if it sells in the domestic tariff area, the finance ministry will earn duty," a commerce ministry official added.

India's great rush for SEZs

Currently, the SEZs have to be net foreign exchange earners. In 2006-07, these zones recorded exports of Rs 34,787.47 crore (Rs 347.87 billion).

As per the SEZ rules, a SEZ can be declared a multi-product zone only if the land area of the zone is more than 1,000 hectares. The Reliance industries zone comprised 440 hectares of land, which prevented the company from getting a multi-product status.

A multi-product status enables a developer to set up units for a diverse range of sectors.

"Reliance industries already had the land under their possession, but there were contiguity issues. A road and a railway passed between the lands under their possession. We have now given them the multi-product status, provided that they build up adequate number of road over bridges or underpasses in the road and the railway line," said a senior commerce ministry official.

Now, Reliance industriesplans to increase the SEZ area to 5,000 hectares.