Gandhi City to set up Rs. 2,620 cr R&D based SEZ in Bangalore

Gandhi City has received approvals to set up the country’s first R&D based Special Economic Zone (SEZ) near Ramanagara, 30 kms from the technology hub of Bangalore. The SEZ will spread over 1,000 acres. It will have housing research labs, incubation centres, and high-end technology testing facilities.
 
Two top Private Equity (PE) firms have already evinced interest in investing in Gandhi City. The SEZ project will have four phases of investment, spread across 10 years, to raise US$ 600 million through various routes. The first phase of investment being raising of US$ 25 million. “The total project outlay is Rs. 2,620 crore. Our plan is to replace minor investors by bringing in PE funds. It will be equivalent to 9 per cent of the total share-holding of Gandhi City,” says Giri Devanur, promoter of Gandhi City SEZ.
 
The process of acquiring 350 acres of land for the project is on. The Karnataka Industrial Area Development Board (KIADB), the nodal agency for land acquisition in Karnataka, will complete the process shortly. The SEZ will be spread over 1,000 acres, housing research labs, incubation centres, and high-end technology testing facilities.
 
SEZs in India are facing several challenges, the major being hassle-free land acquisition. “Land acquisition is taking political overtones in various states; the challenge is even more daunting. The country still pursues a nearly 150-year-old legislation to acquire lands. With amendments to the Land Acquisition expected during the next session of Parliament, we hope there will be relief to SEZ projects,” Giri Devanur notes.
 
As per the SEZ policy, the promoter should directly acquire 70 per cent of the land while the government should acquire the remaining 30 per cent. However, problems with respect to the 30 per cent are plenty – land acquisitions, compensation issues, and political interferences – have delayed the SEZs.
 
Another hurdle is funding, as banks finance only infrastructure, utilities, and roads, within the SEZ, but not the SEZ as a whole. “This is a strange guideline, as projects within the SEZ, such as research labs and innovation centers, should have access to capital markets and bank loans,” points out Giri Devanur.n

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