SEZs IN THE SUNSET ERA:

TO GO OR NOT TO GO?
SEZs have a share More than
of nearly SEZs are about 70 transactions worth

22% 23% 6mn

in India’s office stock of the office supply sq. ft. were reported
pipeline of 2018-19 in SEZ space in
H1 2018

SEZs in India have been However, a sunset date on

granted tax exemptions, tax exemptions announced
which have attracted both in 2015 is proving to be a
developers and occupiers. dampener.

Source: CBRE Research, CBRE interactions with occupiers, Q2 2018

TAX EXEMPTIONS FOR DEVELOPERS AND UNIT HOLDERS

IN SEZs: CURRENT STATUS
Stakeholder Time Period Direct Tax Exemptions Indirect Tax
Exemptions

Exemptions available for all SEZ’s in which

SEZs notified before 31st
development has commenced before 31st
March 2017
March 2017, including future blocks.

SEZs notified after 31st No exemptions Exemptions

DEVELOPERS March 2017 available. would
continue
post the
Unit holders commencing
Exemptions sunset
operations before 31st
available. clause.
March 2020
Unit holders commencing
No exemptions
UNIT operations after 31st
available.
HOLDERS March 2020

WHAT’S NEXT FOR OCCUPIERS IN SEZs?

WHY WOULD WHY WOULD

OCCUPIERS STAY? OCCUPIERS LEAVE?

Those already operating in SEZs – Scales tipped heavily against ‘compliance costs’
‘comfort’ factor due to financial viability and stringent requirements

Non-SEZ to SEZ occupier movement driven to avail Confidentiality concerns

‘tax benefits before the expiry date’

Occupiers commencing small-scale operations for at SEZs were never really a part of their
least some tax benefits CRE strategies

Traditional inclination towards SEZs regardless of the

tax benefits

WHAT’S NEXT FOR DEVELOPERS OF SEZs?

What are developers focusing on?

Delivering
pre-leased SEZ Complete De-notification
DELIVER supply, limited pending (only in special
speculative projects by instances)
development Q3-Q4 2019

Source: CBRE Research, CBRE interactions with developers, Q2 2018

CBRE RESEARCH
This report was prepared by the CBRE INDIA Research Team, which forms part of CBRE Research – a network of preeminent researchers who collaborate to provide real estate market research and econometric
forecasting to real estate investors and occupiers around the globe.

© 2018 CBRE, Inc. Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no
guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals
and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

CIN - U74140DL1999PTC100244