Publication of Notification of Modern Asset Phase II, an IT ITES SEZ at Survey No. 2/2, Venkatala Village, Yelahanka Hobli, Bangalore, Karnataka, for full denotification

## Policy Analysis Report: Denotification of Special Economic Zone (SEZ) - Ms. Modern Asset PhaseII **1. Executive Summary:** This report analyzes a notification issued by the Ministry of Commerce and Industry regarding the denotification of a Special Economic Zone (SEZ) for IT/ITES, previously granted to Ms. Modern Asset PhaseII in Bengaluru, Karnataka. The notification, dated April 30, 2021, rescinds a prior notification establishing the SEZ. The core purpose of this document is to legally withdraw the SEZ status and its associated benefits from the specified area. Key findings indicate that the denotification was prompted by a proposal from Ms. Modern Asset PhaseII, had no objection from the State Government of Karnataka, and was recommended by the Development Commissioner, Cochin, Special Economic Zone. **2. Introduction:** This report provides an analysis of the Ministry of Commerce and Industry Notification S.O. 1729(E), dated April 30, 2021, concerning the denotification of a Special Economic Zone (SEZ) previously approved for Ms. Modern Asset PhaseII. The analysis is based solely on the information contained within the provided text of the notification. **3. Policy Overview:** * **Amendment:** This notification functions as an amendment to the original policy that established the SEZ for Ms. Modern Asset PhaseII, as defined by Special Economic Zones Act, 2005. The original policy is referenced as Ministry of Commerce and Industry Notification Number S.O.1032(E) dated 31st March, 2017. * **Core Objective(s):** The core objective of this *amendment* is to revoke the previously granted SEZ status for Ms. Modern Asset PhaseII, effectively terminating the incentives, regulations, and special considerations associated with SEZ designation for the area in question. **4. Background and Rationale:** This is an amendment to rescind a previous decision. The rationale for this specific amendment is based on a proposal from Ms. Modern Asset PhaseII to denotify the entire SEZ area. The State Government of Karnataka provided a "No Objection" to the proposal, and the Development Commissioner, Cochin, Special Economic Zone, recommended the denotification. Therefore, the rationale is based on the request of the original developer, supported by both state and regional regulatory bodies. **5. Key Provisions / Changes:** This notification amends the previous notification S.O.1032(E) dated 31st March, 2017 which originally notified an area of 3.22 hectares as an SEZ. * **What is being changed:** The notification S.O.1032(E) dated 31st March, 2017. * **What the new rule/provision is:** The Central Government hereby rescinds the above notification (S.O.1032(E) dated 31st March, 2017) except as respects things done or omitted to be done before such rescission. * **Effect of this specific change:** The effect of this rescission is that the area will no longer be considered a Special Economic Zone, and the organization and land will no longer receive the benefits and special exceptions under the Special Economic Zones Act, 2005. **6. Target Audience and Stakeholders:** Based on the provided text, the primary target audience and affected stakeholders include: * **Ms. Modern Asset PhaseII:** As the original recipient of the SEZ status, they are directly affected by its removal. They are likely the primary driver behind this amendment. * **The State Government of Karnataka:** Their "No Objection" indicates their involvement and potential impact on their economic planning and investment landscape. * **The Development Commissioner, Cochin, Special Economic Zone:** As the recommending authority, they are involved in the SEZ's regulatory oversight and are affected by this change in status. * **Businesses and employees within the previously designated SEZ area:** These parties are impacted by the loss of SEZ status. **7. Implementation Aspects (Inferred):** * **Responsible agency/bodies:** The Central Government, specifically the Ministry of Commerce and Industry, is responsible for implementing the denotification. The Development Commissioner, Cochin, Special Economic Zone played a role in recommending the change. * **Timelines or procedures:** The notification is effective immediately upon publication. The text specifies that the rescission does not affect actions taken or omitted *prior* to the date of the notification. This implies a grandfathering of previously completed or outstanding actions under the SEZ regulations. * **Aspects Specific to changes:** The denotification reverts the area to its pre-SEZ status, potentially subjecting it to different regulations, taxes, and oversight from various governmental bodies. **8. Expected Outcomes / Impact of Changes:** The likely intended outcome of this specific change is to release the area from the obligations and benefits associated with SEZ status, as per the request of Ms. Modern Asset PhaseII. Potential impacts of this amendment include: * Ms. Modern Asset PhaseII will no longer be subject to SEZ-specific regulations and reporting requirements. They may have greater flexibility in their operations and land use. * The State Government of Karnataka may need to adjust its economic planning related to the area. * Businesses operating in the area will no longer be able to avail themselves of SEZ incentives. **9. Conclusion:** The Ministry of Commerce and Industry Notification S.O. 1729(E) signifies the denotification of a previously approved SEZ for Ms. Modern Asset PhaseII in Bengaluru. This decision, based on the company's proposal and with the support of the State Government and the Development Commissioner, effectively revokes the SEZ status and its associated regulations and incentives. This action is significant as it demonstrates the flexibility of the SEZ policy framework to adapt to changing business needs and economic conditions, though it remains to be seen what longer term economic impacts on the Bengaluru region will result.

Key Entities Referenced