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Denotification of SEZs: DLF Cyber City applies for denotification of office space in SEZs

DLF Cyber City Developers (DCCDL), the rental arm of DLF, has applied for denotification of 1.1 million sq ft of office space in Special Economic Zones and is hopeful to start leasing it from March end, Sriram Khattar, managing director, rental business, DLF, told investors during a post-earnings earnings call.

Special Economic Zones (SEZ) have higher rental vacancies at present than areas that are not deemed export zones.

The government in December 2023, revised the SEZ rules. The amendment permitted partial and floor-wise denotification, introducing fresh possibilities for utilization within SEZs, especially benefiting the IT and ITES companies as they currently dominate the SEZ landscape.

“We have already applied for all the SEZ floors that could be de-notified under the new circular. If we look at an overall portfolio of offices of about 13 million sq ft, we have applied for 1.1 million to be notified. As part of the process, we have to simultaneously go to a chartered surveyor, preferably recognized by the government authorities, and work out the level of duty drawback we have to pay and we are in the process of doing that,” said Khattar.

Consolidated revenue of DLF Cyber City Developers stood at Rs 1,476 crore, reflecting y-o-y growth of 8%; consolidated profit for the quarter stood at ₹434 crore, a y-o-y growth of 21%.

“We believe that by March end or April middle, we should be able to get these de-notified and we will be putting them on rent in the market for leasing in the month of March,” Khattar said.

ET Bureau

The SEZ portfolio of DLF has maintained a vacancy of about 16%, whereas vacancy in the non-SEZ portfolio has dropped down to only 3%.

According to industry estimates, about 20,000 hectares of SEZ land and 100 million sq feet of built-up area are currently vacant.

SEZs in India were originally set up to achieve India’s plan of promoting exports. A designated duty-free enclave, SEZs were treated as an area outside the customs territory of India.

Multinational companies believe that there is no major financial benefit to operate in SEZs post the sunset clause, though the compliance requirements remain.

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