Surge in Investor Interest at Simara Special Economic Zone Following Rent Reduction

Bara. The Simara Special Economic Zone (SEZ) Authority has seen a surge in interest from industrialists following a significant reduction in land rental rates.

The government reduced the land rent from 20 rupees to 5 rupees per square meter, effective from Poush of the current fiscal year. This decision has led to a rush of entrepreneurs seeking permits to operate industries within the SEZ.

Simara SEZ site in-charge engineer Pappu Giri stated that the 75 percent reduction in rent has drastically increased demand. 'Industrialists are very enthusiastic, and while many are coming for permits, we have no land left to provide,' Giri said, adding that all available land has already been leased.

The 'A Block' of the Simara SEZ consists of 105 plots, each ranging from 17 kattha to 1 bigha. Out of the 343 bigha area of A Block, the Ministry of Industry has invested over 5 billion rupees to construct infrastructure including the SEZ office, banks, insurance, customs, and a convention hall.

Engineer Giri noted that 6 industries have been operating in A Block for 3 years, 12 are under construction, and 13 others have received permits and are in the agreement process.

Industrialists are required to pay 6 months of land rent in advance and provide a 1-year bank guarantee before signing an agreement. Legal provisions dictate that the agreement is automatically terminated if structures are not built within 1 year of receiving the permit.

Industries in the Simara SEZ feature significant investments from India, China, and South Korea. Operating companies include Pashupati Ceramics, Laxmi Granite, Balaji Manufacturing, Nepal Agro Tool, Brilia Shoe Pvt. Ltd., and Bio Comp Nepal Pvt. Ltd.

Among these, only Balaji and Nepal Agro Tool are currently exporting their products abroad. The SEZ reported that these two industries exported products worth approximately 50 million rupees to India by the end of Chaitra of the current fiscal year.

The SEZ stated that these industries provide direct and indirect employment to 5,000 people, with the potential to employ 10,000 to 15,000 once the zone is fully operational.

Tulsi Rauniyar, operator of Pashupati Ceramics (a tile industry) which has been operating in the SEZ for 3 years, said the rent reduction has provided significant relief to industrialists.

Pashupati Ceramics has leased eight plots (about 9 bigha) in the Simara SEZ. Previously, the industry was paying an annual rent of 7.2 million rupees (with a 50 percent discount for 3 years).

'The biggest problem right now is power cuts. Due to irregular electricity, we are spending 1.5 million rupees a month on diesel,' Rauniyar said. 'There should also be a difference in customs duties on raw material imports between industries inside and outside the SEZ.'

Industrialists complain that while the government promised security guarantees, customs exemptions on raw materials, VAT exemptions on exports, a 10 percent discount on electricity tariffs, and on-site banking and insurance facilities, these commitments have not been fully implemented.

Tile industries account for the largest share of businesses operating, under construction, or permitted within the SEZ.

Rauniyar expressed concern that the government's recent move to permit new tile industries within the country, combined with the import of tiles from India at undervalued rates, is pushing domestic industries toward collapse.