For most units, the lease deed is the most important document in an SEZ. It decides how long you can stay, what you pay, what you may build and how you can exit. Government-run zones such as Falta SEZ near Kolkata, as well as private developer-run zones, allot developed plots or built-up space through long-term leases, and the terms are often non-negotiable standard forms. Read them before you sign.

Core clauses to check

• Parties and capacity: the lessor (Development Commissioner or developer), the exact legal name of the lessee and its approval status (Letter of Approval).
• Description of the premises: plot or unit number, area, boundaries and the plan annexed.
• Term, premium and renewal: the initial term, one-time premium, renewal conditions and whether renewal is a right or a discretion.
• Permitted use: use must be limited to authorised operations approved for the unit.
• Construction and timelines: deadline to commence construction or operations and the consequence of delay.

Rent, arrears and interest

Rent and maintenance or service charges are usually payable in advance on a quarterly basis. A typical drafting position is that rent and charges for each quarter fall due within the first month of that quarter, and that arrears carry interest at a fixed annual rate, for example 12% per annum, compounded quarterly, until payment. Because compounding raises the effective cost materially, units should diarise due dates, route payments through a reconciled account, and obtain written receipts. Always check whether interest is simple or compound, from which date it runs, and whether the lessor can adjust security deposit against arrears.

Transfer, sub-letting and mortgage

Most deeds restrict assignment, sub-letting and creation of a mortgage without the lessor's prior written consent. A unit that plans to raise project finance should negotiate a clear mortgage clause and a lender's right to cure defaults and step in.

Termination and exit

• Events of default and the cure period given before termination.
• Re-entry rights and forfeiture of premium.
• Treatment of buildings and fixtures on termination.
• Link between cancellation of the unit's Letter of Approval and the lease.

Freehold conversion

Some zones permit conversion of leasehold to freehold on terms. Where this is a possibility, ask for the policy, the price formula and any conditions in writing.

A short legal review before execution, or before a renewal or conversion application, usually costs far less than a later dispute over arrears or termination.

Need Guidance? Contact KC LEGAL

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This article is for general information only and is not legal advice. Law and procedure change; please verify the current position for your specific case. Last reviewed: November 2026.