Tenants want SEZ in Vizag scrapped

AIIPC forcing us to convert sale deals into leases, they tell commerce ministry.

Nine infotech companies with units inside the 16-hectare Madhurwada IT-based Special fEconomic Zone (SEZ) at Vishakhapatnam have written to the commerce ministry and the Andhra Pradesh government to cancel recognition of the zone.

These companies have said that they do not want to be part of the SEZ and alleged that the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), developer of the zone, forced them to be part of it.

The commerce ministry has initiated an inquiry into the allegations.

An IT professional who has set up a facility in the SEZ told Business Standard that 20 companies had signed an agreement with APIIC two years ago to set up software development facilities in an area allotted to them.

The companies were to employ 100 people per acre and complete the construction within 18 months.

APIIC then applied for SEZ status, which was notified in April this year. Since the SEZ rules require that land has to be developed by APIIC, the companies have been asked to convert their land sale deeds into lease agreements.

The companies contend that they had paid Rs 5 crore to the local authorities to build infrastructure like roads, electricity and sewers. They also developed plug-and-play facilities. All these are facilities that APIIC should have developed under SEZ rules.

"After doing all that, APIIC wants us to surrender the land sale deeds so that the zone conforms to the rules. Why should we do that?" said a company executive who has developed a unit in the zone.

An APIIC official said: "There is no problem. Most of these units do not understand the benefits of the SEZ policy and that is why they don't want to be part of it."

The companies have said they are not interested in being part of the SEZ, which will get tax breaks and immunity from Indian labour laws, because 70 per cent of the investment in infrastructure was ready before the SEZ was notified.

"I would have got at least Rs 60 lakh worth of tax benefits on the investments made in the infrastructure. This is not possible now," said a unit developer in the zone.