Coastal economic zones face land hurdle

The Centre’s ambitious plan of setting up coastal economic zones (CEZ) has hit a sandbank. Non-availability of contiguous land parcels with the states along with huge acquisition and subsequent compensation costs are delaying the execution of the project, according to sources.
 
In July 2016, under the Sagarmala programme, the government had announced setting up 14 CEZs, to be aligned to relevant ports in the maritime states and house coastal economic units for setting up manufacturing facilities.
 
The CEZs will host big manufacturing and export-oriented units. These would include labour-intensive industries such as clothing, footwear, electronics as well as electrical and light manufacturing to tap foreign markets. The proposed CEZs are likely to be bigger in size than special economic zones (SEZs).
 
But, according to an official in the know, the delay in setting up the CEZs was due to the complexities in finalising land by the states. In response to a Business Standard query, a shipping ministry official said the work on CEZs was “in progress”.
 
The ministry is in discussions with the states of Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh to finalise the land parcels but has been unable to achieve any traction on the ground. “After the land acquisition Act, the cost of land acquisition has gone up five times and subsequently the compensation component has also risen,” said an official from one of the states, who did not wish to be named.
 
On the other hand there are some states that are finding it difficult to meet the requirement of a contiguous land parcel. Most have tracts of land available piecemeal, but not a contiguous land bank, as required for the CEZs, the official said.
 
The NITI Aayog, tasked with the responsibility to decide financial benefits attached to the CEZs, had proposed a 10-year corporate tax exemption for all manufacturing units within them. The proposal is yet to be accepted by the finance ministry.
 
CEZs are spatial-economic regions, which could extend along 300-500 km of coastline and 200-300 km inland from the coastline. Each CEZ will be an agglomeration of coastal districts within a state.
 
These zones would have to be set up near deep-draft ports, which are capable of accommodating very large and heavily loaded ships. Each port would be developed into a specialized zone — some zones would have a specialised container terminal, while some may focus on handling cargo etc.
 
The 14 proposed CEZs are Kachchh, Suryapur and Saurashtra in Gujarat; North and South Konkan in Maharashtra; Dakshin Kanara in Karnataka; Malabar in Kerala; Mannar, VCIC South and Poompuhar in Tamil Nadu; VCIC Central and North in Andhra Pradesh; Kalinga in Odisha; and Gaud in West Bengal.
 
These are expected to cater to the food processing, steel, cement, leather processing, petrochemicals, ship building, electronics and automotive industries. Ports handle 90 per cent of the country’s export-import cargo by volume and 70 per cent through value.