Govt talks tough on SEZ plans

Get project off in 6 months or lose it.

The government today cracked the whip on companies that have got the government's approval to set up special economic zones but have done nothing to develop them. Companies will have to get the SEZ projects off the ground in six months flat.

Failure to do so would lead to cancellation of the approval to develop the zone. Of the 237 formally approved zones till date, the commerce ministry is looking closely at 70-80 zones, which despite having received approvals over six months ago, are yet to come forward to get their projects notified.

Commerce Secretary GK Pillai, who is also the chairman of the SEZ Board of Approvals, said on the sidelines of an Exports Promotion Council seminar: "We propose to make it mandatory for developers to complete all formalities for notification of their zones within six months of getting final approval, failing which their clearances will be cancelled. The soon to be amended SEZ Rules will include directions in this regard. We should have had many more notified SEZs by now (63 have been notified till date). There is a delay on the part of the developers in getting the formally approved SEZs notified".

The decision to impose a time limit on getting the SEZs notified comes amidst concerns in various quarters that developers are holding on to the land for gaining better prices from the industrial units that would come up and set up shop in the zones.

The government feels that procedures for getting projects notified should be worked on by the developers, before they send the proposals to the BoA through state governments.

SEZ developers, who have land in their possession are given formal approval by the BoA, after which the developers have to meet various stipulations before getting them notified.

Out of all the formally approved SEZ's, Maharashtra has the highest number with 48, followed by 45 in Andhra Pradesh, 29 in Karnataka and 25 in Tamil Nadu. There are 22 functional SEZs, which have recorded exports worth Rs 22,000 crore in 2005-06.

Pillai also added the Empowered Group of Ministers (EGoM) meeting, which is scheduled for January 22, is likely to discuss all concerns raised by political parties, including the Left and the BJP. One of the major issues discussed would be land acquisition in light of the wide spread protests in places like Nandigram in West Bengal.

"More over, there are many clarifications, on issues like the benefits to be shared by the developers, co-developers, sub contractors, or contiguous and vacant land, which are likely to come up for discussion," added Pillai.

Pillai also clarified that proposals, which require fresh land acquisition, will be taken up for consideration after the formulation of the rehabilitation policy, which is currently being formulated by the Rural Development ministry.

"The 81 proposals, which were supposed to come up for discussion in the BoA meeting on January 10 and 19, have land in possession. I don't see any problems for the approved SEZs, who have got the land under their possession," he added.

The scope of changes in rules will also extend to the tax benefits that co-developers of the SEZs and their contractors and sub-contractors should get. "In the proposed amendments even co-developers and contractors and sub-contractors will be given the tax concessions," Pillai said.

Apart from some of the bigger issues, the amendment to rules will clarify lot of issues that have come up since the SEZ Act has become operational.

He added the Commerce Ministry was in touch with state governments to amend their laws so that the single window clearance system could be operationalised.