Ministry fears SEZ delays threat to foreign tie ups

With fresh proposals and notifications of special economic zones (SEZ) on hold, the commerce ministry is concerned that foreign partners of some of these zones may pull out.

The ministry has conveyed its concerns to External Affairs Minister Pranab Mukherjee, who is the chairman of the empowered group of ministers (EGoM), which has put the brakes on further approvals and notifications of SEZs (apart from the 63 notified ones).

"No new investors will come to the SEZs if there is further delay in granting approvals. Existing foreign partners may also lose interest in the SEZs they want to invest in. The EGoM chairman has been told about these concerns," said the commerce ministry official.

According to the official, the next meeting of the EGoM may take place in the first week of March.

There are instances of states losing SEZ proposals to other states due to delay in procedural matters. "Taiwanese footwear maker Apache decided to set up their 126 hectare SEZ in Andhra Pradesh because the Tamil Nadu government sat on the proposal for a week," the official said.

The commerce ministry expects investment worth Rs 3,00,000 crore in the 235 formally approved SEZs and creation of 4 million jobs. As of now, 63 SEZs have been notified, which have garnered investments worth Rs 12,000 crore and given employment to 1,51,000 people.

In another instance, a foreign partner of a notified SEZ had already procured equipment abroad for setting up the units but could not send them to India as all proposals were put on hold.

"The foreign partner of that SEZ was on the verge of diverting the equipment to its units in Thailand and Philippines, when the EGoM allowed the commerce ministry to hold the meeting of the Board of Approval for notified SEZs," added the official.

He also pointed out foreign developers like Sri Lankan apparel company Brandix, whose 440 hectare-SEZ in Andhra Pradesh is on hold.

"Brandix has already employed 400 people and had promised employment to 60,000 people in their SEZ. If the delay continues, the company may opt out of the SEZ," the official said.