Part of Mukesh Ambani-led project, 55 other SEZs cancelled

An industry representative says the plan is to de-notify the entire SEZ so that promoters can use the land for other commercial purposes

A part of Reliance Industries Chairman Mukesh Ambani’s Navi Mumbai Special Economic Zone (NMSEZ) was cancelled by the Ministry of Commerce and Industry on Friday, following a meeting of the Board of Approval (BoA). A total of 55 other SEZs were also cancelled.

The SEZ, located in Kalamboli (Maharashtra), is one of the four nodes of the 1,250-hectare multi-product NMSEZ that is jointly owned by Ambani, Anand Jain of Jai Corp, SKIL Infrastructure and the City and Industrial Development Corporation.

The SEZ in Kalamboli, dedicated to information technology/information technology-enabled services, received a formal approval in July 2007. Now, however, the developers have informed the government they aren’t “interested” in setting up an SEZ there.

ON THE WAY OUT

• SEZ proposals by DLF, JSW, Delhi Metro Rail Corporation and Xansa SEZ were also cancelled
   
• The project by JSW Aluminum couldn’t be started due to delay in securing environmental clearances, even after a formal approval in 2012
   
• The government also cancelled the information technology SEZ by DLF Commercial Developers in Noida, Uttar Pradesh
   
• Since October 2014, the government had cancelled 67 SEZs.
   
• The total number of SEZs cancelled stands at 123, Including those cancelled on Friday

An industry representative says the plan is to de-notify the entire SEZ so that promoters can use it for other commercial purposes. Besides, having an SEZ status on the land isn’t lucrative for developers anymore, owing to imposition of minimum alternate tax and dividend distribution tax.

“The formal approval given to the Navi Mumbai SEZ has been cancelled at today’s BoA (meeting),” Commerce Secretary Rajeev Kher, who chaired the meeting, told Business Standard.

As of March 2013, the developers had procured duty-free goods valued at Rs 37.82 crore, with Rs 4.9 crore of duty forgone, according to a report released recently by the Comptroller and Auditor General (CAG).

The CAG also highlighted the fact that despite issuing unlimited extension of the approvals, the project had failed to take off.

“Consequently, the projected investments, employment and exports could not be achieved in any of the projects. We believe that according extensions in a routine manner without linking it to the progress of the projects is fraught with the risk of developers utilising the SEZ route to plan for alternative use of SEZ land or for raising loans against the government land, besides defeating the intended socio-economic benefits projected by the developer,” the Comptroller and Auditor General report said.

The SEZs cancelled at Friday’s BoA meeting included proposals by DLF, JSW, Delhi Metro Rail Corporation and Xansa SEZ. Even after receiving a formal approval in 2012, the project by JSW Aluminum couldn’t be started due to delay in securing environmental clearances.

Besides, the government also cancelled the information technology SEZ by DLF Commercial Developers in Noida, Uttar Pradesh. The developer has informed the government it couldn’t start operations due to “lack of viability”.

Since October 2014, the government had cancelled 67 special economic zones. Including those cancelled on Friday, the total number of SEZs cancelled stands at 123.