SEZ Bill likely to raise stir in MP

Indore SEZ's (phase-II) selling-off process may be hindered

The passage of the Special Economic Zone (SEZ) Bill in the Lok Sabha is likely to attract the value-added tax (VAT)-like protest from Madhya Pradesh, and may also hinder India's first operational SEZ Indore's (phase-II) selling-off process, if the Left parties maintain their tough stand on labour related laws in the SEZ bill for the states too.

The Congress-ruled Cabinet had earlier cleared a proposal to allow corporate entities to hire and fire employees, close units and do away with trade unions in the Indore SEZ.

The state government is looking for a partner or a stake holder for providing facilities in the second phase of the SEZ, covering an area of 900 hectares. The government will have to amend the necessary provisions made by the previous government.

The Union commerce and industry ministry has agreed to delete Section 50 (b) of the bill that proposed to vest the powers in the states to exempt SEZs from the provisions of state laws related to trade unions, working conditions, provident fund, employers' liabilities, maternity benefits, invalidity and old-age pensions.

Though the state government is informally ready to make necessary amendments in the SEZ Act in Madhya Pradesh, the BJP-led Cabinet has yet to discuss the matter before putting the Indore SEZ Ltd on the market.

The corporate section involved in the investment process of the SEZ have said that the "State government would have to ensure flexible labour laws readied by the Congress government and if the government altered laws it would have to face protests."

The government is learnt to have finalised the names of seven companies for the second phase of the SEZ Indore. Tata Economic Consultancy Services (TECS) had been appointed consultant for the purpose.

The privatisation of the SEZ would curtail the state government's role in the estimated Rs 1,075 crore SEZ. The state government intends to reduce its stake in the 1:3 ratio ie, a private partner can become the majority stake-holder by investing Rs 300 crore if the government holds Rs 100 crore equity, thereby raising funds through debt instrument.

According to sources, "L&T, Gammon India, a Tata and a Mahindra company are in the fray for the Indore SEZ." Mahidnra Acres, a subsidiary of Mahindra & Mahindra had been given the task to design the SEZ Indore-II.

The first phase of the SEZ has only limited opening for private companies. Big corporate houses like SRF and Flexituff have already started operations and few others have acquired land for setting up plants in the first phase covering an area of 1035 hectares.

"We are in fact waiting for the SEZ bill to be cleared from both the houses of Parliament, so that we can make necessary amendments in our bill," said Raghav Chandra, managing director, MP State Industrial Development Corporation, a nodal agency for the SEZ.

"It will, however, take another month or so," he added. Corporate houses have also demanded from the state government to speed up the process of privatising the second phase of the SEZ, so that service sectors can also invest in the foreign trade zone.