UP SEZ review decision seen as a tactical measure

The UP government's move to review all the private sector proposals for special economic zones (SEZs) has evoked mixed responses.

Many view it as the same old practice of various governments, especially Mayawati's, to smell manipulation in all the deals of the predecessor, and therefore they are not surprised.

But insiders see it as a move by Mayawati to justify the stalling of the Anil Ambani-proposed SEZ at Dadri.

They say if the government had allowed other SEZs while withholding the Ambani-proposed SEZ, it would have been seen as a case of premeditated and conscious discrimination, as Anil Ambani is a close ally of Mulayam Singh and Amar Singh.

A private sector SEZ promoter told Business Standard that the government wanted to review SEZs because quite often there is manipulation involved.

The review will ensure the ruling party's influence over industry. In general, the people in the state expect that this time Mayawati will be different from her previous innings and there will be no wheeling dealing. The review of SEZs has become the first test of the above hypothesis.

The next SEZ Approval Board meeting, slated for June 22, will be decisive for private entrepreneurial initiative in the state.

The board had 7 proposals before it on May 31 meeting, four from the Uttar Pradesh State Industrial Development Corporation (UPSIDC) and three from the private sector.

UPSIDC has got approval for three Kanpur-based projects and its Bhadoi venture has got in-principle approval.

The decision on three private sector proposals, Dolphin Developers for Kanpur-based leather SEZ, Shipra Estate for a multi-product SEZ near Aligarh and Purvanchal SEZ at Bhadoi for carpets, is pending.

The Kanpur SEZ on leather proposes a processing area of 77 per cent measuring 197.51 acres, and 59 acres of non-processing area.The project cost is estimated at Rs 220.142 crore. The cost of the project is estimated at Rs 236.8 crore

For the textile SEZ, garments will get about 40 per cent of the allocated area, cotton textile 25 per cent and man-made textile 20 per cent. The project investment is estimated at Rs 239 crore. The Bhadoi SEZ for handicrafts, mainly carpets, wants 84.5 per cent processing of the total proposed area of 256.90 acres.

The estimated project cost is carpets is slated to get 70 per cent of the processing area and handicrafts 30 per cent. The estimated cost of the project is Rs 195.8 crore with debt to equity ratio of 1:1, each contributing Rs 359.2 crore. The project IRR for ten year period is 19.5 per cent.