Par panel raises concerns over SEZ developers, units mortgaging land to raise loans

Concerned over special economic zone developers and units mortgaging land to raise loans, a parliamentary panel today suggested that the SEZ law be reviewed to curb the possibility of using such land as collateral for raising funds.

A Public Accounts Committee, chaired by Congress leader Mallikarjun Kharge, in its report stated that "11 developers/ units in Andhra Pradesh, Karnataka, Maharashtra and West Bengal had raised Rs 6,309.53 crore as loans by mortgaging SEZ land".

Three developers/units had raised a loan amount of Rs 2,211.48 crore and utilised the same for purposes other than development of these zones.

It said that the SEZ law and rules do not specify that such land cannot be mortgaged.

"The committee recommend that the department of commerce and financial services review the SEZ Act to specify that SEZ land lease hold rights can not be mortgaged to curb the possibility of huge loans going bad which ultimately would affect the public exchequer," it added.

It also said that actual land requirements by developers should be ascertained to the extent possible and necessary amendments effected in the SEZ laws to effectively curb mortgaging and utilisation for other purposes of land notified or acquired for these zones.

Further, it asked the ministry of finance to "seriously" reconsider the removal of minimum alternate tax.