Row over SEZ security hots up

ARUN S & MAHUA VENKATESH
Posted online: Saturday, October 14, 2006 at 0000 hours IST

NEW DELHI, OCT 13: Even as its scuffle with the finance ministry over
the revenue implications of special economic zones (SEZ) has barely
ended, the commerce ministry seems to be in for another tiff - this
time, with the home ministry.
At least two SEZ proposals - Shyam Burlap Co Ltd’s multi-product SEZ at
Kamrup district in Assam and the Tata’s Gopalpur SEZ- have come up
against the home ministry’s objections on security grounds.

The proximity of Assam’s first SEZ project to the Indo-Bhutan border is
said to be reason for the home ministry’s opposition. In case of the
Tata’s project, its nearness to a defence installation is the alleged
security threat.

However, security analysts as well as the banking and insurance sector
are backing the commerce ministry’s view that it would be unfair to
treat all SEZ proposals in border areas differently and with suspicion.

A commerce ministry official said, “The suggestions of the home
ministry’s representative in the BoA would be considered. But the
project’s viability should be given a higher weightage as far as
clearances are concerned. Only if sufficient number of entrepreneurs set
up units in the SEZ, can a developer expect high returns. The
environment should be conducive for that.”

Defence analyst Raja Menon said any opposition to such projects should
be articulated in public. Former Intelligence Bureau chief Ajit Doval
said, “The state would be ill advised to succumb to minor procedural
infirmities to deny SEZs to the northeast.” Doval added, if required,
counter measures should be strengthened rather than abandoning such
projects.

Punjab National Bank CMD SC Gupta said, “Funding of SEZs would depend on
the viability factor and how these projects can create value.” Indian
Bank CMD KC Chakrabarty said risk mitigation measures would also have to
be taken after a proper assessment of the factors that can pose risks.

Does this also mean insurance premium would be higher in areas which
pose security threats? Most insurers want to adopt a wait and watch
policy. “Though a clear picture on this is yet to emerge, the premia
rates are unlikely to be significantly higher,” an official at Oriental
Insurance said.

http://www.financialexpress.com/fe_full_story.php?content_id=143360