Stamp duty row may hit Reliance's Mumbai SEZs

GIRISH KUBER & HEMA RAMAKRISHNAN

TIMES NEWS NETWORK[ WEDNESDAY, OCTOBER 11, 2006 12:24:59 AM]

MUMBAI: Differences in the state government over the extension of stamp
duty waiver to private developers of Special Economic Zones (SEZ) could
well derail the process of land acquisition.

The immediate impact is likely to be felt by the Mukesh Ambani-led
Reliance Group which is planning two mega SEZs in Mumbai — Navi Mumbai
and Maha Mumbai. The group has already taken over around 450 hectares of
land on first lease from Cidco for its Navi Mumbai SEZ project. A stamp
duty waiver was given as the lease deed was registered before the expiry
of the deadline.

Reliance was looking to begin the formalities of leasing over 10,000
hectares once the Maharashtra State SEZ and Designated Areas Act was
passed. This crucial legislation would enable developers to get a stamp
duty waiver if they directly acquire or lease land. The waiver was
available to developers between October ’05 and 31 March, ’06. But six
months have passed since the expiry of this deadline.

Now, a section of the government reckons the duty waiver should not be
extended beyond March 31, ’06. “Let these SEZ promoters pay stamp duty
at market rates,” a powerful Congress minister is understood to have
opined. Such a move could significantly push up the costs of land
acquisition as the developer would have to pay a maximum of 5% on the
value of the deal.

This new development is in line with the dominant view inside the
Congress that the government’s SEZ policy should not be seen as
anti-farmer, especially after party president Sonia Gandhi had made it
clear that agriculture land ought not to be used for these zones. A
powerful group within the state cabinet, which is opposing the duty
exemption, insists the issue be taken back to the state cabinet for
approval. This could mean a further delay in land acquisition by several
private developers.

Several other companies are also planning big ticket SEZ projects in the
state. These include Bajaj Auto (Aurangabad), Bharat Forge, (Pune),
Videocon (Pune and Aurangabad), Shahpoorji Pallonji (Nagpur), India
Bulls (Raigad), Wipro (Pune), Syntel International (Pune), K Raheja
Universal (Navi Mumbai), Hiranandani Builders (Powai), City Parks (Pune).

If developers choose to register their land deeds at this point of time,
they would have to pay stamp duty. But most developers would prefer to
wait for enabling provision in the state SEZ Act.

Around 65 odd proposals have already been cleared by the Vilasrao
Deshmukh government. If these projects eventually materialise, this
could push Maharashtra to the top of the heap in terms of the quantum of
land to be developed as SEZs. Of these, nearly 18 SEZs will be developed
by the Maharashtra Industries Development Corporation(MIDC) and the
remaining by private developers. The MIDC is exempt from paying stamp
duty on purchase of land since it is a government entity. This is true
for Cidco as well.

Apart from the waiver to developers, a unit holder of a SEZ also enjoyed
stamp duty exemption. This exemption, granted since May ’02, covered
agreements relating to deposit of title deed, conveyance among others.
All instruments executed by any person to start an industrial unit or
expand a unit in an SEZ were exempt from stamp duty. March 31, ’06 was
the deadline for this exemption as well.
http://economictimes.indiatimes.com/articleshow/msid-2143019,curpg-2.cms