Centre will not wriggle out of SEZs, asserts Kamal Nath

"Nandigram was a very unfortunate incident of land acquisition"

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Says he is worried investors might go elsewhere
"FDI in retail should come at the back-end"
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Kamal Nath

New Delhi: Commerce and Industry Minister Kamal Nath has made it clear
that the Government will not "politically wriggle out" of SEZs.

In an interview to the CNN-IBN programme Devil's Advocate, to be
broadcast at 8:30 p.m. on Sunday (March 18), he was hopeful the Pranab
Mukherjee-headed Empowered Group of Ministers will soon clear SEZs where
no land acquisition issues are involved.

Asked if after the recent killings in Nandigram the Government remained
committed to SEZs or would use the present freeze to politically wriggle
out, Mr. Kamal Nath said:

"There is no political wriggling out. It's an act of Parliament. Cabinet
has considered it. But there's the question of land acquisition which
must be fair, it must be equitable, it must be at the right price. It
must be inclusive of the people. Nandigram was a very unfortunate
incident of land acquisition but we must not confuse land acquisition
with SEZs. They are two distinct things.

Karan Thapar: So the Government remains committed to SEZs?

Kamal Nath: Absolutely.

Q: Nandigram and political concerns have not put you off?

A: They have not put me off.

Q: And the Prime Minister is with you when you say this? He too is
committed to SEZs?

A: Of course, the [whole] Government is committed.

Mr. Nath said he was worried that if clearance for such SEZs was not
forthcoming several might opt out of India and take their investment
elsewhere.

"Of course I am worried. There is investment competitiveness from
Thailand, from Philippines, from Indonesia. If FDI is coming to our
special economic zones it can also jolly well go to Thailand,
Philippines and Indonesia. Investment has to be attracted. It can't be
demanded. (If there are delays) they will feel unstable. At the end of
the day they are here because they look at India as a credible country."

Speaking about the manner in which land acquisition is being handled by
various State Governments, he said that he was personally in favour of
giving farmers a stake in the development that comes up on their land in
addition to the market price. He said the Government's new National
Re-settlement and Rehabilitation Policy was likely to include this:

He refuted claims by the Ministry of Finance that SEZs could lead to a
loss of revenue of 100,000 crores over four years. As he put it, this
was "a distorted picture." He explained that, as things stand, customs
and excise duties are anyway refunded on exports. Now, in the case of
SEZs, these customs and duties would not be charged in the first place.
But what the Ministry of Finance was doing was to make public the
quantum of customs and excise duties foregone without mentioning that
anyway the same amount would also have been refunded under present
export laws.

Talking about the level of revenue SEZs would generate, the Minister said:

"Economic activity generates more revenue. One can't be more basic than
that. This is no rocket science. I believe there's a very major
substantial revenue gain [from SEZs]."

The Minister said SEZs would definitely create a meaningful number of
jobs and that criticism they would not do so were wrong. He also refuted
the claim that SEZs should be set up in backward districts and that most
proposed SEZs were IT-related and only a few were concerned with
manufacturing.

The Minister indicated that even though the SEZ Act did not relax labour
laws, State Governments "still have that freedom under the labour laws"
and he indicated that inter-state competitiveness could ensure they
exercise this freedom.

Asked about what impact FDI (as opposed to large domestic corporate
houses) could have on the Indian retail sector, he first seemed to
suggest that there would be no difference between the two. "I don't
think it's a question of FDI in retail. It's always a question of big
versus small."

Pressed on this point, the Minister said FDI in retail would cause
dislocation and therefore it could only be permitted at the back-end.

The Minister said that small retailers would need to be strengthened to
stand up to FDI in retail: "I have always said that if FDI in retail
will upset the small retailer we need to strengthen the small retailer.
That's why I have said if they want to come in they should go to the
back-end. They should invest in packaging and technology."

On the proposed Bharti Wal-Mart tie-up, he said: "If Wal-Mart supplies
to every retailer good food products whereas (today) 40 per cent (of
them) rot, if they put up a cold chain, if they put up packaging, if
they put up supplies to every retailer it strengthens my retailer."

http://www.hindu.com/2007/03/18/stories/2007031817111200.htm