Lending to SEZs: `eGoM to take call on RBI's stand'

Our Bureau

Kamal Nath seeks Prime Minister's intervention

Mr Kamal Nath

New Delhi March 13 The Union Commerce and Industry Minister, Mr Kamal
Nath, on Tuesday said that the Empowered Group of Ministers (eGoM) would
take a call on the Reserve Bank of India interpretation of bank lending
to special economic zones (SEZs) as "exposure to commercial real estate".

Talking to newspersons here on the sidelines of an international seminar
on the WTO, organised by the Commerce Ministry here, Mr Nath has also
sought the intervention of the Prime Minister, stating that the apex
bank was not right in treating banks' advances to SEZs as exposure to
real estate.

He said SEZ was an industrial cluster with dedicated infrastructure
designed to promote the country's exports through focused value-addition
activities.

"If a hotel comes up on the land, it does not become a real estate," the
Minister quipped.

Mr Nath also said that several Chief Ministers and Union Ministers have
written to him urging for some forward movement on SEZs development
arguing that these "vehicles for growth and development" should not be
grounded. He said that he has forwarded these letters to eGoM, which
would decide on the issue.

Officials in the Commerce Ministry have denied that the land allotted
for SEZs were being largely diverted for real estate business. They said
the land area notified as SEZ is required to be developed within three
years of the date of notification.

The Board of Approval on the basis of list of activities notified by the
Central Government grants the authorised activities eligible for tax
concessions. The development of infrastructure such as housing,
commercial spaces, recreational amenities is allowed in a phased manner
depending on the progress in allotment/occupancy in the processing area,
they said.

No fresh acquisition

They further said in the 234 valid formal approvals granted till date
for SEZs, the extent of land involved is 33,807 hectares of which
roughly 17,800 hectares of land was already in the ownership/possession
of State industrial development corporations. The rest of the land was
already in the possession of the developers. Thus in all these 234
cases, there was no fresh acquisition of land.

Out of the 234 valid formal approvals granted till date, 63 SEZs have
been notified where investment of Rs 13,435 crore had already been
funnelled. Expected investment in these SEZs is of the order of Rs
53,561 crore by December 2009, they said.

http://www.thehindubusinessline.com/2007/03/14/stories/2007031407001000.htm