Tuesday, July 10, 2007

SEZ approval validity to be extended on land buy delays


TNN[ MONDAY, JULY 09, 2007 04:35:39 AM]
NEW DELHI: With land becoming a scarce resource after the politial furore over land acquisition by states, the central government has decided to extend the validity of approvals provided to special economic zones (SEZ). This follows complaints from SEZ developers that projects are being delayed due to problems related to purchase of land.

According to to government sources, developers with in-principal approval but are not in possession of land can get the validity of their approvals extended by two years. This means that approvals for projects such as Reliance’s multi-product SEZ in Gurgaon and Posco’s steel SEZ in Orissa, which were given in-principle approval last year, will not lapse this year.

Extension of approval, however, will not be automatic. The commerce department plans to increase the validity of approvals initially by a year and follow it up another next year if it is necessary to do so. Also, validity of extension would be extended only in the case of developers who formally apply to the commerce department for this facility.

Developers have to apply for an extension before the lapse of the initial one-year validity period, the soruces said. Requests from developers who have not made any attempts to acquire land in the one-year period will not be considered for validity extension.

Speaking to ET, commerce department officials said that the board of approval (BoA) for SEZs decided on extending the validity period for proposals as the land acquisition process had slowed down considerably in the last few months.

“Following Ms Sonia Gandhi’s warning to Congress-ruled states last October in Nainital against acquiring farmland for industrial purposes and the protests against acquisition in Nandigram and Maha-Mumbai, there is a general slow-down in the process,” an official said. State governments have now become more cautious in handing land to SEZ developers and there have been very few transactions since October last year, the official added.

The BoA gives in-principal approval to developers who have their project plans in place but have not yet acquired land. Once the developer acquires land, the proposal is placed before the BoA for formal approval following which the developers goes through the formality of getting the SEZ notified.

Once the validity period of an in-principal proposal lapses and the developer is not able to acquire land during the period, the the developer has to start from scratch for getting the proposal approved. There are a total of 162 proposals which have been in-principally approved by the government.

The commerce department is also planning to amend SEZ Rule 18 4 (g) which states that use of previously-used machinery will not be allowed in the SEZs to bring it in line with the budgetary announcement allowing SEZ units to import second-hand capital goods to the extent of 20% of its total requirement. “The provision to allow used capital goods to the extent of 20% was already made in the income tax Act as part of Budget 2007. The commerce department is making changes in SEZ rules to bring it in line with the changes made by the finance ministry,” said L B Singhal from the export promotion council for EoUs and SEZs. 
Sudarshan Rodriguez





Sudarshan Rodriguez,

Senior Research Associate,

Ashoka Trust for Research in Ecology

and the Environment (ATREE)



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