Wednesday, January 31, 2007

Reliance bets on local people to get SEZ land



GURGAON: Meet Gurubhai in real life. With land acquisition for
industrial projects becoming increasingly controversial, Mukesh Ambani’s
Reliance Industries (RIL) is banking on ‘emotional connect’ with the
Indian villages and villagers. While acquiring land for the 25,000-acre
Haryana SEZ project in and around Jhajjar, RIL is using local gram
pradhans (village heads) as agents, cashing in on their local clout to
persuade farmers in their villages to sell land to India’s biggest
corporate house.

Heads of Badli, Jahangirpur, Pelpa, Dadritoe and Sardhi villages in
Jhajjar have already helped the corporate behemoth acquire close to
8,500 acres in six-odd months. Of this, almost 2,000 acres is in
contiguity. RIL needs 2,500 acres of contiguous land to get formal
clearances for SEZ.

“Acquiring so much land would not be possible without an active
involvement of the local village machineries. Land is an extremely
sensitive issue and it’s not just money that incentivises a farmer to
sell his land. He needs to be convinced. Perhaps this is where Reliance
is banking on the legacy of Dhirubhai Ambani to mobilise the support of
village heads, who in turn are convincing farmers and landlords in their
respective constituencies,” a source in the landbanking business said.
An ordinary real estate company could not have managed such smooth
sailing, he added.

According to sources in the state, RIL’s modus operandi for buying land
has led to a win-win situation for all. “Any company buying land in a
village would appoint an agent. In case of the Reliance SEZ, these
agents command a certain clout in their respective capacities. While
this makes land-buying a relatively simpler process for the company,
association with the country’s largest firm gives the villagers a sense
of empowerment,” an official in Jhajjar’s land records department said.

Perhaps this also explains why RIL has not felt the need to exercise the
option of seeking the government’s assistance for maintaining land
contiguity. “As per the deal with RIL, the state has to acquire 7,500
acres out of the total 25,000 acres to ensure contiguity. However,
involvement of influential people at the grassroots has ensured the
company does not need to bank too much on government support,” said an
official in Haryana State Industrial and Infrastructure Development

RIL has already bought 8,500 acres, forking out Rs 1,700 crore.
According to sources, the company is going ahead with land procurement
at the rate of 60-70 acres every day.

Assam Co inks MoU for Rs 2k-cr SEZ in Gujarat


KOLKATA: Amid the countrywide furore over special economic zones (SEZs),
Assam Company has signed an MoU with Gujarat State Petroleum Corporation
(GSPC) to set up a Rs 2,000-crore hydrocarbon SEZ in Gujarat.

Abhay Chawdhry, director (finance) and chief financial officer at Assam
Co told ET, “We had signed the MoU with GSPC only a week ago. Assam Co
is already present in the oil sector and has the expertise to develop
the hydrocarbon SEZ.”

Even though Prime Minister Manmohan Singh has categorically said all
SEZs in the country have been put on hold, Assam Co does not foresee any
problems cropping up with its proposed SEZ. “There may be some delay but
we do not think our SEZ will face problems regarding land acquisition.
There’s plenty of land in Gujarat which is not strictly farmland,” he

The project cost has been pegged at Rs 2,000 crore. “We expect to make
the SEZ operational by 2010,” Mr Chawdhry added. The MoU has been signed
at a time when GSPC has drawn up plans to actively participate in the
upstream hydrocarbon industry both in Gujarat and outside. It is an
aggressive participant in the New Exploration Licensing Policy (NELP)
rounds of bidding.

It also has plans to diversify into downstream petroleum projects,
including handling and distribution of LNG and pursuing coal-bed methane
projects. “We will float a special purpose vehicle for setting up this
SEZ. Both GSPC and Assam Co have decided to form a joint working group
to structure the SPV and prepare a roadmap for setting up the SEZ. The
land requirement for the SEZ is yet to be decided,” he said.

It has been decided that both companies will nominate two members each
to the joint working group that will structure the SPV. The committee
will be formed within a fortnight. According to the MoU, GSPC shall be
entitled to nominate the chairman of the board of the proposed SPV. Mr
Chawdhry said GSPC-Assam Co combine would invite the likes of Geosis,
Schlumberger and BJ to participate in the proposed hydrocarbon SEZ.

Are SEZs islands of comfort for the rich and powerful?

Special Correspondent

PUCL-K holds seminar on changes in land ownership


A new form of colonisation, says Ravivarma Kumar
Government contradicting itself: Lakshmipathi Kolara

Bangalore: A slew of projects being promoted by the Government such as
the Special Economic Zones (SEZs) and townships strike at the root of
the Constitutional guarantee of social and economic equality by creating
"isolated islands of comfort" for the rich and powerful, said former
Karnataka Backward Classes Commission Chairperson Ravivarma Kumar.

Speaking at a seminar on "Current Changes in Land Ownership in
Karnataka" organised by People's Union for Civil Liberties-Karnataka
(PUCL-K) here on Tuesday, he said SEZs, being promoted in the name of
creating new jobs, were in reality depriving people of the existing
means of livelihood.

"This is a new form of colonisation," said Mr. Kumar. The sorry state of
people uprooted by grand projects of the past, such as the Project
Seabird at Karwar, were proof of the failure of the rehabilitation
packages, he said.

"How can one set of people be rendered landless to provide more lands to
the rich, with the bonus of tax holidays and free resources?" he asked.

Activist Shivasundar said that concessions given to SEZs far outweighed
the claims of investment and employment generation. Citing Reserve Bank
of India statistics, he said that Rs. 1,75,000 crore concessions were
being given to SEZs in India, as against an investment of Rs. 1,00,000

The industries coming up in SEZs were technology-intensive and did not
create jobs to justify the concessions, he said. SEZs, which the
Government has declared "deemed foreign territory for all trade and
other commercial purposes", mark the loss of sovereignty of a nation,
said Mr. Shivasundar.

Writer Lakshmipathi Kolara said that the Government, which was on the
one hand making announcements about waiving farmers' loans, was
contradicting itself by welcoming projects that uproot farmers on the

In the State, 32,000 acres of agricultural land was being acquired for
SEZs, which would affect 1.12 lakh farmers and agricultural labourers in
148 villages. Not one farmers' representative was on any Greater
Bangalore committees, he added.

R.P. Chandrashekhar's book "Abhivriddiya Kodalige Okkalutanada Koralu"
was released on the occasion. Various Dalit and farmers' representatives
participated in the seminar.


The seminar saw farmers' representatives voicing their apprehensions
about loss of livelihood because of SEZs and townships. "Educated boys
and girls in our villages have jobs. They are now taking away what we
have. They are talking of giving new jobs. But to whom?" Appiah of Malur
taluk said and added "This is nothing short of legal robbery."

Gautam of Bairamangala said that one factor that was "pushing farmers to
the lap of land sharks" was the absence of market for their produce. "We
grow sugarcane in Bidadi but we do not have a steady market to sell," he

Haidar Baig from Hoskote said that there was a nexus between politicians
and business interests in the formation of SEZs.

The lands of influential politicians had been marked out of SEZs areas,
while most small farmers lost their lands, he said.

Commerce to GoM: Clear 41 ‘cleared’ SEZs, roll back freeze

Wednesday January 31 2007 00:05 IST
NEW DELHI: Infosys Technologies, Wipro, Satyam Computers , HCL
Technologies and Bajaj Auto Limited are among the 41 approved developers
who are knocking on the doors of the Government for a rollback of the
GoM’s decision withholding their SEZ notification. Among them, they have
acquired nearly 5,000 hectares of land and Rs 40,000 crore in investment
is sitting idle.

The Commerce Ministry has written to External Affairs Minister Pranab
Mukherjee – who heads the Empowered Group of Ministers – seeking
directions on issuance of notification in these 41 cases spread in nine
states, including Kerala, Uttar Pradesh, Maharashtra, Andhra Pradesh and
Goa. On January 22, the GoM decided on no new SEZ approvals, including
notifications, until it took a final view.

The Commerce Ministry has reminded Mukherjee that of the 236 valid
approvals, 63 SEZs have already been notified. ‘‘In another 41 cases,
the developers have already submitted land details and other documents
as required under the provisions of the SEZ Act 2005 and SEZ Rules,
2006, for issue of notification. The development commissioners have
carried out necessary inspections in these cases. These papers are under
process and draft notifications are being finalised in consultation with
the Law Ministry.’’

The letter goes on to add that because of the GoM’s directions, the
Commerce Ministry cannot issue notifications until the orders are
reversed. ‘‘The developers have expressed concerns over this decision as
they have already taken steps for implementation of their projects.
Number of these have already placed orders, finalised contractors in
anticipation of the notification. All benefits granted under the SEZ Act
become available only from the date of notifications,’’ the Commerce
Ministry has said.

Citing the case of Brandix India Apparel City, a company promoted by a
Sri Lankan promoter with 100% FDI, the Commerce Ministry has informed
the GoM that this company has already recruited and trained 400 rural
women from nearby villages and is ready to commence operation on receipt
of notification.

The Ministry points out that 1,000 acres has already been leased from
the Andhra Pradesh Industrial and Investment Corporation in 2006.

Sunday, January 28, 2007

Kodiyeri calls for consensus on SEZs

Staff Reporter

KOTTAYAM: The Investor Meet organised by Kerala State Industrial
Development Corporation (KSIDC) and the Kerala Infrastructure
Development Corporation (KINFRA) has elicited healthy response from
prospective entrepreneurs.

According to organisers, 32 entrepreneurs have signed memorandum of
understanding with KSIDC which, when it materialises, would bring in
investment to the tune of Rs.576-crore to the district. Meanwhile,
KINFRA, at their proposed Industrial Development Park being planned at
Nattakom, has elicited investment worth Rs.750 crore, organisers said.

Earlier, Minister for Home and Tourism Kodiyeri Balakrishnan stressed
the need to arrive at a consensus on the issue of Special Economic Zones
(SEZ) in the State.

Inaugurating the Investor Meet here, the Minister said the initiatives
the State had taken in the Information Technology (IT) sector have been
affected by the special privileges provided by the SEZ that have come up
in other States. The present provisions in the concerned Acts would have
to be amended to suite the special circumstances prevailing in the State.

Land had always been a problem, and the present stipulation of minimum
1,000-acre land for a SEZ was not practical in Kerala, he pointed out.

He asked the delegates not to wait for the Government to acquire land
for future investments, as it would lead to inordinate delay and other
complications, but procure land on their own and approach the Government
so that the authorities would be able to speed up the follow up.

In his keynote address, Minister for Industries Elamaram Karim said the
proposed Infrastructure Kerala Ltd., a Rs.100-crore infrastructure
development company being set up with the public-private participation,
will become operative soon. The company being envisaged in the line of
Cochin International Airports Ltd. (CIAL) would strive to raise
Rs.10,000 crore through public deposits.

According to Mr Karim, the approach and attitude of the trade unions to
issues have changed, but the image of the State as an investment-hostile
destination lingers on.Efforts need to be made to change this image and
media has an important role to play in this regard, he said.

Posco port may get govt nod soon



NEW DELHI: Even as Posco’s SEZ (special economic zone) proposal faces
uncertainties, the steel maker is all set to get government’s approval
to construct a port to support its proposed 12-million-tonne (mt) steel
plant in Orissa.

The expert committee on infrastructure under the ministry of environment
has given in-principle clearance to the Posco port project and once the
company completes a public hearing on environmental impact, the final
clearance would be obtained, sources close to the development told ET.

Posco plans to begin work on its captive port sometime in April as final
clearance would come about in March, sources added. The Korean steel
major plans to invest about $900 million in developing the captive port
facility at Jatadhari, 12 km from the existing port at Paradip. The
project is expected to be developed in two phases.

In the first phase, it will have a capacity of 10 million tonnes per
annum (mtpa) and will be expanded up to 31 mtpa. The break-up will be 15
mtpa of raw material imports and 16 mtpa of product exports. For import
of raw materials (iron ore, coal and other sub-materials), five berths
with a total length of 1,590 metres are planned to be constructed and
for export of products (export slabs, hot coils), eight berths (1,770
metres) will be built.

The company intends to feed its market hubs in Kolkata, Chennai and
Mumbai from this port, the sources said. The clearance for the Posco
project would be a major development for the steel maker. The project
was earlier opposed by environmentalists who said it would adversely
affect the nesting beaches for Olive Ridley sea turtles in a nearby
marine sanctuary.

Shipping minister TR Baalu had also expressed apprehension that the
Posco port was likely to affect the operations of nearby Paradip port.
Posco was earlier offered berths at the existing Paradip port, which the
company declined due to its smaller cargo handling facility.

Ever since signing MoU with the Orissa government for its steel plant in
2005, the Posco project has faced numerous hurdles. The latest being
delay in grant of SEZ status to the project.

While the company’s proposal to set up a multi-product metal-based SEZ
has been given in-principle approval by the Centre, it is now expected
to be delayed as the government is working on a rehabilitation and
resettlement policy before clearing any fresh proposal for SEZs.

Now, GoM to apply SEZ pill to petrochem hubs



NEW DELHI: After putting fresh SEZ approvals on hold till land
acquisition and rehabilitation policies are re-formulated, the UPA
government is set to employ similar economy for another economic project
— petroleum, chemical and petrochemical investment regions (PCPIRs).

The GoM on PCPIRs in its meeting here on January 15 decided to put a cap
on the number of PCPIRs and bar use of agriculture land for setting up
these regions, official sources told ET. The idea is that there won’t be
more than 10-12 such investment regions, although the exact number will
be decided by the Cabinet, these sources added.

The GoM also affirmed the view that PCPIRs need no tax breaks. It
reckoned that since these projects are to be backed by infrastructure
funding of $3 billion per region by the Centre, to give them tax sops
will be superfluous. Sources said the SEZ experience where the
government has been confronted with the problem of plenty (of demand)
and potential revenue pilferage has also weighed heavily on the GoM.

The management structure of PCPIRs could also be newly defined.
Initially, it was mooted by a high-power committee headed by principal
secretary to the Prime Minister that a management board will supervise
development and management of these investment regions.

The GoM has now decided to recommend the Cabinet that each state
governments wanting to set up a PCPIR will make a specific law for the
purpose. There will be a two-tier management structure — a board at the
political level and below that an empowered supervisory committee at the
executive level in which the PCPIR developer will also be represented.
“The GoM felt the need to give PCPIRs strong legal backing,” an official

Each PCPIR is envisaged to come up in 250 sq km, with minimum 40%
(25,000 acres) processing area. While the Centre will provide external
physical infrastructure linkages (rail, road, ports, airports), the
states will accord the region high quality power (open access as per the
state electricity regulatory commission) and water. The developer will
offer the PCPIR units common infrastructure such as chemicals storage
terminals, effluent treatment plants and create a green belt to
segregate the industrial units from human inhabitation.

States will enter into concession agreement with the developer who in
turn will charge fees for the services and facilities. As per the
sources, the GoM also decided to relax the proposed condition that
PCPIRs will be close to ports. Approval could be granted if there is
good connectivity with ports.

Four state governments have already expressed willingness to set up
PCPIRs Gujarat (Dahej), West Bengal (Haldia), Andhra Pradesh (Visag) and
Karnataka (Mangalore). Tamil Nadu, Maharashtra and Haryana have hinted
that they might propose PCPIR projects.

Petrochemical industry constitutes about 14% of industrial production
and 10.7% of exports. Each PCPIR will have a naphtha/gas cracker or a
refinery as the mother unit and hundreds of downstream units along
different value chains, from polymers to plastic-products to
PTA/MEG/acrilonitrile and polyester/acrylic textiles as well synthetic
rubber and colouring units. The PCPIR model is inspired by industrial
parks in Houston, Rotterdam, Shanghai, Jurong etc.

'SEZs must offer 80% jobs to locals in Goa'

'SEZs must offer 80% jobs to locals in Goa'

PTI[ THURSDAY, JANUARY 25, 2007 03:26:40 AM]

PANAJI: Goa government said on Wednesday that it will make 80%
employment for locals mandatory in the proposed special economic zones
(SEZ) in the state. “We will withdraw their (SEZ) permissions, if they
don’t adhere to 80% employment to the locals,” industries minister
Luizinho Faleiro told the assembly.

The opposition members, however, ridiculed the minister’s statement.
They said that under SEZ Act, 2005, the state has no control over such
matters like employment. “State has no control over SEZ. It’s like a
foreign territory,” leader of opposition Manohar Parrikar said, adding
the government is “misleading the House”.

The minister, however, stuck to his statement, stating that the
government would not allow the SEZs in the state, if they don’t adhere
to the law of land making 80% employment to the locals mandatory. As per
reply on the floor of the House, the state government is in the process
of acquiring land for the proposed SEZs.

Reliance bets on local people to get SEZ land



GURGAON: Meet Gurubhai in real life. With land acquisition for
industrial projects becoming increasingly controversial, Mukesh Ambani’s
Reliance Industries (RIL) is banking on ‘emotional connect’ with the
Indian villages and villagers. While acquiring land for the 25,000-acre
Haryana SEZ project in and around Jhajjar, RIL is using local gram
pradhans (village heads) as agents, cashing in on their local clout to
persuade farmers in their villages to sell land to India’s biggest
corporate house.

Heads of Badli, Jahangirpur, Pelpa, Dadritoe and Sardhi villages in
Jhajjar have already helped the corporate behemoth acquire close to
8,500 acres in six-odd months. Of this, almost 2,000 acres is in
contiguity. RIL needs 2,500 acres of contiguous land to get formal
clearances for SEZ.

“Acquiring so much land would not be possible without an active
involvement of the local village machineries. Land is an extremely
sensitive issue and it’s not just money that incentivises a farmer to
sell his land. He needs to be convinced. Perhaps this is where Reliance
is banking on the legacy of Dhirubhai Ambani to mobilise the support of
village heads, who in turn are convincing farmers and landlords in their
respective constituencies,” a source in the landbanking business said.
An ordinary real estate company could not have managed such smooth
sailing, he added.

According to sources in the state, RIL’s modus operandi for buying land
has led to a win-win situation for all. “Any company buying land in a
village would appoint an agent. In case of the Reliance SEZ, these
agents command a certain clout in their respective capacities. While
this makes land-buying a relatively simpler process for the company,
association with the country’s largest firm gives the villagers a sense
of empowerment,” an official in Jhajjar’s land records department said.

Perhaps this also explains why RIL has not felt the need to exercise the
option of seeking the government’s assistance for maintaining land
contiguity. “As per the deal with RIL, the state has to acquire 7,500
acres out of the total 25,000 acres to ensure contiguity. However,
involvement of influential people at the grassroots has ensured the
company does not need to bank too much on government support,” said an
official in Haryana State Industrial and Infrastructure Development

RIL has already bought 8,500 acres, forking out Rs 1,700 crore.
According to sources, the company is going ahead with land procurement
at the rate of 60-70 acres every day.

Medha Patkar to attend SEZ public hearing

NELLORE: Social activist and Narmada Bachao Andolan leader Medha Patkar,
Ramon Magsaysay award winner Sandeep Pandey and National Centre for
Labour secretary N.P. Sami will visit Nellore on January 31 to attend a
public hearing on the special economic zone (SEZ) at Tada, Krishnapatnam
port and tsunami victims in the region.

The Andhra Pradesh Matsyakarula Union, a unit of the Andhra Pradesh
Vyavasaya Vrithidarula Union, will hold the hearing to highlight
problems posed by the manner in which large tracts of lands are being
taken over for the SEZ at Tada and also for the port. Besides, it will
also take up various problems pertaining to unorganised workers in
tsunami-hit areas.

According to National Alliance of People's Movements national convenor
P. Chennaiah and Matsyakarula Sangham district secretary M. Raja Reddy,
the hearing will be conducted at the town hall here from 9 a.m. to 5 p.m.

Ms. Patkar will deliver a key-note address on relief and rehabilitation

Friday, January 26, 2007

SEZs and stakes for all

Industrial development calls for innovative ways to co-opt land owners

Posted online: Thursday, January 25, 2007 at 0000 hours IST

The government’s announcement of a review of the policy on
rehabilitation of land-losers in SEZs indicates the complexity and
contention involved in land utilisation and industrialisation in a
densely-populated, poor country like India.
Two major criticisms have been levelled about the prevalent SEZ policy.
By the first, the government should change the overall policy and legal
environment to promote economic activity, instead of creating islands
free from regulatory obstacles. This is a valid point in principle. But
in a vast and diverse democracy, changing the policy and legal
environment for the whole country is easier said than done. Such
far-reaching changes, however desirable, are time-consuming, and involve
painstaking negotiations and long-term engagement to build a consensus.
Therefore, using the investment in SEZs as a short-term economic booster
is a sensible policy tool, provided it presages a long-term change in
the investment climate.

The second criticism is that the incentives offered are excessive and
inequitable, and will entail revenue losses. A closer examination shows
that SEZ incentives are largely the same as those available to
export-oriented units. The one exception is that SEZ units can
participate in trading activities. It makes sense that these economic
incentives should be uniform throughout the country, while other
policy/regulatory incentives will, of necessity, be applicable to
notified SEZs for the time being. The loss of revenue on tax-incentives
is notional, and the argument that the additional investment growth and
jobs will more than offset this loss is reasonable.

In addition to these, there are five operational issues which need to be
addressed. First, what kind of land should be acquired for SEZs? The
government policy is both fair and reasonable. The government says that
mainly waste land and, if necessary, single crop agricultural land alone
should be acquired. Location-specific industries (port-based, for
example) may sometimes require valuable agricultural land. Otherwise,
the stated policy should be strictly enforced. The claim that loss of
cultivable land will undermine food security is exaggerated. Conversion
of 100,000 hectares of land, or even more, would reduce farm land by
less that 0.1%. With the decline in share of agriculture in GDP, greater
industrialisation and shift of occupations are both necessary and
inevitable. India cannot continue to be a largely agrarian economy if we
harbour ambitions of rapid economic growth and global power status.

Second, should land for SEZs be bought on market principles or acquired
by compulsion through state power? The land acquisition law and past
precedents do permit the state to acquire land for a company for a
‘public purpose’, and industrial growth does qualify as such. But it is
preferable to encourage private purchase through market mechanisms
including negotiations and bidding. However, there are occasions which
warrant state intervention. For instance, a recalcitrant owner of one
critical but small piece of land can thwart the whole project by
demanding an abnormal price or refusing to sell. In such cases, land
acquisition may be the last resort, and even then, the price should be
fixed through negotiations rather than depending on earlier registered
sales deeds (declared sale prices are often undervalued).

Third, how do we ensure that land losers have stakes in SEZs?

With the huge real estate boom, even 10-20% of the land would fetch the
owner multiple returns relative to the original compensation

Mere ‘compensation’ at current market prices is insufficient if the
asset value could appreciate significantly. Land losers suffer the
heartburn of relative deprivation as values skyrocket, and their
neighbours benefit from their sacrifice.

One elegant and equitable solution would be to treat part of the land as
equity in the project. In addition to the normal compensation, the land
owner could have right of owning a part of the developed land in the
SEZ. This could be about 10% in industrial projects, and 20% in
infrastructure projects. With the huge real estate boom, even 10-20% of
the land would fetch the owner multiple returns relative to the original
compensation. Such equity stakes will make SEZs attractive to the land

Fourth, displaced people need to be imparted with skills that could have
them absorbed in these SEZ projects. There exist successful precedents.
In 1985-86, a massive project was undertaken to train 8,000 youngsters
from the displaced families of the Visakhapatnam Steel Project, and all
of them are now productively employed. It took some effort, of course. A
national programme of training unemployed youth in India is overdue in
any case, and SEZs should be the starting point. Once SEZs provide local
employment, much of the resistance will disappear.

Finally, how do we integrate SEZs in the local governments, even as
their autonomy is assured? In AP, in 1996, the industrial infrastructure
corporation created a viable and successful model. Local entrepreneurs
were handed over the management of the industrial estate, and were given
the authority to raise service charges (‘taxes’) from the units/plots in
the area. An agreement that was struck between the local government and
the industrial estate transferred 30% of the taxes raised to the
municipality. In effect, the industrial township subsidised the
municipality, while quality of services and local autonomy stayed
intact. Such an innovation would be ideal for SEZs.

There are bound to be some losers in any growth process. But with
sensitivity, openness and innovation, we can grant stakes in growth to all.

—The author is coordinator of Voteindia; Email:

AIKS wants state-level caps on SEZs

Posted online: Thursday, January 25, 2007 at 0000 hours IST

NEW DELHI, JAN 24: Concerned by growing public ire against SEZs in West
Bengal, CPI(M)’s farmers’ wing, All India Kisan Sabha (AIKS) demanded on
Wednesday that state-level zonation teams be formed to assess the
fertility and character of land.
They have also demanded the Centre to introduce state-level caps on SEZs
as only “some states are gaining by the SEZs.”

On the invitation of the Parliamentary committee on commerce, headed by
Murli Manohar Joshi, AIKS presented its views on SEZs before the
committee. CPI(M) politburo member and general secretary of AIKS K
Varadha Rajan led the two-member delegation which also consisted of
former MP and CPI(M) central committee member Nurul Huda. CPI leaders AB
Bardhan and D Raja also met the committee on Wednesday.

“We are concerned mainly with the land. That is why we suggested that
every state should constitute a state zonation team consisting of
agronomists and soil analysts.

They must study the fertility of the land and fertile land should be
avoided as far as possible,” Huda told FE after the meeting.

On the numbers of SEZs, Huda said the Centre should bring state-level
caps on SEZs as other states also should benefit from them. “Earlier,
there was a cap on SEZs.

After the government removed it, only some states such as Maharashtra,
Andhra Pradesh and Tamil Nadu became the beneficiaries of SEZs. This
uneven distribution will harm the interest of other states,” Huda added.
The CPI, on the other hand, told the committee that it should advise the
Centre to check the proliferation of SEZs. “The government should not
give out any fresh SEZ proposals.

Four hundred and four SEZs in a country is quite a big number compared
to the international total of SEZs, which is below 1,400,” Raja said
after the meeting.

The CPI, which even locked horns with the CPI(M) on SEZs in West Bengal,
also demanded the Centre to come out soon with a national policy on
rehabilitation. The AIKS asked the Centre to amend the Land Acquisition
Act drafted by the British in 1894.

Wednesday, January 24, 2007

Protect farmers affected by SEZs, says Sindhia

Staff Correspondent

Surendra Mohan-led faction of JD(S) to organise protest on February 9 A
nationwide protest will be organised on February 9

HUBLI: The Surendra Mohan-led faction of Janata Dal (Secular) will
organise a nationwide agitation on February 9 seeking steps to safeguard
the interests of farmers whose lands will be acquired for Special
Economic Zones (SEZs).

Addressing presspersons here on Monday, former Minister and Janata Dal
(Secular) leader P.G.R. Sindhia said that apart from staging the protest
and submitting a memorandum, the party would be presenting an
"Alternative Approach Paper" with suggestions to solve the problem. Mr.
Sindhia clarified that the party was not against acquisition of land for
industrial growth through the formation of SEZs. However, certain issues
should be addressed to protect the farmers, he said.

Alternative approach

So the party had undertaken the task to prepare an alternative approach
paper to solve the problem and had involved various non-governmental
organisations in the work. On February 9, the paper would be presented
to Prime Minister Manmohan Singh, he said. The Centre was acquiring
fertile lands from farmers without giving them alternative lands. All
these issues would be tackled in the paper, he said.

On which faction was the true Janata Dal (Secular), he said that as per
the directions of the Election Commission, the related documents had
been submitted to it and it would take a final decision on the issue.

Centre awaiting land acquisition rehab package details from States

Our Bureau

THE FINLAND President, Ms Tarja Halonen, and the Minister for Commerce
and Industry, Mr Kamal Nath, during a meeting with businessmen, in the
Capital on Tuesday. — Kamal Narang


New Delhi Jan. 23 The Union Minister for Commerce and Industry, Mr Kamal
Nath, on Tuesday said that the UnionGovernment was awaiting the land
acquisition rehabilitation package from the State Governments for
farmers whose land is acquired for creation of SEZs. He also ruled out
placing any cap on the number of SEZs.

Speaking to newspersons during a meeting with the President of Finland,
Ms Tarja Halonen, jointly organised by Assocham, CII and FICCI, Mr Nath
said that the Union Government had already asked the Chief Ministers to
submit a land acquisition package to the Group of Ministers (GoM) on SEZs.

The Ministry of Panchayati Raj and other relevant departments will
consider the rehabilitation package so that more than adequate
compensation is paid to farmers whose land is acquired for SEZ purposes,
the Minister said.

The GoM would again meet shortly and deliberate on the land
rehabilitation package with due consultation with State Governments
concerned, said Mr Nath.

Earlier, speaking on Indo-Finnish Economic Trade, Mr Nath said that the
trade balance was currently in favour of Finland and in due course of
time, India's trade engagements would mount substantially with Finland.

The Minister sought the support of Finland for the Doha developmental
round on WTO, urging it to support India and its stand on agricultural
subsidies, as this round has to be concluded successfully to ensure that
trade flows increase between developing world to developed world.

During the meeting, Ms Halonen offered Finland's complete support to
India in the forthcoming developmental rounds of WTO, hoping that these
will reach the logical end to ensure sustainable social and
environmental development of both developed and developing world.

India, she said, was one of the key partners in WTO and will play a very
significant role in the next WTO negotiations with necessary Finland
support and both India and Finland would come closer to forge their
partnership in the field of education, environment and knowledge to make
quality products.

Ministry clarifies on SEZs

Our Bureau

New Delhi, Jan. 23

The Commerce Ministry on Tuesday clarified that the new approvals and
notifications for Special Economic Zones (SEZs) have been temporarily
held in abeyance, pending decisions by the Empowered Group of Ministers
on SEZs.

In a statement issued here, it said that the SEZ developers and other
stakeholders have expressed apprehensions about the future of
investments made by them in relation to the SEZ projects, following
media reports highlighting the decisions of the Empowered Group held
here on Monday.

The meeting was inconclusive and hence the Empowered Group was likely to
meet shortly and final decisions would be taken on all pending issue,
the official statement said.

Rail Nigam, Gopalpur Ports plan SPV for freight corridor

Posted online: Wednesday, January 24, 2007 at 0000 hours IST

GOPALPUR (ORISSA), JAN 23: The Rail Vikas Nigam Ltd (RVNL) and the
Gopalpur Ports Ltd (GPL) will soon set up a special purpose vehicle to
construct a freight corridor to connect mineral-rich areas like Koraput
and Rayagada in Orissa with the port. The 79.15-km corridor between
Gunupur and Theruballi is estimated to cost Rs 400 crore. GPL also plans
to apply for a SEZ status soon for the port project that covers around
2,100 acres.
“Talks with RVNL are in the final stages for the SPV. The SPV could have
other stakeholders like Dubai Aluminium Co (Dubal) as members”, DP
Singh, chairman of GPL, said, adding the financial closure of the line
was expected by June. GPL is also considering entering into a
comprehensive agreement with Dubal by March for the development of the
corridor and the port.

Work on a 130-km-long freight corridor leading to the port was begun by
RVNL in 2004, but due to insufficient traffic and closure of the
Gopalpur port, the corridor remained incomplete.

Singh said GPL already had 629 acres of land and another 1400 acres
would be given to it by the Orissa government in 2 months to set up an
SEZ in the port area. After that, the consortium will apply for an SEZ
status for the multi-product zone which will mostly handle steel, agro
and related products.

“We are seriously thinking of ensuring an SEZ status for the project so
that it could be developed in a big way, and will shortly send the
application to the Orissa government,” Singh said.

GPL has already announced its intention to raise Rs 1,200 crore through
IPO, which is likely later this year. The consortium, comprising Sara
International, Orissa Stevedores and Hong Kong-based Noble, is also in
talks with IIFCL to raise the debt. The remaining Rs 450 crore will be
the equity of GPL for the Rs 1700-crore port project. The port will be
developed into an all-weather port by 2010.

The cargo handling capacity of the port is supposed to be raised to 20
MTPA by 2012

Govt clears SEZing doubts


NEW DELHI: The commerce & industry ministry has allayed apprehensions of
SEZ developers over the government’s decision to freeze new approvals
and notification of SEZs. On Monday, the empowered group of ministers
(eGoM) on SEZs had decided to keep approvals on hold till further orders.

In a statement issued on Tuesday, the ministry of commerce & industry
said new approvals and notifications have been temporarily held in
abeyance and final decisions would be taken on all pending issues when
the eGoM meets again shortly. The statement took note of the concern
among developers over the future of their investments.

The statement noted that apprehensions had been expressed by SEZ
developers and other stakeholders regarding the future of investments
made by them. “The apprehensions are primarily based on media reports
highlighting the decisions of the eGoM,” the release said.

The statement explained that the eGoM meeting on Monday for reviewing
the status of SEZ approvals –– as per the decision taken in the previous
meeting last August –– was inconclusive. “It is only pending decision by
the eGoM that the new approvals and notifications have been temporarily
held in abeyance. The eGoM is expected to meet shortly and final
decisions would then be taken on all pending issues,” the release added.

The eGoM, in its meeting on Monday, had decided to slam brakes on all
notifications till a decision on contentious issues, including land
acquisition process, sectoral caps and possible ceilings, were sorted
out in its next meeting. Opposition surrounding land acquisition for
SEZs has been gathering steam and also taking a violent shape, as in
Nandigram, West Bengal, where Indonesia’s Salim group was planning to
set up a chemicals SEZ.

The Prime Minister has promised that a new rehabilitation policy for the
displaced will be in place soon to ensure farmers and displaced
businesses get a fair deal. The Left parties and BJP are also pushing
for sectoral caps to be placed on SEZs. With Assembly elections in
Punjab and Uttar Pradesh due shortly, the government is expected to go
slow on SEZs.

BJP seeks govt report on SEZs

Posted online: Wednesday, January 24, 2007 at 0000 hours IST

NEW DELHI, JAN 23: In an attempt to score brownie points against the
Congress-led UPA, the BJP on Tuesday asked the government to come out
with a white paper on SEZs, besides demanding an all party meeting on
the issue.
“The government should bring out a white paper and also call an all
party meeting to evolve a consensus on the creation of SEZs. Our party
is demanding this in the backdrop of resistance on the acquisition of
fertile agricultural land,” senior BJP leader M Venkiah Naidu said.

He said the white paper should include sectorwise details of projects,
their nature, investment involved, employment potential, etc.

EGoM fails to decide, 340 SEZs still in dark

Tuesday January 23 2007 00:00 IST
NEW DELHI : The Empowered Group of Ministers (EGoM), on Monday, failed
to draw a final conclusion on the issues of land and tax concessions in
Special Economic Zones. Fate of more than 340 SEZs cleared so far
depends on the final decision of the EGoM. Announcing the fact Commerce
and Industry Minister Kamal Nath said, “The EGoM discussed land issues,
rehabilitation question and possible misuse of tax concessions. But it
remained inconclusive.” The EGoM will meet again shortly he added.

The EGoM decision will decide the fate of the 340 SEZs that are approved
but not notified. However, for the 63 SEZs notified till now, EGoM’s
call on SEZ policy will not be applicable. Pending the final view of
EGoM, no fresh SEZ proposals will be taken up by the inter-ministerial
Board of Approvals (BoA). Currently as many as 300 SEZ applications are
pending with BoA.

Nath said as EGoM Chairman and External Affairs Minister Pranab
Mukherjee had to leave for another meeting, final views on various
issues could not be reached. However, sources said as the issues raised
on SEZs were complex and contentious, it was difficult to reach a firm
policy. Besides Mukherjee and Nath, the EGoM includes Finance Minister P
Chidambaram, Agriculture Minister Sharad Pawar, and IT and
Communications Minister Dayanadhi Maran.

Tuesday, January 23, 2007

No final view yet on SEZs

Special Correspondent

NEW DELHI: The Empowered Group of Ministers (EGoM) on special economic
zones (SEZs), headed by External Affairs Minister Pranab Mukherjee, on
Monday failed to arrive at a final view on the controversial issues of
land acquisition, rehabilitation and misuse of tax concessions.

Thus, the fate of over 340 SEZs, which have been approved but not
notified, remains uncertain.

The EGoM would soon meet again, Commerce and Industries Minister Kamal
Nath told journalists. Pending a final view by it, no fresh proposal
would be taken up by the inter-Ministerial Board of Approvals (BoA).

According to Ministry sources, the decision of the EGoM would not be
applicable to the 63 SEZs which have already been notified. Besides the
over 340 SEZ proposals, there are about 300 applications pending BoA

Mr. Kamal Nath pointed out that as the EGoM Chairman had to leave for
another meeting, final views on various issues could not be firmed up.

Apart from Mr. Mukherjee and Mr. Kamal Nath, the members are P.
Chidambaram (Finance), Sharad Pawar (Agriculture) and Dayanidhi Maran
(IT and Communications.)

Mr. Kamal Nath said the land acquisition issue was not confined to SEZs
and extended to all other industrial projects. "Details have been sought
from the State Governments on land that is being acquired for various
purposes and before that no approvals can be given."

On Govt agenda today: SEZs, pension reforms

Vikas DhootPosted online: Monday, January 22, 2007 at 0000 hrs Print
EmailUPA: Insurance Bill with GoM, parties to be consulted, says FM
New Delhi, January 21 : As it grapples with fresh Left opposition on
insurance reforms, the UPA government will take up tomorrow two issues
at the heart of its reforms programme — pension reforms and Special
Economic Zones.

Prime Minister Manmohan Singh and Finance Minister P Chidambaram will be
meeting state chief ministers, seventeen of whom have already voted for
pension reforms with their decision to move new employees away from
defined benefit pensions. Later in the day, the Empowered Group of
Ministers headed by External Affairs Minister Pranab Mukherjee will
scrutinize closely the SEZ rules and consider the suggestions and
concerns expressed by senior leaders from the Left and Congress last month.

Speaking to The Indian Express, Finance Minister P Chidambaram said that
the government will discuss “the draft (Pension Funds Regulatory and
Development Authority) Bill and the investment guidelines for
non-government provident funds” with state CMs. ‘‘We can’t keep the
money in public account. We hope that the CMs will give us the benefit
of advice,’’ Chidambaram said, referring to the funds that have already
been collected from new government employees at the Centre and 17 states
under the New Pension Scheme. Till the PFRDA Bill is passed, the
government is suggesting that the accumulated pension funds be invested
as per the investment guidelines recommended for non-government PFs such
as the EPFO, which allow portfolio investments of upto 5 per cent in
equities. However, the EPFO hasn’t adopted these guidelines yet, due to
opposition from the Left parties’ trade union representatives on its board.

‘‘By and large, political parties have agreed¿ there are some
differences on who should be the pension fund managers and where the
funds should be invested. We hope that with 17 states and the Centre
having switched to the NPS, it’s only a matter of time before we
complete the negotiations, Chidambaram said.

The response from Left-run states of Tripura, West Bengal and Kerala
would be crucial. Though they have the fastest rising pension bills in
the country, the states haven’t initiated any damage control exercise
yet due to lack of political will.

West Bengal Finance Minister Asim Dasgupta told The Indian Express that
the decision (to join the NPS) rests with the Chief Minister. On his
recent trip to Kolkata, the PM had turned to Buddhadeb to break the
pension reform impasse.

A considerable mid-course correction can be expected on SEZs, again at
the centre of a row after protests on land acquisition and compensation
in proposed SEZs like Nandigram. While the PM has promised a
comprehensive relief and rehabilitation law to address those concerns
soon, there are other concerns. “Every issue that has been raised in
relation to SEZs would be placed before the empowered GoM for
direction,” Commerce Secretary Gopal K Pillai said yesterday.

“The Department of Revenue has a number of reservations on SEZs. They
were considered and largely rejected. The (controversy over) land
acquisition has caught everyone’s attention,” Chidambaram told The
Indian Express. One of those concerns was putting a cap on SEZs, that
had earlier been rejected by the EGOM, but would raise its head again at
tomorrow’s meeting. “I am not against SEZs, but I am against the
proliferation of SEZs,” he said at the The Indian Express Idea Exchange

CPM not anti-SEZ, Centre must amend laws: Yechury

Press Trust Of IndiaPosted online: Monday, January 22, 2007 at 0000 hrs
Print Email
Kurukshetra, January 21: CPI(M) leader Sitaram Yechury today said his
party was not against Special Economic Zones (SEZs) and asked the Centre
to amend laws relating to them so that the farming and labour community
is not put at disadvantage and not displaced.

The government needs to amend the laws relating to the quality of land
to be acquired for SEZs, besides paying “adequate compensation” not only
to the farming community but also to the tenants of the agricultural
land, he said after delivering the convocation address in the National
Institute of Technology here. The party MP said the land use must be
given priority for setting up the industry and basic infrastructure
rather than real estate, which was unproductive.

“We are not against SEZ but we want that it must favour the
agriculturist classes rather than the real estate people and moreover it
must give returns to the government too.”

Yechury said due to the “inconsistencies” in the laws and bylaws for
SEZs, the “property giants” were converting the metro peripherial areas
into only residential estates and not industrial or manufacturing units.

“As is the case of Maha-Mumbai, so is the case of Delhi NCR. The metros
are growing fast as the residential properties and not productive units.
It is at the disadvantage of the people and the government,” he said.

States' representation in SEZ-related policies urged

Our Bureau


New Delhi Jan. 22 The Associated Chambers of Commerce and Industry of
India (Assocham) has called for representation of States in policy
matters related to SEZs.

The chamber has urged the Prime Minister, Dr Manmohan Singh, to
reconstitute a New Group of Ministers (NGoM) with representatives from
States to formulate within three months land acquisition and
rehabilitation policies for SEZ's proposals.

Until the new comprehensive policies packages are evolved by the NGoM
for SEZs, the pending proposals for clearances should be held to avoid
politicisation of the "much-needed SEZs," the chamber said.

In a note submitted to the Prime Minister's Office, the chamber
President, Mr Venugopal N. Dhoot, said: "SEZs are a must to achieve 10
per cent GDP growth, 25 per cent export acceleration for 10 consecutive
years and also create 15-17 lakh additional jobs in the next five years
with unlimited investment opportunities."

The current mandate of the GoM for SEZs is not as comprehensive and
diversified as it should have been, and does not sufficiently addresses
the issue of rehabilitation for acquisitions of agricultural land, it
said. It has suggested that IT SEZs be developed and made operational
within six months from the date of notification.

Thus, over 130 approved IT SEZs would immediately result in an
investment of $9-12 billion, leading to massive employment generation
and acceleration of exports of IT products and contribute significantly
to the creation of GDP.

SEZs: Govt considering `export obligation'

Our Bureau

The details
The already notified 63 SEZs would not be affected by any new rules
being framed or under way for the SEZs as the rules would be prospective.
Till now, the Board of Approvals had given final approvals to 237 SEZs
and in-principle nod to 165 SEZs.


New Delhi Jan. 22 Though the meeting of the Empowered Group of Ministers
for Special Economic Zones (SEZs) today ended `inconclusively,' the
Government is toying with a proposal to introduce "export obligation"
for SEZs so that serious players remain in the field and exports begin
from an early date and revenue loss due to tax concessions be stemmed.
However, officials were not keen to elaborate on the proposal.

The meeting was chaired by the External Affairs Minister, Mr Pranab
Mukherjee, and sources indicated that the meeting discussed various
issues pertaining to SEZs, including the contentious issue of land
acquisition. The Finance Minister, Mr P. Chidambaram, and the Commerce
and Industry Minister, Mr Kamal Nath, were among the Ministers who
attended the meeting.

Mr Nath, later briefing the media, said that the Empowered Group could
not decide on the future of new SEZs or the ones already granted
in-principle nod at the meeting today due to paucity of time. Old SEZs
not affected

The Commerce Secretary, Mr G.K. Pillai, later clarified that the already
notified 63 SEZs would not be affected by any new rules being framed or
under way for the SEZs as the rules would be prospective.

On the issue of imposing time-bound export obligations on SEZs, official
sources told Business Line here that this would only "complicate" the
concept and add to transaction cost as most of the SEZ developers and
units believe that there is "finality" to the SEZ Rules notified by the
Revenue Department towards the end of 2006.

They said that in IT SEZs, 100 per cent export was taking place and that
the idea of ensuring hassle-free functioning of the SEZs would be lost
if the rules were tampered with in the wake of controversies.

Mr Nath said the Centre had asked State Governments to forward details
of land acquisitions for all purposes including SEZs. He said the group
deliberated on "land issues, rehabilitation policy and possible misuse
of tax concessions by SEZs."

He said the Centre could not acquire the land for SEZ purposes, as it
was the States that were pro-active.

Till now, the Board of Approvals for SEZs has given final approvals to
237 SEZs and in-principle nod to 165 SEZs. Besides, another 300
applications remain pending.

Both the Central and State Governments have been facing the heat from
farmers, non-governmental organisations and opposition parties for
allowing big industries to acquire farmland to develop SEZs. Already
corporates such as Reliance Industries Ltd, Mahindra & Mahindra Ltd and
Gitanjali Gems Ltd have announced plans to set up SEZs, while the
national oil company Oil and Natural Gas Corporation has also joined the
SEZ bandwagon.

Nath favours export obligation on SEZ units

PTI[ TUESDAY, JANUARY 23, 2007 03:50:54 PM]

NEW DELHI: Commerce Minister Kamal Nath on Tuesday favoured export
obligation on units in Special Economic Zones and said there was a need
for further clarity on the issue to address concerns these units might
not sell abroad.

"I am in favour of export obligation on the units in SEZs. Section 5 of
the SEZ Act has already provided for it. Only clarification is needed,"
he said.

Section 5 of the SEZ Act says that the government will be guided by the
idea of "promotion of exports of goods and services" while approving
these zones.

"The SEZ Act provides that the SEZs are primarily for exports. There are
concerns that some of the units in SEZs might not export and we need to
clarify on that," Nath added.

At present, units in SEZs have to earn more foreign exchange than they
spend on importing goods and services from abroad. Apart from this
condition, they are not subject to any minimum value addition norms or
export obligations.

Nath's statement comes a day after the Finance Ministry proposed at the
meeting of Empowered Group of Ministers to make it mandatory for units
to export up to 50 per cent of their production.

Land resale barred for SEZ units


NEW DELHI, JAN 21 : The government has decided to amend the Special
Economic Zones Rules to ensure that developers replace units in SEZs
that do not start operations within a year of getting permission.
Further, these units will be barred from selling land in SEZs.
According to commerce ministry officials, this will partly address the
growing concern among political parties that SEZs are turning into real
estate business. "There are units which wait for a year or so for land
prices within an SEZ to appreciate and then sell it off to make a fast
buck. We will ensure that this does not happen," an official told FE.

The proposed amendments, expected to be notified in a month, will ensure
developers failing to get their zones notified within six months of
receiving a formal approval not just lose clearance for their projects,
but also cough up stamp duty to respective states for the land acquired.

The commerce ministry has asked states to ensure that developers—which
have obtained clearance in principle from the Board of Approval—are
exempt from stamp duty not only for initial land acquisition but for all
subsequent activities.

• Units failing to operationalise
in a year will lose clearance
• Builders to pay stamp duty if they fail to get SEZ notified in 6 months
• No tax sop for rehabilitation work outside SEZs
• Developers to declare that their land is litigation-free

Besides, the ministry now plans to include a provision, restricting tax
exemption on relief and rehabilitation undertaken by developers only to
such activities within the SEZ. “R&R work undertaken outside SEZs—like
buildings and schools—will not be eligible for tax exemption,” the
official said.

The ministry has decided to ask developers to not only get a
non-encumbrance certificate for land acquired but also file a specific
affidavit, stating it is litigation-free. "The amendments will specify
that units will not be allowed to sell their waste in the domestic
tariff area.

FM throws spanner in SEZ works

Posted online: Tuesday, January 23, 2007 at 0000 hours IST

NEW DELHI, JAN 22 : Finance minister P Chidambaram on Monday proposed a
fresh provision in the Special Economic Zones Act that would deny tax
benefits to developers and units in SEZs unless they fulfilled a certain
export obligation.
According to government officials, Chidambaram’s proposal was opposed
not only by commerce and industry minister Kamal Nath, but also by
Planning Commission deputy chairman Montek Singh Ahluwalia and the law
ministry in the meeting of the empowered group of ministers.

Chidambaram proposed that SEZ units should not be eligible for tax sops
if they did not meet an export obligation of 30-50% of total production.
He was also keen that developers be denied direct tax concessions if the
units did not meet the obligation.

The eGoM, chaired by external affairs minister Pranab Mukherjee, failed
to take a decision on 21 crucial issues, including land acquisition, a
rehabilitation policy and misuse of tax incentives since Chidambaram’s
proposal deflected the entire course of the discussion.

Kamal Nath said such a provision would divert huge investments to other
countries as Indian and foreign units in the 23 operational SEZs now
sell up to 70% of their production in the domestic tariff area (DTA).
Even the law ministry said it was not legally tenable to penalise
developers for units in their SEZs not meeting such an obligation.

The commerce ministry was of the view that the current requirement of
posting net foreign exchange earnings was enough to ensure adequate
exports. The Plan panel, too, said if sales to DTA were low, consequent
indirect tax revenue would be minimal.

Pending a final view by the eGoM on other issues and the announcement of
a national rehabilitation policy, all decisions concerning 300 fresh
proposals, 237 proposals that have received the BoA’s formal approval,
and another 164 granted in-principle clearance have been put on hold.

Singur SEZ it

Tuesday January 23 2007 06:42 IST
It can provide valuable insights

There is no better way to test industry and government leaders on their
promises, than by allowing them the space to act. With construction work
finally commencing at the Tata Motors site at Singur, the onus, in an
opportune way, is on the company and the West Bengal government to
deliver. It is good that the state government has not balked at the
challenge, and has chosen to go ahead with the project. Two aspects of
the project hold significance for the local communities — the
landholders who have sold their property as well as the residents of
Singur curious about how the altered political economy would impact
their lives. The effect could be far-reaching. The Singur project is,
remember, not a Special Economic Zone (SEZ). But as the government
grapples with the issues of SEZs — of rehabilitation, land acquisition
and local interfaces — the experience at Singur will certainly be
illuminating. Contrary to claims by critics, the acquisition process at
Singur has been transparent. Importantly, the government in Kolkata has
taken ownership of the entire process.

It has broken the populist myth of the inviolable integrity of
agricultural tracts. Chief Minister Buddhadeb Bhattacharjee has stressed
the inevitability of some farmland having to be diverted for
industrialisation. This is not just for the larger common good, but also
for the benefit of sites specifically chosen for such projects. Singur
will test this. Tata Motors officials say they have already employed, in
the first 24 hours of construction activity, 50 villagers and hope to
increase this number to 2,500. In all, they expect 10,000 locals to be
connected with the project. A terrible injustice could be wrought by
critics of such projects who seek to oppose by romanticising the toils
of the marginal farmer. Making ends meet on such small tracts is a daily
challenge, and the economy of small scales gives the farmer no buffer
when drought or flood occurs. Taking industrialisation and manufacturing
to new venues could mean giving marginal farmers and landless labourers
a way to get integrated into, and benefit from, mainstream economic
activity. So, the point is not to be drawn into blanket critiques of
development. But to find ways of integrating specific projects with the
local as well as larger economic good in an optimum manner.

AIALA demo against SEZ

Tuesday January 23 2007 00:00 IST
DHARMAPURI: Dharmapuri district wing of All India Agricultural Labourers
Association (AIALA) staged a demonstration in front of Dharmapuri taluk
office, urging the government to drop the proceedings related to the
Special Economic Zone (SEZ), on Monday.

CPIML district committee president K Saravanan led the demonstration.

Representative of CPIML state committee A Chandramohan, AIALA state
committee representative K Govindaraj and AICCTU representative P
Ramakrishnan spoke. Members from several other wings also took part.

EGoM meeting inconclusive, fate of 340 SEZs hangs in balance

Tuesday January 23 2007 00:00 IST

NEW DELHI: The fate of more than 340 special economic zones cleared so
far hangs in balance as the Empowered Group of Ministers could not reach
a firm view on the most contentious issues of land and tax concessions.

"The EGoM discussed land issues, rehabilitation question and possible
misuse of tax concessions. But it remained inconclusive," Commerce and
Industry Minister Kamal Nath said.

He said pending the final view of the EGoM, which will meet shortly
again, no fresh proposals will be taken up by the Inter-Ministerial
Board of Approvals.

Sources said whatever decision EGoM takes on the SEZ policy, it would
not be applicable to the 63 SEZs that have already been notified.

But the future of more than 340 proposals approved but not notified
remains uncertain. Apart from the proposals cleared, as many as 300
applications are pending with BoA.

Officials said the rehabilitation policy, which is being prepared by the
Rural Development Ministry, will be taken to the cabinet next month.
They said there would be separate policies for land acquisition and

Nath said as EGoM chairman and External Affairs Minister Pranab
Mukherjee had to leave for another meeting, final views on various
issues could not be reached.

Sources said as the issues raised on SEZs were complex and contentious,
it was difficult to reach a firm policy.

Besides Mukherjee and Nath, the EGoM includes finance Minister P
Chidambaram, agriculture Minister Sharad Pawar, and it and
communications Minister Dayanadhi Maran

Saturday, January 20, 2007

MAN to set up US plant, Indore SEZ



MUMBAI: Man Industries (MIL), a flagship company of the UK-based MAN
group and a leading producer of steel saw pipes in India, is on an
expansion mode that will see the firm setting up a $50-million facility
on the south coast of the US and build IT/ITeS special economic zones
(SEZs) near Indore. The company had recently demerged its aluminium
division and has plans to list it on the Bombay Stock Exchange (BSE).

“We are looking at the feasibility of setting up a plant in the US and
it will include saw pipe manufacturing and coating units,” said chief
executive (projects) Somnath Roy. “The capacity of the plant will be
about 300,000 tonne per annum.” MIL had received two orders from US oil
companies worth $100 million late last year.

While the company, like other Indian pipe manufacturers, is targeting
the US market, it is also looking at new ones, including Latin America
and African countries such as Nigeria.

“India has emerged as one of the four global hubs for pipe production
along with Japan, China and Europe. We want to leverage on our cost and
logistics advantage and see opportunities in the US, West Asia and East
Europe,” Mr Roy added.
The company, which expects to increase revenues by about 50% to Rs 1,250
crore in FY07, has production units in Anjar (Gujarat) and Pithampur
(Madhya Pradesh).

It is now investing Rs 80 crore to increase the capacity of its helical
SAW pipes by about 600 km (an industry jargon to indicate the length of
pipes manufactured every year) at its Anjar plant. “This will take our
total capacity, including that of the longitudinal saw pipes, to 2,600
km per year,” said Mr Roy.

Industry estimates say that in tonnage terms this could amount to almost
a million tonne a year.MIL, which is the first Asian company to issue a
global depository receipt at the Dubai International Financial Exchange,
is also talking with the Madhya Pradesh government to set up an SEZ for
the IT/ITeS sectors.

The company is said to be in the process of locking about 265 acres near
Indore and is in talks with prospective partners. “The company is also
looking to diversify into the real estate and hospitality businesses.
But it’s still early days and we are scouting for prospective areas. Our
focus on saw pipes remains,” added Mr Roy.

SEZ benefits too many to lose 'site' of

SEZ benefits too many to lose 'site' of


NEW DELHI: Controversies have surrounded the special economic zones
(SEZs) policy right from the time the rules guiding the policy were
notified in February last year.

Whispers about alleged land-grabbing, which started early last year,
have gradually taken the shape of violent protests in some parts of the
country. While there is no question about the urgent need to address the
concerns of the farming community, the government has to ensure that the
baby doesn’t get thrown out with the bathwater.

The fact that the SEZs have managed to attract high investments in a
short period of eleven months and also generated a modest number of jobs
is a reminder of why the government went in for a SEZ policy and why it
should be preserved. When a policy of such an enormous magnitude is
implemented, it is not surprising that it gives rise to problems and

In a way, it is important for protests to be registered as it can act as
a check against the policy going wrong or its implementation going
haywire. A good example could be the notifications issued by the Centre
in August last year to prevent operating units from relocating in SEZs.

The protests against land-grabbing has also made the government sit up
and take notice. It has, in fact, forced Congress President Sonia Gandhi
to intervene and Prime Minister Manmohan Singh to order a relook at the
policy. But that certainly does not spell the death-knell of the policy

The empowered group of ministers, which is meeting on January 22, is
expected to minutely inspect every aspect of the existing policy and
come up with ways to tighten it to check misuse. The objective is to
plug every loophole which could lead to undue harassment of farmers and

The government should, however, refrain from putting caps on SEZs at
this stage. To be fair to the policy, it has managed to attract large
investments, which otherwise would not have come in such a short time.
An investment of a whopping Rs 11,900 crore has been made since February
last year creating 15, 812 jobs.

EGoM to take up SEZ land acquisition


NEW DELHI: The government will consider imposition of sector-wise
ceiling on special economic zones (SEZ) once 100 SEZs are notified,
commerce & industry minister Kamal Nath said on Friday.

As of now, the government has notified 63 SEZs. No new SEZ has been
approved since October and the last two meetings of the board of
approval (BoA) were cancelled due to growing protests over land
acquisition, especially in West Bengal. If the BoA had gone ahead with
its original schedule, the number of notified SEZs would have touched
100 by now.

Mr Kamal Nath said the empowered group of ministers (eGoM) on SEZs,
headed by external affairs minister Pranab Mukherjee, would look into
land acquisition issues at its meeting next week. Priority is being
given to land acquisition and rehabilitation of farmers in view of the
political sensitivity of the issue. Land acquisition is not an SEZ issue
as state governments acquire land for other projects too, the minister

The eGoM would consider sector-wise ceiling on SEZs once the total
number of notified SEZs touches 100, Mr Kamal Nath said while speaking
to the media at a seminar organised by CII here. The eGoM, in its
meeting in August, had considered imposing a ceiling of 150 on total
approvals but gave up the idea and planned to hold a review meeting
after 75 SEZs were notified or after five months, whichever happened

A separate proposal to restrict the number of SEZs in the IT sector was
also discussed since the segment formed the largest number. The
rehabilitation package proposed by the rural development ministry would
be the focus of the next eGoM meeting as the government is keen to put
in place an acceptable package.

Following strong political opposition and intervention from Congress
president Sonia Gandhi, the government has already put fresh SEZ
approvals on hold. Next week’s eGoM meeting is likely to chart a course
for going ahead with the process without affecting livelihood of farmers.

New SEZs norms may cost developers in case of delays

PTI[ SATURDAY, JANUARY 20, 2007 06:06:53 PM]

NEW DELHI: Government has planned major changes in the Special Economic
Zones (SEZ) rules that it will come down heavily on developers who do
not start work for operationalising their zones even after final
clearance of the Board of Approvals.

"We propose to make it mandatory on developers to complete all
formalities for notification of their zones within six months of getting
final approval, failing which their clearances will be cancelled,"
Commerce Secretary and Chairman of Board of Approvals G K Pillai said.

There are as many as 70-80 cases where the more than six months have
passed and the developers have not come for getting their projects
notified, he said during a stock-taking exercise on SEZs.

The today's interactive session with Export Promotion Council for EoU
and SEZs will provide inputs to the BoA for fine tuning of the rules.

The scope of changes in rules will also extend to the tax benefits that
co-developers of the SEZs and their contractors and sub-contractors
should get.

"In the proposed amendments even co-developers and contractors and
sub-contractors will be given the tax concessions," he said.

Apart from some of the bigger issues, the amendment to rules will
clarify lot of issues that have come up since the SEZ Act has become

When SEZ Act was set a single window clearance mechanism was envisaged
but it has not yet come into force.

Pillai said the Commerce Ministry was in touch with state governments to
amend their laws so that the single window clearance system could be
operationalised. Earlier inaugurating the interactive session, Pillai
said there was no need to amend the SEZ Act but certain concessions
would have to be made in SEZ rules.

"Some small issues have come up in implementation of the Act and some we
will change to suit requirements of everybody," he said.

Pillai said so far 63 SEZs have been notified and investments worth Rs
11,000 crore has been received since the SEZ Act was operationalised.

He said by 2009 more than Rs 60,000 crore investment would flow in to
SEZs and they could create nine lakh jobs.

Maruti's move to convert Manesar unit into SEZ may fall through



NEW DELHI: Automobile major, Maruti Udyog Ltd (MUL) proposal to convert
its car production facility being set up at Manesar, Haryana into a
Special Economic Zone (SEZ) may not come through owing to opposition
from both Finance and Commerce Ministries.

Sources divulged that MUL’s proposal came up for an intense debate at a
meeting of a Committee of Secretaries (COS) convened by Prime Minister’s
Principal Secretary T.K.A.Nair on last Wednesday.

Sources divulged that Commerce Secretary Gopal K Pillai is not in favour
of Maruti’s proposal to convert the Manesar production unit into an SEZ.
Instead, Udyog Bhavan officials have asked the MUL and its parent
company, Suzuki Motor Corporation (SMC) to identify an alternative site
in any of the multi-product SEZ to set up a production facility meant
for export markets.

For automobile manufacturing units, the minimum cover area prescribed
for creating an SEZ is 100 hectares.

T.K.A.Nair convened a meeting on the issue after MUL Managing Director
Jagdish Khattar made a representation. Khattar’s letter to PMO was a
follow up of issues raised by SMC Chairman O. Suzuki during his visit in
September last year.

From this facility, the Suzuki and its subsidiary, MUL propose to
export 200,000 cars beginning June 2008, it is learnt.

While opposing the MUL proposal to convert the Manesar facility into an
SEZ, Commerce Ministry has cited the SEZ Act of 2005 where such
conversion is not allowed as it defeats the very purpose of attracting
fresh investments, creating additional infrastructure and employment
through these zones.

Finance Minister P.Chidambaram is on record saying that conversion of
existing units or expansion of prevailing production bases into SEZs
would lead to revenue loss in a big way.

While seeking conversion of Manesar facility into an SEZ, the MUL
management has requested for allowing domestic sale of cars rolled out
from this facility without payment of any import duties.

MUL has taken the position that imposing import duty on cars from the
newly carved out SEZ would make their automobiles non-competitive in the
domestic market. Currently, import of new cars in finished form attract
over 100 percent customs levy.

Commerce Ministry has cited the section 30 of SEZ Act that any goods
sold in the domestic tariff area (DTA) will attract full customs duty
including the anti-dumping, countervailing and safeguard duties as
applicable under Customs Tariff Act of 1975.

However, MUL is its presentation before the PMO, has cited the Free
Trade Zone (FTZ) norms applicable in US where domestic sale was allowed
on payment of indirect taxes applicable to other local car manufacturers.

Both, Finance and Commerce Ministries are not inclined to allow the
domestic sale of cars from the Manesar unit on payment of customs and
excise duties as applicable to automobile manufacturers.

Their argument is that it will lead to differential taxation regime as
domestic car manufacturers also pay duties and taxes on inputs apart
from the final product.

Special zone called India

Saturday January 20 2007 07:30 IST
Ila Patnaik

The establishment of new Special Economic Zones faces another hurdle,
this time from unexpected quarters. It comes from the prime minister’s
suggestion that they be put on hold till a rehabilitation policy for
displaced people is formulated. The empowered Group of Ministers is
scheduled to meet on Monday in this regard. Reports also suggest that
the government is working on a proposal that only vacant land be
acquired for SEZs.

One of the reasons for the difficulties in the SEZ policy is said to be
the use of arable land. But is arable land a constraint? Reports suggest
that up to 0.2 million hectares have been sanctioned for over 200 SEZs.
India has a land area of 297 million hectares, out of which 162 million
hectares are arable. The land sanctioned for SEZs thus constitutes a
minuscule 0.12 per cent of India’s total arable land. Even if the
allocation of land to SEZs went up eight times, it would constitute a
mere 1 per cent of the country’s total arable land.

Claims about loss of India’s self-reliance in food production owing to
SEZs are nonsense. Yields in India are so low, that even minor
improvement in productivity would overwhelm the loss of 1 per cent of
land. For India to become a developed country, the area under
agriculture has to shrink; urban and industrial land development has to
take place; and about a 100 million workers have to move out from
agriculture into industry and services. This is the only way forward for
bringing prosperity to the rural population. Every developed country in
the world has undergone this process, and a clear-headed appreciation of
India’s path in the next 10 years is required. Urban development gives
rural landowners extremely good deals when their land is sold; the
government should be supporting voluntary transactions, instead of
preventing them.

What is true about SEZs is that the land where urban development makes
sense tends to be located near ports, rivers or lakes, and has a
pre-existing dense population. In India’s SEZ policy, the state has come
into the picture by playing the role of forcibly acquiring land. This is
done under the ‘eminent domain’ principle, but at non-transparent
prices. The sharp hike in land prices that naturally follows
consolidation and development often leaves the original owners of land
feeling cheated.

Going beyond land, the SEZ effort is afflicted by many deeper questions.
It was never clear that the policy was aimed at promoting exports or
FDI, as is the case with Chinese SEZs. A variety of tax concessions were
being given for the development of real estate. It is estimated that
about Rs 1.7 lakh crore in tax revenue is to be forgone. Revenue forgone
is no different from money spent by the government. Small enclaves of
development were to be created instead of spreading public resources
across all tax payers. Growth in exports is good if it reflects
improvements in productivity in the country. Here the growth in exports,
to whatever extent, was to come from a few artificially created pockets
in the country. The bribes that would be earned by politicians and the
profits that would be earned by developers were sources of discontent.
The finance ministry said it did not have enough custom officials to man
the boundaries and checkposts of SEZs which would be Free Trade Areas.
RBI opposed giving convertibility within SEZs. Finally, Sonia Gandhi
chipped in with her opposition to the use of arable land for SEZs.

One attractive benefit of doing SEZs could have been a suspension of
Indian labour law, just as trade barriers do not apply for SEZs. If SEZs
had changed labour law, then many of the infirmities of SEZs might still
have been worth living with, in order to create millions of jobs and
Chinese-style exports. But this key ingredient was blocked by trade unions.

The best strategy now appears to be to go back to the pre-Kamal Nath
path of strengthening the all-India situation on labour law, urban
governance, trade reforms and capital account convertibility, in a
framework of full compliance with tax laws. This appears to be a better
path than trying to build enclaves where politicians help their friends
obtain land and then taxes are exempted.

The SEZ policy debacle has had one positive contribution. It has put the
land market on the agenda for reform. One factor which attracted
developers and industrialists to SEZs (other than tax concessions) was
the role the government was going to play in solving the problems of
purchasing land. When small plots of land are owned by a large number of
farmers and it is not easy to buy a large contiguous plot of land, a few
holdouts can extract a king’s ransom. In addition, there are obsolete
laws which reduce flexibility of land use between farming and
non-agricultural applications. A clear land title is difficult to
obtain, unless land is purchased from the government. These frictions
pose genuine problems.

The lesson from the SEZ story so far is therefore that the government
should focus on developing good land markets. There are four factors of
production: land, labour, capital and enterprise. The worst state
induced distortions of a factor market are found with land. Better land
title systems need to be built, and the legal foundations of private
land ownership need to be strengthened. Developing well-functioning land
markets, removing government involvement in land use, acting as an
enlightened middleman who helps to consolidate holdings and auction land
to the highest bidder in transparent, publicly visible procedures —
these are the areas which require state involvement. Training programmes
ahead of time, facilitating schemes through which farmers are given the
option of buying shares in the enterprise of the buyer and pushing for
greater transparency and information in the plans of the developers,
would allow the state to strengthen the interests of the farmers while
facilitating industry to develop. The government’s focus should be on
solving these problems for 297 million hectares that are India, rather
than for merely 0.2 million sanctioned for SEZs.

The writer is senior fellow, National Institution of Public Finance and
Policy, New Delhi

SEZ plan turning into bad dream

Friday January 19 2007 00:00 IST
NEW DELHI: Converting a beautiful dream into a horrible nightmare within
a blink of an eye is perhaps no big task for Indian policy makers. And
that’s what has happened repeatedly with India Inc. in 2006 considering
the SEZ (special economic zones) saga for the year. For both big
corporate houses and India as a whole, what was looking like a race to
gain, now looks like a hoard to bear pain.

SEZ’s were supposed to give to the country areas, which would be
blossoming ground for exports and investments. But, with recent moves,
it seems all they could manage to do was adding fire to the political
and economic dual that is living within the country.

The one who is to be blamed fully for the failure is none other than
Kamal Nath, the minister for commerce. From the very first day that SEZ
Act, 2000 came into force, Kamal Nath has been an ardent supporter of
setting up SEZ’s in India. He overlooked all the logics and calculations
that were put in front of him.

But the mistake was, while it took China (whom Kamal Nath followed
blindly) 27 years to setup five SEZ’s, the government of Maharastra
alone approved more than two dozens SEZs, forget about the number across
the whole country. On top of it while the number is growing rapidly the
present setup has failed to support them. Lack of power and other
infrastructural loopholes, in more ways than one have made it difficult
for new SEZ’s to sustain.

It’s not only the system that is showing signs of failure, even the
bigger benefit that SEZ’s are supposed to give are also loosing track.
If one were to follow the calculations done by the finance ministry,
then India would loose Rs 100,000 crore till 2009-10 as tax losses
alone. This surely is big enough to have taken some of commerce
ministries time and attention, but sadly nothing happened.

A report by RBI suggested that the revenue loss for the government in
providing incentives may be justified only if SEZ units ensure forward
and backward linkages with the domestic economy; else these new zones
would increase nothing but regional imbalance. Even this could not
change Mr. Nath’s mind.

And now after around 237 SEZs are approved and there are 600 more in the
pipeline, the ministry has decided to come up with a proper
rehabilitation policy and study of land acquisition, which bound to put
on hold the fates of many entrepreneurs.

Commerce minister showing an act of fairness now stresses, "States must
have a fair and transparent policy in land acquisitions, as well as some
sense of equity". In such a chaotic situation everyone seems to be a
sufferer and the policy makers have once again been able to change many
a dreams from bad to worse.