Friday, April 27, 2007

Are SEZ curbs thwarted?


Does the notification on PCPIRs issued on April 4 by the ministry of
chemicals and fertilisers contradict the new stipulation in the SEZ
policy that state governments will not be allowed to acquire land on
behalf of the private developers? It would seem so, going by two
paragraphs in the notification.

It says: "State government would identify a suitable site, prepare the
proposal and seek approval... It will notify the PCPIR area under the
relevant act and acquire/assist on acquiring the land necessary for the
setting up of the infrastructure, processing and non-processing area.
The acquisition of land, if any, must be in accordance with law and must
provide rehabilitation as per laid down norms.

As far as possible, acquisition of agriculture land may be avoided." It
further says: "The required land within PCPIR will be made available to
the developer by state government through PCPIR management board by way
of a concession."

SEZs can be subsets in PCPIRs, envisaged to come up in 250 sq km, with
minimum 40% (100 sq km) processing area. As per the notification, PCPIR
could include "one or more SEZs, industrial parks, free trade and
warehousing zones, export-oriented units, etc. The benefits normally
ascribed to such titles will be available to those in PCPIRs also.
Otherwise PCPIR units don't qualify for any tax break other than Section
80 (1) (A) tax holiday for infrastructure.

Thanks to the decision of eGOM, virtually the developer—whether it is
the state or a private entity—will have to acquire the land on its own
to set up an SEZ. The state cannot use its legal authority to acquire
land for public purposes, if the same is transferred to the private
developer. Housing an SEZ in a PCPIR seems to allow the SEZ developer to
circumvent the policy restriction, unless the SEZ Act states that it
overrides the PCPIR notification.

The Centre will ensure external infrastructure linkages to PCPIR,
including rail, road (NH), ports, airports and telecom, in a timebound
manner. To the extent possible, the infrastructure will be created
through the PPP mode. Budgetary outlays and viability gap funding route
would be used for building the infrastructure.

States will accord the regions high quality power and water. It reckoned
that since these projects are to be backed by infrastructure funding of
$3 billion per region by the Centre, it will be superfluous giving them
tax sops. Sources said that the Cabinet had decided that the number of
PCPIRs could initially be capped at 5. Many state governments have
expressed willingness to set up PCPIRs. These include Gujarat (Dahej),
West Bengal, Andhra Pradesh (Vizag) and Karnataka (Mangalore). Tamil
Nadu, Maharashtra and Haryana may follow suit

TN moves to revive Nanguneri SEZ



CHENNAI: The Tamil Nadu government is seeking to revive the proposed SEZ
project at Nanguneri in Tirunelveli, the foundation stone for which was
laid six years ago. The state government, which has moved the Centre for
an early clearance by the commerce ministry, is keeping its fingers
crossed for a quick closure.

"We hope to get the approval by May 9 when the Board of Approval (BOA)
is scheduled to meet. The construction work would begin subsequently.
One by one various state proposals are being given due attention,"
sources close to the developments added.

One other major hurdle that appears to have been overcome is that
US-based INFAC group, the main promoters, have been able to rope in the
AMR group of Hyderabad as a new partner. Alongside, formalities to
attain the multi-product status has also now been completed, sources
told ET.

Conceived in 2001, this SEZ in a backward district was the pet project
of the former union commerce and industry minister, late Murasoli Maran.
The foundation stone for it was laid with much fanfare during the
previous DMK regime.

However, the project was put on the backburner during the subsequent
AIADMK regime. Political compulsions apart, the project hit a roadblock
when the US-based INFAC, the main promoter, was unable to achieve
financial closure. Subsequent efforts to bring in a Kolkata-based
promoter also fell through.

INFAC jointly promoted the SEZ along with the Tamil Nadu Industrial
Development Company (TIDCO) through a special purpose vehicle, Advanced
Technologies Manufacturing and Assembly (ATMAC).

The US group has managed to bring in the new partner after completing
the process of acquiring 400 acres of the 2,500 acre multi-product

"The master plan has been completed by the Jurong Town Corporation of
Singapore," the sources said, adding that an investment of over Rs 600
crore would be needed to create the infrastructure.

Noting that the surge of investments into Tamil Nadu has prompted the
government to revive the stalled SEZ project, sources said the SEZ,
about 500 km from Chennai, once operational, would have a dedicated
telecommunication infrastructure, including a fibre optic network,
digital switching and a satellite earth station.

The SEZ would house light engineering firms, precision engineering
companies, pharma majors and electronic hardware and chip design
manufacturers and is also expected to attract major hi-tech industries
and those promoting clean environment technology.

IT companies utilising SEZs well

PTI[ FRIDAY, APRIL 27, 2007 08:50:44 AM]

CHENNAI: IT companies are making maximum utilisation of Special Economic
Zones (SEZ) but were unable to employ local people, a top official of
the National Manufacturing Competitiveness Council said here today.

As much as 60 per cent of lands allotted for SEZs were being utilised by
IT companies, the council's chairman V Krishnamurthy, he said delivering
a lecture on `Inclusive Growth of the Indian Economy' on the 54th
Anniversary of the Triplicane Cultural Academy here.

"One of the aims of setting up SEZ in an area is to provide employment
opportunities for local people, which is hardly done by the IT
companies," he said.

Only manufacturing companies could do that, he added and called for
increased investment in manufacturing.

Ruing a lack of comprehensive investment in some of the `key industries'
like leather and textiles, Krishnamurthy called for FDI in the textile

Further, stating that there was a `mismatch of available resources and
the demand for skilled labour,' Krishnamurthy blamed the lack of enough
ITIs in the country.

The Council had suggested the Human Resources Development ministry to
set up more training institutes.

India required as many as 25 lakh skilled labourers a year, but only
around 8 lakh were available, he said.

Further, the country's ambition of reaching 14 per cent growth rate was
achievable, he said.

"However, it has to be sustained through the next decade," he added.

Wednesday, April 18, 2007

Law soon for rehabilitation before SEZ land acquisition

Monday April 16 2007 02:08 IST

NEW DELHI: Facing protests over land acquisition for setting up Special
Economic Zones (SEZs), the government is considering to enact a law
making it mandatory for industries to rehabilitate the displaced people
before developing projects.

Piloted by the Rural Development Ministry, the Resettlement and
Rehabilitation (R&R) Bill is currently being examined by the law
ministry, said sources from the two ministries.

"We have a two-pronged strategy. Besides enacting a new R&R Act, the
Land Acquisition Act too would be amended to give the new law an
overriding effect over the Land Acquisition Act and the Special Economic
Zone Act," said a Rural Development Ministry source.

Earlier this week, Rural Development Minister Raghuvansh Prasad Singh
had said his ministry's relief and rehabilitation policy would soon go
to the cabinet.

Singh indicated that compulsory land acquisition for industrial projects
including Special Economic Zones would not be allowed "at any cost" in
the policy. He said his ministry "would ensure that the interests of
farmers are protected".

Reliance hopes new SEZ guidelines are not final


NEW DELHI, APR 16: Days after the government limited the size of special
economic zones (SEZs) to 5,000 hectares, Reliance Industries has said
the revised rules may not be final.
"We will go to the government, we will place our ideas with them, and we
are sure that they will change their mind," RIL director Anand Jain, who
also heads Reliance's SEZ venture, said in an interview aired on Monday
by private news channel.

RIL, which is developing massive SEZ projects in Maharashtra and
Haryana, was the hardest hit after an empowered group of ministers
(eGoM) on April 5 decided to put a 5,000 hectares cap on the size of SEZs.

The size of both the Maha Mumbai SEZ and multi-product SEZ near Gurgaon
proposed by RIL exceeded the land limit. According to the channel, Jain
insisted that Reliance would not get around the revised rules to proceed
with its SEZ plans and said that he does not consider these rules as final.

"I am sure this is not final. There is much more to come. This is a
policy that is evolving. We have had an incident, Nandigram. This is an
instant reaction to this," he said.

While reacting to the government's decision to distance itself from
acquiring land for SEZs, he said: "The government cannot have it both
ways. They cannot insist on the SEZ being on contiguous land and then
refuse to get involved..."

When asked how RIL would acquire land in the face of protests by farmers
and activists, he told the channel that the compensation package to
farmers will be like a lottery.

Ambani turf war spills over to Maha SEZ

Posted online: Wednesday, April 18, 2007 at 0000 hours IST
NEW DELHI, APR 17:  The turf war between the Ambani brothers doesn’t seem to end. This time it’s about Mukesh Ambani-led Reliance Industries Ltd’s (RIL’s) plans to set up two gas-based power plants for the special economic zone (SEZ) in Maharashtra.
In strongly worded letters to the central and state governments, the Anil Ambani-controlled Reliance Energy Ltd (REL) has alleged that such a move by RIL amounts to breach of the non-competition agreement entered into between the brothers prior to the reorganisation of the Reliance group.

“The proposal of RIL to set up power facilities for the commercial units and residents of SEZs is in clear violation of the non-competition understandings and amounts to harming the interests of millions of shareholders of Anil D Ambani group. Similarly, supply of surplus power by RIL (after meeting its captive needs) to state-owned utilities was also not allowed under the non-competition agreement,” REL said in its letter to Maharashtra chief minister Vilasrao Deshmukh.

In a similar letter to A Raja, minister of environment & forests, REL said, “RIL may be or might have approached you for developing captive generation facilities. RIL’s intent to set up a power plant in excess of captive requirement is a clear breach of trust of the de-merger agreement.”

REL’s letter further said that such proposals, discussed by RIL’s chairman & managing director, Mukesh Ambani, go far beyond the scope of RIL’s business, as agreed to under the de-merger scheme of the Reliance group.
Sudarshan Rodriguez




Sudarshan Rodriguez,

Marine Conservation Analyst

Project Coordinator,

Post- Tsunami Environment Initiative


Flat 2B, Adithya Apartments,

38 Balakrishna Road,

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India open to reviewing land ceiling on SEZs: Nath

Posted online: Wednesday, April 18, 2007 at 0000 hours IST

BEIJING, APR 17: The government is open to changes in the 5,000 hectare
ceiling for special economic zones (SEZs) which was decided at a meeting
of an empowered group of ministers about two weeks back.
"We have a broad parameter. If there are any specific or area-specific
issues, which do not have any controversy, of course we will look at it
(the ceiling) in certain conditions," commerce minister Kamal Nath said

"This is not the Gita or the Bible. No?," Nath said when asked whether
the government would have a re-look into the land ceiling policy for
setting up the special economic zones.

Nath's remark comes a day after Reliance, whose two projects would be
impacted by the ceiling, said the government would rethink its stand.

"I am sure this is not a final no. There is much more to come... .. We
will go to the government, we will place our ideas with them, and we are
sure they will change their mind," Reliance's SEZ group head Anand Jain
told a TV channel.

The agreement to limit the size of special economic zones was the one of
the major factors leading to lifting the freeze on these zones that was
in place since January.

The limit was expected to put to rest controversy surrounding land
acquisitions for special economic zones.


SEZ to come up at Tiruchy

SEZ to come up at Tiruchy
Wednesday April 18 2007 11:12 IST
TIRUCHY: In a move expected to transform Tiruchy into a strategic
industrial hub, a proposal has been sent to the Centre for setting up a
special economic zone in Tiruchy, right at the site identified for the
IT Park at Navalpattu on the outskirts of the city.

The 125 acre SEZ would house the IT Park in 10 acres, according to the
proposal sent to the Centre by Electronics Corporation of India (ELCOT).
In fact, ELCOT has sought for four more SEZs, two to be set up at
Madurai and one each at Salem and Madurai, apart from Tiruchy.

While the SEZs at Madurai are proposed at Ilandaikulam on an area of 28
acres and at Vadapazhanji on 213 acres, the Salem SEZ would come up on
an area of 160 acres in Ammapettai and at Gangaikondan in Tirunelveli -
on 125 acres. The proposalsz were sent on April 5, said ELCOT MD
Umashankar and hoped that there would not be any problem in getting the
nod from the Centre.

As far as the IT Park in Tiruchy is concerned the work is progressing
smoothly, except for the fact that no big players have so far evinced
their interest to set up shops. Though they are convinced about the
infrastructure here, the talks are more oriented towards the cost they
have to incur for setting up their units in the IT park. Sources said a
dozen companies have decided to establish themselves at the park, while
negotiations are still on.

Tenders are likely to be called for drafting the master plan for the
park, elaborating on the roads, streetlights and water supply needed for
the park. Apart from the 136 acres already in possession of ELCOT,
acquisition of an additional 100 acres, sought by ELCOT for Phase II of
the project, would soon begin. The acquisition is in its preliminary
stage, said Collector Ashish Vachhani.

Friday, April 13, 2007

SEZ labour laws: TUs for talks with Centre

Posted online: Friday, April 13, 2007 at 0110 hours IST

KOLKATA, APR 12 : Central trade unions want to have a discussion with
the Centre to settle the contentious issue of creating separate labour
laws for the special economic zones (SEZs).
The central trade unions, which were opposed to two different sets of
labour laws earlier - one for the SEZs with less rights and regulations
and the other for non-SEZs with constitutionally guaranteed rights-have
now demanded for a national convention to arrive at a consensus.

The Centre of Indian Tarde Unions (CITU) recently said it would oppose
any move on the part of the central government to delegate the power to
the development commissioner of the SEZ to manage labour isuues.

Union labour minister Oscar Fernandes on Thursday said after a
convention on employment generation organised by the Federation of
Indian Chambers of Commerce & Industry here that the government has
decided not to act unilaterally. "We will talk to the state governments
and trade union bodies before taking any decision on labour laws in the
SEZs. Till then, all the existing laws will be in force in the SEZs."

All the central trade unions have opposed the move by the Centre to
dilute the exisiting labour laws.

The country's largest trade union body, Bharat Mazdoor Sabha (BMS),
which is close to the Bharatiya Janata Party's political understandings,
has said it would come up with a demand for fresh rounds of meeting on
the issue. Said Girish Awasti, presidernt of BMS, "Along with other
central trade unions, we will raise the demand for a convention during
the national trade union meet to be held from April 27-28."

Awasti said the BMS, having one crore members, was opposed to any
relaxation in labour laws.

G Sanjeeva Reddy, president of the Indian National Trade Union Congress,
the second largest trade union in the country, also favours fresh
discussions. "We will not allow dilution of working hours and the social
security system for workers inside the SEZs. There can't be two sets of
labour laws in the country."

Tuesday, April 10, 2007

DLF may go in for twin SEZs in tune with new laws

DLF may go in for twin SEZs in tune with new laws

PTI[ FRIDAY, APRIL 06, 2007 08:22:29 PM]

New Delhi: Faced with the new rule on special economic zone that limit
the maximum area to 5,000 hectares, India's largest real estate player
DLF may split its proposed mega zone in Haryana into two tax free
enclaves in the region.
"We have just started the process of acquiring the land. Now, there will
be one SEZ of 5,000 hectare but if we get more land, we may set up
another SEZ of 3,000 hectare in Gurgaon," a senior company official said.
DLF had proposed a multi-product SEZ in Gurgaon covering over 8,000
hectare. However, the Centre on Friday decided to fix a ceiling of 5,000
hectare for multi-product SEZs. Such zones earlier required a minimum of
1,000 hectare but there was no upper limit.
The Empowered Group of Ministers, which decided on new rules, did not
specify whether promoters would be allowed to build two SEZs in a
contiguous area.
DLF, which has already filed draft red herring prospectus for its
proposed IPO, would also rework its investment plan in the wake of SEZ
rules. The official said in case the company was allowed only one SEZ,
its planned investment would come down by at least Rs 4,000 crore.
Another real estate firm Omaxe, which planned an SEZ on over 6,000
hectare would also 'go back to the drawing board' to chalk out the new
But the company maintained that as of now it would go ahead with SEZ
plan even though the size has been curtailed. Incidentally, Omaxe also
is in process of launching an IPO to raise Rs 1,500 crore.
Both the realty firms may also inform market regulator SEBI about
changes in their SEZ plans.

SEZ export obligation to attract tighter vigilance



NEW DELHI: The introduction of export obligation for units operating
within SEZs equivalent to the purchases made by them from the domestic
tariff area (DTA) will call for more paperwork for units and stricter
vigilance on the part of the revenue department to ensure compliance.

Earlier, SEZ units were supposed to be only net foreign exchange
earners. The additional obligation, introduced by the empowered group of
ministers on SEZs last week, will now also require units which were
earlier not obligated to export, to compulsorily undertake exports and
maintain two balance sheets to account for their sales in the domestic
market and the international market.

A number of SEZs, especially those in the IT and IT-enabled services
sector like the Nokia SEZ in Sriperembudur, have no intentions to export
till date.

Going by the earlier rules, Nokia's production unit had no obligation to
export as it was not sourcing anything from the international market.
However, under the new rules, it will compulsorily have to export
products at least equivalent to the value of the inputs sourced by the
unit from the domestic market or the DTA. Speaking to ET, official
sources clarified that now all SEZ units will have to separately show
their sales in the domestic market and the international market.

The increased export obligation will also require the revenue department
to tighten vigilance. Since SEZ units are to get tax exemptions on the
profits made from exports and not from their sales in the DTA, there are
chances that units show a more robust balance sheet with regard to
exports and show a lean balance sheet for sales in DTA to claim larger

To prevent any misuse, transfer pricing (TP) provisions would come handy
here for the revenue department, officials said.

The principle ensures that prices in the transaction are equivalent to
what they would have been, had the parties involved in the transaction
not been related to each other.

The department is already strengthening its TP cell to deal with large
number of SEZs.

Interestingly, China has also made effective use of TP norms in a
comprehensive way in SEZs in the country

SEZs are like the Curate’s egg: Good in parts



A little over 30 years ago, there were 80 special economic zones (SEZs)
in 30 countries generating about $6 billion in exports and employing
about one million people. Today, there are more than 3,000 SEZs in 120
countries and they account for over $600 billion in exports and 50
million direct jobs.

By offering privileged terms, they attract investment and foreign
exchange, spur employment, and boost the development of improved
technologies and infrastructure. Despite their appeal, SEZs have been
criticised on the grounds of attracting investment only by offering
distortionary incentives rather than building underlying competitive

It is argued that these incentives create a fiscal burden on the
taxpayer and hurt environmental and labour standards. In the eyes of its
critics, the direct and indirect costs of SEZs do not benefit the rest
of the economy and, instead, lead to enclaves of prosperity.

To its proponents, however, SEZs are a potent means of ensuring greater
employment and prosperity. Provided care is taken to ensure active
linkage programmes and adequate social and environmental safeguards,
they argue that private sector involvement in SEZ development and
operation can go a long way to ensure the benefits of SEZs are
maximised. SEZs, they claim, must be seen in the context of an overall
strategy to promote private sector-led growth, rather than as a
substitute for a good investment climate.

What has been the global experience with SEZs? Are they useful in
promoting private investment-led economic growth? What measures can
governments take to ensure that SEZs benefit the rest of the economy
through linkages? Why are some SEZs more successful than others? Do zone
ownership and management structures play a key role? Do SEZs promote
liberalisation or just give the illusion of an improved investment climate?

In the light of the on-going furore over SEZs in India it might be worth
re-visiting the debate. Unfortunately, close to half a century after
SEZs were first envisaged as a short-cut to speedy growth, the jury is
still out on whether these enclaves of excellence are really the way to
go. That lacuna, however, is partly made up by a World Bank sponsored
on-line discussion on SEZs, moderated by James Crittle and Gokhan
Akinci, that summarises the position as far as the debate on SEZs is

Continued...1|2|3|Next >>

Forget size, dozens of IT SEZs go ahead with plans



NEW DELHI: Size does not seem to matter for the developers of IT SEZs.
Unperturbed on the brouhaha over size of multi-product SEZs, many
developers of IT SEZs are going ahead with their plans and at least two
dozens of them are likely to hit the street over the next 12-18 months.
And the early birds are looking at commanding a premium in the lease

One of the new ones to jump onto the bandwagon is Mumbai-based Royal
Palms Estates, which is setting up an IT/ITeS SEZ spread over 25 acres,
with projected development cost of around Rs 650 crore over the next
three years. While many IT SEZs are targeting large users — with minimum
leased space requirement of 50,000 square feet — Royal Palms plans to
devote substantial chunk of space to small users whose demand may
typically vary from 2,000 sq feet to 50,000 sq feet. "Not many are
targeting smaller users, who would not mind paying a premium to be part
of an SEZ, which is within city-limits," said Dilawar Nensey, joint
managing director, Royal Palms Estates.

Another IT SEZ coming up in Mumbai is the one being developed by
Hiranandani Builders at Powai. Sources in real estate market said IT
major TCS have already booked over 60% of the space in the Powai SEZ.

Analysts point out that larger users of office space generally prefer to
position themselves on the outskirts of cities, where rentals are much
lower, while smaller users tend to stay closer to city-centres.
Typically, large users are able to bargain harder for lower rentals,
while smaller ones end up paying premium for the space.

As per industry estimates of the 140-odd IT/ITeS SEZs approved by the
central government, at least 25-odd such SEZs should be up and running
by end-2008.

While the uncertainty over extension of the STPI scheme beyond 2009 may
give some SEZs edge in marketing themselves to new players entering the
space, existing players who currently operate under the scheme are
keeping their expansion plans flexible. "Many corporates, who are used
to plan their office space needs three years in advance, are now just
looking at their requirements for the next 18 to 24 months," points out
Ankur Srivastava, MD, DTZ India, a real estate consultancy firm.

State’s SEZ plans go for a six



MUMBAI: The new rules guiding the special economic zones (SEZ) may put a
question mark on six sanctioned projects in Maharashtra, home to the
largest number of SEZs.

The empowered group of ministers had on Thursday stopped state
governments from acquiring land for SEZs promoted by private players.
The rules are applicable to SEZs cleared after February 10, 2006.

This means states will not be able to fulfil the promise of ensuring
cost-effective land acquisition for the SEZs cleared after the
cut-off-date. The developers will now have to buy land directly at
market price without any support from state governments.

Of the 72 SEZs proposed in Maharashtra, government agencies are involved
in as many as 24. Of these, 18 may not face any hurdle since they were
cleared before the cut-off-date. "We don't know what will happen to the
remaining six," a top official from the industry ministry said. The SEZs
in question are promoted by Bharat Forge, in Khed near Pune (5,000
acres); Mahindra Gesco, near Pune (2,700 acres); Videocon, one in
Aurangabad (5,000 acres) and another in Pune (2,500 acres); Supreme
Petro, in Raigad(250 acres); and the Reliance Group, the Maha Mumbai SEZ
near Mumbai (35,000 acres).

The Maharashtra Industrial Development Corporation (MIDC) is a partner
in five of these projects except that of Reliance. "We have joint
venture agreements in place for these five SEZs. What will happen to
them in the wake of the eGoM order, we don't know. We will have to wait
for some clarity on the issue," an MIDC official said.

For Maha Mumbai SEZ, the state government had chipped in by invoking the
Land Acquisition Act 1894. "Henceforth, the company will have to go out
on its own to acquire land," a state official associated with the
exercise said.

Though the company has announced plans to buy land directly from
farmers, the state government's decision to impose Section 4 (1) of the
Act virtually froze the land for any other purpose. The Section 4(1)
arms state governments with the power to notify any land they want for
'public purpose'. Once imposed, the section is valid for 12 months.
After the Centre's direction to state governments to stay clear of land
acquisition, the validity of the section is uncertain.

When contacted, the spokesperson for Maha Mumbai SEZ refused to discuss
the issue. State government officials said first they have to get the
Centre's order. "By Tuesday, we expect to receive a copy of the order,"
said a government official.

Stricter obligations for SEZs on cards to boost exports



NEW DELHI: To ensure that the much-touted special economic zones (SEZ)
actually become vehicles for boosting exports, the revenue department is
pitching for a review of the net foreign exchange criterion to make it
more stringent.

There are 15 instances where supplies from SEZs to the domestic tariff
areas (DTA) are considered deemed foreign exchange earning under the
existing SEZ rules. The revenue department wants the list to be
shortened as it feels that SEZs should be undertaking actual exports to
meet the export obligation.

The commerce department, however, holds a contrary view. It feels there
is no problem with the existing classification and there was no need to
change it. "These are widely-accepted norms and the classification for
foreign exchange earning for SEZs is similar to that of EoUs," an
official said. The issue, however, is expected to be taken up at the
next EGoM meeting.

SEZ units are required to be not only net foreign exchange earners but
under the expected new guidelines, their exports would also have to be
more than whatever they source from the DTAs.

The revenue department is of the view that since the zones have been
given huge tax benefits, the emphasis should be on actual physical
exports being more than imports, an official said. The zones should not
rely on deemed exports to achieve their net forex earner status.

The official said the objective behind setting up the zones was to boost
exports from the country and garner a larger share of the world market,
and this could be done if the focus remains on physical exports. The
department wants pruning of certain deeming provisions that have been
spelled out in the rules.

Supplies from the SEZs to the DTA are considered as foreign exchange
earnings for 15 specified cases including goods sold under various duty
exemption schemes of the commerce department, viz, the export promotion
capital goods scheme and the advance licence scheme, supplies are made
for various government-recognised projects and supply of IT agreement
items under notified zero duty telecom and electronic items.

Govt lifts ban on SEZs but ruins big dreams


NEW DELHI: The government has overhauled its policy on special economic
zones (SEZs), making large, multi-product SEZs virtually impossible to

The empowered group of ministers (eGOM) headed by foreign minister
Pranab Mukherjee, which met in the political shadow of the Nandigram
violence, on Thursday lifted the freeze on approving new SEZs but
changed several parameters to make the policy more acceptable.

As per the new norms, the size of an SEZ cannot exceed 5,000 hectares
(12,500 acres). Earlier, there was only a lower limit of 1,000 hectares
for multi-product SEZs. Now, state governments can impose a lower
ceiling, if they want to. More importantly, state governments can no
longer acquire land for a special economic zone on behalf of private
developers; nor can state governments form joint ventures with private
developers if they do not already have land in possession to offer the
project. States can acquire land to develop SEZs on their own, provided
they stick to the new relief and rehabilitation package to be announced

Also, at least 50% of the total area in an SEZ has to be earmarked for
processing units. Earlier, the norm was 35% for multi-product SEZs and
50% for sector-specific SEZs. SEZs will also have tougher export
obligations to meet—instead of being merely net foreign exchange
earners, they will have to have export earnings at least equivalent to
their purchases from the domestic tariff area.

While the ceiling of 5,000 hectares on SEZs will presently affect the
plans of just a handful of SEZs, the biggest challenge for private
developers lies in acquiring large tracts of land meeting all contiguity
norms without government help. Developers of large projects were banking
on state governments, who have the power to take over land for
industrial projects, to acquire tricky bits of land.

Speaking to ET, senior commerce ministry officials said the Centre has
decided to give states the authority to cut down on the size of the SEZs
further in response to representations from a number of parties,
including the Left, on the need to fix lower limits. "If states deem
fit, they can even fix the ceiling at 1,000 hectares. The Centre doesn't
have any problems regarding that," an official said.

With the Nandigram fiasco resulting in the loss of several lives and
protests against forcible land acquisition gathering steam in
Maharashtra, the eGoM decision to debar states from acquiring land for
private players is clearly aimed at avoiding more violence.

BoA may resume SEZ clearances next month


NEW DELHI: The frustration of a number of late entrants joining the SEZ
bandwagon is expected to come to an end when the board of approvals
(BoA) for SEZs meets during the middle of next month. Projects in the
initial stages would find progress in their multi-stage clearance once
the BoA meets around May 15, officials said. The BoA has not been
meeting for quite some time since the eGoM on SEZs imposed a freeze on
all clearances.

Only 63 SEZs have been notified so far while nearly 230 are waiting in
the wings after formal clearances. These projects will get final
clearance only after the BoA resumes processing of approvals.

While real estate companies keen to develop mega SEZs would find the
going tough due to the cap of 5,000 hectares on land acquisition,
smaller companies which applied for SEZ projects at a later stage would
stand to benefit due to lifting of the freeze on approvals.

"In respect of pending applications for SEZs, these may be processed for
in-principle, formal approval, notifications subject to the condition
that the state governments would not undertake any compulsory
acquisition of land for such SEZs," said a statement from the commerce &
industry ministry. Earlier, it was expected that the BoA would meet this
month but resumption of clearance would begin next month in view of
recent developments, officials said.

Developers first obtain provisional clearances and get formal clearance
only after completing land acquisition. Finally, SEZs are notified only
when all formalities are completed by developers. Following a decision
by the eGoM, the commerce department would now verify adherence to land
acquisition norms before providing the green signal for final clearance.

Infy, Suzlon SEZs to get notified

Infy, Suzlon SEZs to get notified


NEW DELHI: With the empowered group of ministers (eGoM) headed by
external affairs minister Pranab Mukherjee lifting the freeze on SEZ
approvals, a number of projects, including Ascendas ITPL (Bangalore),
Brandix Textile City (Visakhapatnam) and Lotus Footwear
(Thiruvannamalai, TN), are expected to be put on the fast track.
Developers of these projects have been complaining about delays
following the freeze imposed by the eGoM and state governments and had
urged the Centre to clear these .

Among the 83 projects that would be notified following Thursday's
decision of the eGoM to lift the freeze include Ramky Pharma City SEZ
(Visakhapatnam), Kakinada SEZ (Kakinada), APIIC multi-product SEZ
(Visakhapatnam), Orient Craft Textiles SEZ (Gurgaon) and Infosys
Technology SEZs (Pune & Mysore). Notification in respect of the 83 cases
of formal approvals, documents for which have been submitted by the
developers, may be issued by the department of commerce soon.

However, the notifications would be issued only after due verification,
including issues concerning any dispute relating to land. The other
major projects awaiting notification include Wockhardt Pharma SEZ
(Aurangabad), Maharashtra Airport Development Corporation's
multi-product SEZ (Nagpur), Jindal Stainless Steel SEZ (Kalinga Nagar in
Orissa), Mahindra World City SEZ (Jaipur), SICOT Footwear SEZ
(Kancheepuram) and Suzlon Infrastructure at Coimbatore.

The governments of Tamil Nadu and Andhra Pradesh, in particular, have
been pushing for early lifting of the freeze on SEZ approvals. Some
other states, such as Orissa, which were not quick in getting project
clearances initially had argued that the freeze was not fair on them.

Reliance likely to break up Jhajjar SEZ into 5 chunks



GURGAON: Trust Reliance Industries (RIL) to roll with the punches. It
has already started discussions with the Haryana government over
modifications to the plans for its giant SEZ at Jhajjar, originally
proposed to sprawl over 25,000 acres. The need for modification has been
necessitated by the revision of SEZ norms by the empowered group of
ministers (eGoM). RIL is considering breaking up the giant SEZ into five
separate zones: one large multi-product SEZ and four smaller ones.

According to sources in the Haryana government, RIL has proposed it will
go ahead with land acquisition in the area. However, further acquisition
will only be aimed at generating contiguity in the 10,000-odd acres the
company has acquired. Sources say contiguity in the project could be
ensured by the acquisition of nearly 5,000 acres more. Then, the company
may use 12,500 acres for one multi-product SEZ, and spin off its
proposed container facility, food processing unit, power plant and
airport into separate projects.

When contacted, an RIL spokesperson declined to comment. Haryana State
Infrastructure & Industrial Development Corporation (HSIIDC) officials,
however, confirmed that efforts to find an alternative have been
initiated by both the parties. "Something has to be done. We have made
headway and there is general excitement in the state, with expectations
of major economic activities and subsequent creation of employment
opportunities. We will definitely go ahead with the project, obviously
adhering to the proposed policy regulations," a Haryana government
spokesperson told ET.

It is, however, not clear if RIL will apply for SEZ status and
concomitant tax exemptions for the airport project. As of now, food
processing units, 1,000 mw-plus power plants and container facilities
catering to the agri sector enjoy tax breaks. RIL had plans for a
captive airport in the SEZ, which it could now move out, though it is
not clear if it could avail the tax benefits.

Uncertainty surrounded the project after the eGoM on Thursday imposed a
cap of 12,500 acres for a single applicant and said the states will not
be involved in land acquisition for SEZs. Moreover, only those projects
will get a go-ahead that have contiguous land. Although RIL has acquired
large tracts of land, it has not been able to strike contiguity as the
area includes several patches that are still owned by local land owners.

As per RIL's original MoU with the Haryana government, the company was
to buy 17,500 acres directly from farmers, and the state was to give the
remaining 7,500 acres. Further, the state was to release its
contribution only to help the company achieve contiguity, that too after
the company had completed its share of land acquisition

Lankan co mulls $700 million in Nellore textile SEZ



NEW DELHI: The Sri Lanka-based premium inner-wear manufacturer MAS
Holdings has proposed investment of $700 million in a textile SEZ at
Nellore in Andhra Pradesh. The SEZ is to be spread over 7,000 acres. The
company has already purchased land directly from the owners and has
applied for a formal approval from the board of approval (BoA) for SEZs.

Speaking to ET, commerce & industry ministry officials said that the
proposal will be taken up by BoA next month and is likely to be cleared.
"Since the company has already purchased the required land, the recent
changes in the SEZ policy, restricting compulsory acquisition of land,
do not apply to this case," an official said.

MAS Holdings proposes to create 31,000 jobs within the SEZ and 40,000
jobs outside the SEZ. "It is expected that the company will be able to
complete all required formalities in the next few months and start
production in eighteen months," the official said.

With the empowered group of ministers (eGoM) on SEZs lifting the freeze
on fresh approvals in its meeting on Thursday, the BoA is now free to
examine all proposals. There are 162 proposals, which had been given
in-principle clearance, which will now be examined for formal approval.

About 15 proposals have got land and will not face any clearance
hurdles. There are about 350 cases in the pipeline yet to be examined by
the BoA. With the eGoM barring the government from acquiring land for
private developers, the land acquisition process in certain cases may
slow down.

However, officials say that if developers come out with a good offer,
are sensitive to the local needs and have an open and flexible approach,
problems can be resolved. "There are cases where developers have
consulted local people to identify the land which will cause least
disruption," the official said.

More land grief for SEZs



NEW DELHI/PUNE: Scores of private developers in various stages of
implementing their plans to set up special economic zones (SEZs) on land
acquired by state governments will have to either purchase land afresh
or abandon their plans. All SEZ proposals for which states acquired or
allotted land after February 10, 2006, when the SEZ Act was notified,
will have to be redone, according to official sources.

This follows Thursday's decision of the empowered group of ministers
(eGoM) to bar forceful acquisition of land for SEZs, even if these have
been already given in-principle approval by the board of approval (BoA).
Many developers were hoping to piggyback on the governments' ability to
acquire land forcefully.

The eGoM decision is that the developer—government or private—will
purchase the land on its own from willing sellers. A senior commerce
ministry official told ET that the new policy will apply to all 162
cases for which in-principle approval has been given, in addition to new
proposals. He added that the 234 SEZs that have received formal
approvals would not have a problem in receiving the final notification
as "the land was bought or acquired prior to the notification of the Act".

However, this assumption may be different from ground realities.
According to sources, in at least two dozen formally-approved
SEZs—including Reliance's proposed multi-product SEZ near Garhi Harsaru
in Gurgaon district—land acquisition took place after the SEZ Act was

Madhya Pradesh Minister backs SEZ

Tuesday April 10 2007 08:24 IST
MADURAI: Madhya Pradesh Minister for Commercial Tax Babulal Gaur has
said that Special Economic Zones (SEZs) will be beneficial for the state
as it will create employment opportunities for villagers.

Addressing a press conference here on Monday, Babulal, who had come to
study the functioning of industries in Tamil Nadu, said that the four
Special Economic Zones that were established in Madhya Pradesh had been
beneficial to the local villagers.

The facilities had generated as many as 6,000 jobs in the last two years
while 40,000 jobs were expected to be created this year, he added.

More NRIs are expected to invest, he said and added that the expected Rs
2 lakh crore investment would generate three lakh jobs by 2008.

Monday, April 09, 2007

MAS Holdings to invest $700 m in textile SEZ


NEW DELHI, APR 6 : Sri Lanka-based MAS Holdings would invest $700
million to set up a textile SEZ in the remote Chintavaram village in
Andhra Pradesh.
Sources said the company has already procured 700 acres in the area and
would be applying for the Board of Approval's nod soon. MAS Holdings has
also assured that in the next 18 months they would provide direct
employment to 31,000 people.

Pointing out that India currently uses only 21 out of the 101 tariff
lines in global textile trade, government sources said the entry of
foreign companies like MAS Holdings and Brandix in the apparel segment
is being encouraged to help India get into trading in the other 80
tariff lines.

"The spin-off effect from these textile multinationals setting up shop
here is that more Indians will learn to compete internationally. Many of
them would become entrepreneurs and enter into trading in the 80 tariff
lines where India does not have any presence," an official said.

Another Sri Lankan firm Brandix on Thursday got the clearance from the
empowered Group of Ministers for notification of their 404-hectare
apparel SEZ in Vishakhapatnam.

Brandix has already pumped in $100 million and employed 1,000 people.

However, DK Nair, secretary-general of the Confederation of Indian
Textile Industries, said the government should also help domestic
industries by eliminating or drastically cutting the import duty and
excise duty on man-made fibres and also by putting in place flexible
labour laws besides increasing the availability of power and reducing
its cost.

SEZs unfrozen, but cut to size

SEZs unfrozen, but cut to size


NEW DELHI, APR 5: The empowered group of ministers (eGoM) on Thursday
paved the way for the notification of 83 special economic zones (SEZs)
that were in limbo for the past 75 days mainly due to controversies over
land acquisitions. It also lifted the ban on fresh proposals for setting
up SEZs.
Government sources said the commerce & industry ministry could
immediately clear 54 SEZs and another 29 soon after. Significantly, the
Centre has asked states not to transfer land compulsorily acquired for
SEZs to private entities.

The eGoM also capped the maximum area for an SEZ at 5,000 hectares,
which states could reduce further if they wish. While no proposal over
5,000 hectares has been cleared so far, the limit will require Reliance
Industries (with plans to set up two 10,000-hectare SEZs in Jhajjar,
Haryana and in Mahamumbai), DLF (8,000 hectare in Gurgaon), Omaxe (6,070
hectare in Alwar) and Mahindras to cut their SEZs to size.

The other major decisions include fixing a uniform limit of 50% on
minimum processing area for all SEZs. Multi-product SEZs were hitherto
required to have a processing area of only 35%. This move will prevent
SEZs from being used purely as commercial real estate.

Big Thaw
• Commerce ministry could now clear 54 SEZs and another 29 later
• States asked not to transfer land acquired for SEZs to private entities
• SEZ area capped at 5,000 ha, which states could reduce further

Since states will now be restricted from transferring land to private
SEZ developers, the onus will be entirely on companies to procure land.
They will have to negotiate with farmers or landowners directly.

SEZ proposals where state agencies had acquired or proposed to acquire
land would not be cleared by the Centre unless a compensation package as
suggested by the national rehabilitation policy was awarded to displaced
farmers, the sources said. Proposals where states have joint ventures
with private entities would not be cleared, either.

Land acquisition main hurdle for SEZ: CM


MUMBAI, APR 3 : Maharashtra chief minister, Vilasrao Deshmukh, asserted
that land acquisition remained as the main hurdle in the establishment
of special economic zones (SEZ) in the state.
He termed the Nandigram incident as 'unfortunate' and said that farmers'
interests were to be protected by offering packages to farmers whose
land was to be acquired.

Deshmukh had already announced that the state government would not
acquire fertile land, but would acquire semi-fertile or arid land for SEZs.

He added that industries, particularly the IT sector, had potential to
solve the problem of unemployment. The state government would play a
role of facilitator. "We want to see the creation of more and more jobs,
so that the problem of unemployment is solved," he said. Hinjewadi in
Pune, which is being developed as a special economic zone by the MIDC,
has become a world class IT centre. Private IT parks are being promoted
in a big way in Maharashtra. The government has approved the setting-up
of 146 IT parks all over the state, Deshmukh said. He added that Nagpur
was being developed as Asia's Frankfurt.

Maharashtra's strength lay in the number of educational institutions, he
added. "The IT industry focuses only on turnover. It should touch the
lives of the people at the grassroot level and be a tool to remove the
curse of poverty," Deshmukh said.

SEZs to receive Rs 100k cr, says govt


NEW DELHI, APR 3: Special economic zones (SEZs) would bring in
investments worth Rs100,000 crore, including foreign direct investments
(FDI) of over Rs 25,000 crore by December, and provide direct employment
to 5 lakh people, the commerce ministry said in its annual report.
In the 63 SEZs notified so far, Rs.13,435 crore has already been
invested in less than one year and 18,457 have already received direct
employment, the ministry said.

The growth rate of merchandise exports at over 20% during the last 4
years is more than twice the current GDP growth, it said. The rising
competitiveness of sectors like engineering goods (auto parts) and high
commodity prices (petroleum and metals) have been the driving force for
high growth of exports, the ministry added.

Referring to the setting up of a Special Purpose Tea Fund (SPTF) under
the Tea Board, the ministry said the proposal is to cover an area of 2.1
lakh hectares for rejuvenation and replantation activities in 15 years.
On multilateral trade negotiations, the ministry said India has pursued
its interests across all areas under the Doha Work Programme. It
continued to work constructively with its partners, particularly the
G-20 and the G-33 in agriculture, to secure its development imperatives.

SEZ loans may cost less

PM asks for review of Reserve Bank's classification


NEW DELHI, APR 3: The Prime Minister has asked the empowered group of
ministers (eGoM) on special economic zones (SEZs) to decide if these
areas should be given infrastructure status, as opposed to the RBI
classification that treats them akin to commercial real estate.
Infrastructure status would make loans to SEZs cheaper.
According to government sources, the eGoM meeting, originally planned
for the second week of April, will now be held on April 5 following
pressure from investors. Other important issues on the agenda include
capping the maximum area of an SEZ at 10,000 hectares and raising the
processing area to 50% for all SEZs.

At present, there is no limit on the size of an SEZ. Further, the
minimum processing area for a multi-product SEZ is fixed at 35%, while
for multi-services and sector-specific SEZs, it is 50%.

The government has circulated the agenda note to SEZ developers and
other stakeholders for the April 5 eGoM meeting, the sources said. The
group would also take a final call on whether 84 SEZs free of legal
issues related to land acquisition be notified.

The RBI had last September increased the risk weightage on bank lending
to SEZs to 150%, and more than doubled the general provisioning
requirement to standard advances from 0.4% to 1%. Investors have
strenuously complained to the government that the move had increased
costs substantially.

The commerce ministry had opposed the RBI move, arguing that SEZs would
attract huge FDI, create more employment and help develop world-class

Land issues bog down Maharashtra SEZs’


MUMBAI, APR 3: The Maharashtra chief minister Vilasrao Deshmukh has
asserted that land acquisition has been the main problem in the
establishment of special economic zones (SEZ) in Maharashtra. He termed
the Nandigram incident as unfortunate and said that farmers interests
need to be protected by offering a package especially for those farmers
whose land is to be acquired.
Deshmukh had already announced that the state government would not
acquire fertile land but the acquisition of semi-fertile or arid land
would be done for the purpose of setting up of SEZs.

He said new industries particularly the IT sector has potential to solve
problem of unemployment. The state government would play a role of
facilitator. "We want to see creation of more and more jobs so that the
problem of unemployment is solved,"he said.

Hinjewadi in Pune, which is being developed as a Special Economic Zone
by the MIDC, has become a world class IT Centre. Private IT parks are
being promoted in a big way in Maharashtra. The government has approved
setting-up of 146 IT parks all over Maharashtra, Deshmukh said, adding
that Nagpur was being developed as Asia's Frankfurt.

Maharashtra's strength lies in the number of educational institutions it
has. Even in any remote corner of the state, one can find either a
medical or an engineering college, the Chief Minister said. "The current
focus of the IT industry is only on turnover. IT should touch the lives
of the people at the grassroots levels. It should be made into a tool to
remove the curse of poverty,"Deshmukh said.

Sunday, April 08, 2007

Thaw in SEZ freeze likely

171 developers with land free of legal problems could benefit from the move


NEW DELHI, MAR 2: The government is likely to allow developers of
Special Economic Zones (SEZ) with land free of controversy and legal
wrangles to go ahead with the development of their projects. The move is
significant, as it would give relief to171 SEZs, which were not notified
by the government despite receiving formal clearances from the Board of
The government decided to put the notification of SEZs on hold after
Prime Minister Manmohan Singh called for the formulation a national
rehabilitation policy before any fresh approvals were issued. So far, 63
SEZs have been notified, which have already brought in over Rs 13,500
crore in investment and created 18,000 jobs.

Officials told FE that defreezing of the notification on SEZs could take
place as early as next week. This would not violate the mandate of the
Empowered Group of Ministers, which is looking into various issues
relating to SEZs, including that of rehabilitation of those displaced by
such projects. Sources said the since the developers of these projects
already had clear title deeds for their land, the government could
consider issuing the notifications soon.

The issue of issuing notifications to SEZs with clear land titles is
likely to figure prominently in the Board of Trade meeting under the
chairmanship of Kumar Mangalam Birla, scheduled for Wednesday.

Land Locked
• Issue of notifying SEZs with land to figure in Board of Trade meeting
on Wednesday
• 63 notified SEZs have brought investments worth Rs 13,500 crore and
hired 18,000 people
• Haryana, Gujarat, Karnataka,
TN and Andhra asked the govt to lift moratorium on SEZs

Chief ministers of Haryana, Gujarat, Karnataka, Tamil Nadu and Andhra
Pradesh have been lobbying vigorously for the freeze on SEZs to be
lifted. Many of these chief ministers have even shot off letters to
members of the Empowered Group of Ministers seeking a lifting of the ban.

In addition, various domestic and foreign investors have also been
pressing the Centre to relax the moratorium on SEZs. While the Export
Promotion Council for EOUs & SEZs has appealed to the government to
remove the existing uncertainty, companies including Taiwanese footwear
group Feng Tay Enterprises and Sri Lankan textile company Brandix have
written to the commerce ministry as well.

Salim Group ready for shifting to alternative site for SEZ

Our Bureau

Proposed chemical hub may come up at Haldia

Project details
Dr Sen said the State Government would have to zero in on an alternative
site for the proposed SEZ before conveying the decision in this regard
to the Salim Group.
He said the Salim Group was keen to begin work on various infrastructure
projects that had been proposed.

Kolkata April 4 The Salim Group of Indonesia, which has proposed to
implement several projects in West Bengal, has agreed to shift the site
of a Special Economic Zone (SEZ) project that was earlier proposed to be
set up in Nandigram.

This was stated here today by Dr Sabyasachi Sen, West Bengal's
Industries Secretary, after a meeting with Mr Prasoon Mukherjee,
spokesperson of New Kolkata International Development, a special purpose
vehicle that has been formed to implement the Salim Group's projects in
West Bengal.

Mr Mukherjee discussed the progress of the various projects with the
Chief Minister, Mr Buddhadeb Bhattacherjee.

Following violent protests against land acquisition in Nandigram, the
West Bengal Government had announced a few days ago that the proposed
SEZ project would be shifted to a different site if the local people did
not want it to be set up at Nandigram. Nearby Haldia is being talked of
as a possible relocation site for the proposed SEZ/chemical hub.

Alternative site

Speaking to newspersons after his meeting with Mr Mukherjee, Dr Sen said
the State Government would have to zero in on an alternative site for
the proposed SEZ before conveying the decision in this regard to the
Salim Group. He said the Salim Group was keen to begin work on various
infrastructure projects that had been proposed. Work on these would
start as soon as possession of land was handed over to them.

Dr Sen said the agreement for the proposed SEZ with the Salim Group
envisages its implementation over a 15-year period from the date of
signing of the agreement. The agreement does not mention that the entire
land required would have to be handed over to the Salim Group at one go.
As such, handing over the required land in a staggered manner could not
be ruled out.

According to him, the State Government would ideally like to acquire
land for industrial purposes and ensure that private investors are
permitted use of the land as "lessees". However, the State Government
was open to the idea direct purchase of land by industry. "That is also
a valid option," he said.

CPI(M) wants ceiling on SEZs to be reviewed

Our Bureau

`The SEZ policy announced is totally inadequate'

The CPI (M) did not agree with State Governments not being involved in
acquisition of land, particularly for those of a larger size.

New Delhi April 6 The Communist Party of India (Marxist) said on Friday
that the Government should await the recommendations of the Standing
Committee on Commerce and re-examine the whole matter on special
economic zones (SEZs).

The Polit Bureau of the CPI (M) said that a multi-product SEZ should
have a minimum specified size of only 400 hectares (1,000 acres) and a
ceiling of 2,000 hectares (5,000 acres).

Pegs ceiling

The Empowered Group of Ministers (EGoM) on SEZs had on Friday decided to
peg the ceiling on multi-product SEZs at 5,000 hectares (12,500 acres).

It, however, did not disturb the existing minimum size of 1,000 hectares
(2,500 acres) for multi-product SEZs.

Stating that the changes in SEZ policy announced by the EGoM was totally
inadequate and fell far short of what was required, the CPI (M) Polit
Bureau noted that it has ignored the comprehensive suggestions made by
the Left parties.

"The UPA Government should realise that the political parties across the
board have come out against the present SEZ Act and rules. If the
Government proceeds with the SEZs in the present form, the matter will
have to be taken up in Parliament so that the demand for amendments to
SEZ Acts and rules can be dealt with there," a statement issued by CPI
(M) Polit Bureau said.

Iniquitous Tax

The CPI (M) did not agree with State Governments not being involved in
acquisition of land, particularly for those of a larger size.

"There has to be State intervention to ensure that if any land is being
bought, the farmers and others working on land get a fair price. In the
absence of any changes in the Land Acquisition Act and a rehabilitation
policy that can be legally enforceable, the licence being given to
corporates to buy land on a large scale will be harmful," the statement

The CPI (M) said that the EGoM has left the "exorbitant and unjustified"
tax concessions intact.

Nuziveedu Seeds will promote Rs 1,500 cr SEZ near Chennai

Our Bureau

Tidco joins in implementing the project 

The SEZ will be an environment friendly structure with water recycling, green power from windmills and an energy efficient building

Chennai April 6 Nuziveedu Seeds Ltd, a Secunderabad-based company, is to promote a Rs 1,500-crore special economic zone for IT, ITES and biotechnology companies near Chennai.

According to an official press release, Nuziveedu Seeds entered into an agreement with the Tamil Nadu Government to promote the project.

The agreement was signed in the presence of the Chief Minister, Mr M. Karunanidhi, here on Friday, between Mr M. Prabhakar Rao, Managing Director of Nuziveedu Seeds and Mr S. Ramasundaram, Chairman and Managing Director of Tamil Nadu Industrial Development Project.

A special purpose vehicle, Zillion Estates Ltd, promoted by Nuziveedu Seeds as the main promoter, and Tidco will implement the project. Tidco will also facilitate the clearances for the project.

Mr Rao told presspersons that the SEZ — Chennai Cyber City — would come up at Sholinganallur, on the IT Corridor. The company has acquired 66 acres of land, where it will construct the 46-lakh sq ft IT park, along with a residence area of 21-lakh sq ft and a hotel, and retail space of about 4-lakh sq ft.

The SEZ will be an environment friendly structure with water recycling, green power from windmills and an energy efficient building, he said.

International consultants Ernst & Young did the feasibility for the project. Assetz Property Services Pvt Ltd is to assist the promoters in planning through construction and marketing. The US-based HOK Planning Group are the designers for the project.

Nuziveedu Seeds has diversified interests, including in textiles, in which it has invested over Rs 1,000 crore, sugar and cogeneration, and IT parks development. It has a six-lakh sq ft IT park in Bangalore, and is setting up two SEZs in Hyderabad and one in Delhi.
Sudarshan Rodriguez




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Post- Tsunami Environment Initiative


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Govt lifts freeze on SEZs, caps size at 5,000 hectares

Our Bureau

Processing area increased to 50 per cent for all zones; 83 more SEZs

New norms
States free to fix lower ceiling on SEZ size
Govt plans comprehensive Land Acquisition Act
88 applications yet to be approved

Mr Kamal Nath

New Delhi April 5 The Government today lifted the freeze on special
economic zones (SEZs) while simultaneously tightening rules by
prescribing a ceiling on the size at 5,000 hectares for multi-product
SEZs and increasing the processing area from 35 per cent to 50 per cent
for both multi-product and sector-specific zones.

The Empowered Group of Ministers on SEZs, headed by the Union External
Affairs Minister, Mr Pranab Mukherjee, met today to arrive at the decision.

After a lull of two-and-a-half months, since the last meeting of the
Group froze SEZ approvals on January 22, today's decision has come as a
clear signal to developers and units in these zones that they could go
ahead with their business plans.

Fixing of the upper ceiling of 5,000 hectares and raising the processing
area uniformly would also allay any apprehensions about possible misuse
of land for purposes other than the prime one of setting up
manufacturing activities, generating exports and creating dedicated
infrastructure amenities within these enclaves.

With the SEZ issue turning into a political hot potato, the Government
has also given States the freedom to fix a lower ceiling on the size of
the SEZ.

It has also been said that there would not be any compulsory acquisition
of land for SEZs.

The Commerce and Industry Minister, Mr Kamal Nath, told newspersons that
the meeting also gave nod to notification for 83 applications that were
formally approved.

This takes the total number of notified SEZs from 63 to 146.

This leaves 88 cases to be notified out of 234 approved by the Board of
Approvals so far.

The Minister clarified that the decisions taken today would be
applicable to all SEZs, "including those which have already been notified."

On pending applications for SEZs, he said that they may be processed for
in-principle, formal approval and notifications subject to the proviso
that the State Governments will not undertake any compulsory acquisition
of land for such SEZs.

He also said that the Ministry of Rural Development would formulate a
comprehensive Land Acquisition Act.

A broader resettlement and rehabilitation policy would be worked out to
ensure livelihood from the project to at least one person from each
displaced family, he added.

Later, the Commerce Secretary, Mr G.K. Pillai, told newspersons that out
of the 83 applications of formal approvals that would be notified now,
54 have been cleared by the Law Ministry; the others are in the process
of getting notified.

The major SEZs whose notifications are pending include Brandix Textiles
City at Visakhapatnam, Kakinada SEZ at Kakinada, Infosys SEZ at Pune,
Ascendas's ITPL SEZ at Bangalore, Jindal Stainless Steel SEZ at Kalinga
Nagar (Orissa), Lotus Footwear SEZ at Cheyyar, Suzlon Infrastructure SEZ
at Coimbatore and Wockhardt Pharma SEZ at Aurangabad.

Officials said that once all the 234 formally approved SEZs become
operational, investment would be of the order of Rs 3 lakh crore and
four million jobs would be generated.

They also said that exports projected by all notified SEZs numbering 82
so far (19 old plus 63 new) in 2007-08 would be Rs 67,300 crore.

`No' to SEZ

Paul Noronha

ANOTHER HURDLE: Farmers and tribals protesting in Mumbai on Thursday
against land acquisition by the Maharashtra Government for Special
Economic Zones in Raigad district, which will be spread over 10,000
hectares, involving a cost of Rs 30,000 crore.

SEZs require integration with social infrastructure: Marg Constructions

Vidya Bala

Company plans 2 special economic zones near Chennai

The company has set up wholly owned subsidiaries for each of its
business verticals which includes integrated commercial development,
satellite city and serviced apartments.

Chennai April 5 Special economic zone (SEZ) is all about creating a
sustainable city; being a real estate player does not automatically
qualify one to build SEZs, says Mr G.R.K. Reddy, Chairman and Managing
Director, Marg Constructions Ltd.

The Chennai-based company, listed on the BSE, has plans to develop two
special economic zones near Chennai, one a combination of light
engineering and auto ancillaries and the other multiservices.

Mr Reddy told Business Line that SEZs required an understanding of the
area's social profile including mindset of the locals and their skill
sets. This knowledge is essential to understand which industry/sector
would suit that economic zone. "It is not about merely activating a
large economic zone but about integrating it with the social
infrastructure," he said. He also added that economic zones must be
identified and built amidst a cluster of villages and not in the
peripherals of cities. Such a cluster would eventually develop into a
city thus bridging the rural-urban divide.

On the SEZ controversy, he said that there may have been a disconnect
somewhere in the process and hopes that it would disappear once left to
market realities. "The Government has taken an initiative to buy the
land and give it to developers. If that process does not work, I think
the entrepreneurs are capable of procuring land."

The company itself acquired over 600 acres of land for Marg's SEZs.

He was confident that no landlord would want to retain land that does
not fetch any income.

Land banks

On the issue of real estate players sitting on huge land banks, he said
that land banks derived true value only from the projects they carry. Mr
Reddy claims that all the land that the company owns was bought after
zeroing in on projects.

"Every land purchased should have a project earmarked. Buying land
without a planned project is like building a bridge and then looking for
water," he said.

Operating through SPVs

Marg Constructions also has malls and township development under its
portfolio. All the projects are located on the Old Mahabalipuram Road.

The company has set up wholly owned subsidiaries for each of its
business verticals which includes integrated commercial development,
satellite city and serviced apartments. Mr Reddy said that such SPVs
would provide flexibility and accountability in terms of financing and
also enable entry of strategic investors or divest stake when real
estate investment trust or funds are launched.

Thursday, April 05, 2007

Industry chambers welcome GoM decision on SEZs

PTI[ THURSDAY, APRIL 05, 2007 06:58:03 PM]

NEW DELHI: Industry chambers today welcomed the Centre's decision to
lift the freeze on special economic zones, saying it clears the
uncertainty surrounding the SEZ policy.
"The decision will clear uncertainties and give a clear signal that SEZs
are here to stay," FICCI said in a statement.
The clearance of the proposals to set up SEZs with a limit on
multi-product zones and the discretion to the states to lower the size
below this limit would give flexibility in establishing such zones, it
Echoing similar sentiments, CII said the decision would put an end to
compulsory land acquisition by state governments and limiting the size
of SEZs would end the ambiguity about the future of SEZs.
"The state industrial development corporations may now use land already
earmarked for industrial purposes for creation of these SEZs," a CII
statement said.
The decision to fix a ceiling of 5,000 hectares of land for SEZ was a
praiseworthy step that would settle all the controversies on SEZs,
Assocham said.
"Clearing of 83 proposals will accelerate economic activities for
increased production and exports," Assocham President Venugopal N Dhoot

SEZs cleared: Feed the globe with Indian goods



NEW DELHI: At last there is some movement on the contentious special
economic zones (SEZs). But, all outstanding issues have been swept
beneath the carpet while de-freezing the 83 zones.

Promoters of these zones where land acquisition has been completed may
go ahead with setting up the SEZs. These zones are billed as the major
economic expansion show pieces of UPA Government to feed the
international markets with both goods and services from India.

But, several questions remain unanswered. Lifting the ban on SEZs should
have been done in sync with finalization of rehabilitation policy for
farmers and rural families impacted due to land acquisition.

Empowered Group of Ministers (EGoM) headed by External Affairs Minister
Pranab Mukherjee has made a meek attempt towards fine-tuning the SEZ
policy especially after bloody pitched battles that were fought in the
hinterlands of West Bengal and Orissa.

For instance, the ceiling for land area has been fixed at 5000 hectares.
This means larger zones proposed by companies like Reliance Industries
Ltd may have to be clipped. It has also been made mandatory that 50
percent of the area under SEZs must be utilized as 'processing area'. In
effect, stringent land utilization norms have been stipulated to negate
the charge that most of these zones have become major real estate
ventures while actually putting minimum land to create additional
industrial capacities for multiple products.

State Governments role in land acquisition has been minimized.
Especially with the Left allies in West Bengal getting the flak for
Nandigram massacre, the UPA Government seems to have made life easier
for the state satraps. But, it may not be a wise move to leave the
farmers to negotiate with the corporates and export community on the
land price.

An institutional mechanism may have to be put in place to ensure that
farmers are paid adequate price on the land sold to developers of SEZs.
One model that has quietly worked well and worth considering was in
Gujarat where instead of ownership only land lease was transferred to SEZs.

UPA Government is yet to take on board the various models for
rehabilitating the farmers and providing them with adequate
compensation. Proposals range from making farmers cooperatives and
associations' equity partners in the SEZs (in lieu of the land) to
providing jobs and reserving ancillary units for the rural families.
They are yet to pass muster of the powers that be.

Noted agriculture economist Dr M.S.Swaminathan's idea of setting up
Special Agri-economic Zones (SAZs) to boost farm based industry and
related infrastructure to boost its contribution to GDP and exports

Finance Minister Palaniappan Chidambaram's concerns on revenue angle may
also have to be taken on board by the UPA Government.

Nevertheless, it is movement forward.

SEZs freeze lifted, but cut to size

PTI[ THURSDAY, APRIL 05, 2007 03:50:05 PM]

New Delhi : Yielding to backlash from various quarters, the Centre on
Thursday decided to put an end to compulsory land acquisition by the
state governments for Special Economic Zones and limited the size of
SEZs to 5,000 hectare.

The Empowered Group of Ministers (EGOM) of SEZ, which met here, also
cleared 83 SEZs with no dispute and increased the processing area of the
SEZs to 50 per cent of the land size.

"The decision will be applicable to all SEZs including those which have
already been notified," Commerce and Industry Minister Kamal Nath told
reporters after the meeting.

The move follows opposition to the SEZ policy from various political
parties including the Left and the massive protests by farmers against
acquisition of farm land.

According to the decisions taken on Thursday, compulsory acquisition of
land for SEZs by the states under the Land Acquisition Act would not be
allowed, leaving it to the developers to directly purchase land from

Further, the states would be empowered to reduce the size of SEZs below
the 5,000 hectare limit set by the Centre.

Nath said under the new Relief and Rehabilitation Policy, which would be
finalised soon, at least one member of the displaced family would have
to be employed in the project. This would be in addition to the
compensation paid to farmers.

With the freeze lifted, the government would approve all pending
applications where there is no land dispute.

Of the 234 SEZs with formal approvals, 63 have already been notified,
while 83 more were today cleared for notification. The Board of
Approvals will now take up 162 SEZs with in-principle approval and 140
pending applications.

The decision on limiting the size would hurt plans of companies such as
Reliance Industries which is setting up mega SEZs like Maha Mumbai and
one near Gurgaon.

eGoM may clear 60 SEZ proposals at today’s meet


NEW DELHI: The empowered group of ministers (eGoM) on SEZs will meet on
Thursday to put an end to the uncertainty surrounding the fate of the
SEZ policy. The eGoM, headed by foreign minister Pranab Mukherjee, is
likely to give a go-ahead to about 60 proposals cleared by the law
ministry that are waiting for notification. It is also expected to put a
ceiling on the size of SEZs and place sectoral caps.

In its last meeting on January 22, the eGoM had put a freeze on fresh
approvals and notification of SEZs. While the move followed violent
protests in different parts of the country over forcible land
acquisition by states, even proposals which had land and had been
formally approved by the board of approval for SEZs were put on hold.

The eGoM is expected to lift the freeze on about 60 SEZ proposals which
have been cleared by the law ministry. Twenty more proposals, which have
cleared all formalities after obtaining land including getting a map, a
no-encumbrance certificate from states and an all-clear certificate from
the development commissioners, might also be given the green light,
sources said.Sources said a decision on lifting the freeze on fresh
approvals will be taken after the new rehabilitation package is put in

In order to prevent situations like the Nandigram flare-up, the eGoM may
fix a ceiling between 1,000 and 1,500 hectares on all SEZs. The minimum
prescribed area of 1,000 hectares for multi-product SEZs may be brought
down to 400 hectares. The move, if implemented, will affect a number of
planned projects including Posco's steel SEZ in Orissa and Reliance
Group's Maha-Mumbai SEZ in Maharashtra.

The eGoM will also consider placing sectoral caps on SEZs. Sources said
a cap was likely to be placed on IT SEZs mushrooming all over the
country. A decision on whether the processing area of SEZs is to be
increased will also be taken by the eGoM.

According to officials, the eGoM may also decide to do away with all
in-principle clearances and rule that only developers with land should
apply for a formal approval for building SEZs.

Nath hardsells relief for suppliers to SEZ



NEW DELHI: Services supplied to special economic zones outside the zone
may be exempted from service tax. Making a strong pitch for the move,
the commerce ministry has asked the revenue department to provide the
exemption. A decision on the proposal is expected at a meeting on April 16.

The commerce ministry feels services supplied to a SEZ developer or unit
to carry out authorised operations in a special economic zone were
tax-exempt and the provision does not state that the operations had to
be carried out within the SEZ.

It has now taken up the issue with the revenue department as its service
tax wing was limiting the exemption. Service tax officials were limiting
the waiver as an earlier circular had provided service tax exemption for
consumption of a service within the zone.

Since the provisions of the SEZ Act do not specify if the service has to
be consumed within a SEZ, the revenue department cannot impose tax on
services consumed outside the zone for carrying out the business of the
zone, a commerce ministry official told ET.
Ministry officials will now hold a meeting with their counterparts in
the revenue department to resolve the issue.

The SEZ Act became operational from February 10, 2006. Section 26 of the
Act gives details of the exemptions and concessions available to SEZ
developers and entrepreneurs.

SEZ developers & units and the export promotion council for
export-oriented units and SEZs has taken up the matter on many occasions
with officials from both the departments. But with tax officials raising
demands on them, it had created an air of uncertainty.