Tuesday, July 10, 2007

New law to rehabilitate SEZ

New law to rehabilitate SEZ

PTI[ SUNDAY, JULY 08, 2007 02:25:48 PM]

NEW DELHI: The new rehabilitation law may make it binding on promoters
to develop infrastructure such as roads in the 20-kilometre periphery of
a special economic zone, besides providing facilities like health,
education and housing to the people displaced by the project.
"The responsibility of the people acquiring land will not be limited
within the SEZ in which they operate. They will be responsible to share
the development responsibility along with the state government within a
periphery of 20 km of an SEZ," a high-level government official said.
The National Rehabilitation Policy, which will be converted into a law,
could also require SEZ developers to share a larger responsibility along
with the state government.
The draft of the Rehabilitation Bill, being prepared by the Rural
Development Ministry, provides for strong punitive action against those
failing to fulfil the responsibility towards those displaced and the
inhabitants in nearby areas.
As per the proposed law, state governments would be asked to set up an
oversight mechanism to ensure that SEZ developers meet their obligations.
Further, unlike the present arrangement, "quite a large part of the
compensation will have to be paid well before the displacement itself",
the official said.
The Rural Development Ministry is also proposing 'Land for Land Policy'
where alternate land should be provided. In case of larger displacement,
developers would be asked to set up a separate colony for the affected
people with facilities like education, health and housing.
The government has so far approved more than 500 SEZs, including formal
and in-principle, but has been facing stiff opposition on the matter,
particularly after violent protests at Nandigram in West Bengal and
other places.


SEZ approval validity to be extended on land buy delays


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

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

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

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

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

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

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

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

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





Sudarshan Rodriguez,

Senior Research Associate,

Ashoka Trust for Research in Ecology

and the Environment (ATREE)



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Centre urged to ease IT SEZ norms

Posted online: Tuesday, July 10, 2007 at 0000 hours IST

NEW DELHI, JUL 9 : Karnataka and Maharashtra have asked the Centre to
relax rules regarding clearance of IT/ITeS special economic zones (SEZs).
The two states house many big IT firms but have a ban on purchase of
agricultural land by non-agriculturists,

Several developers in these two states want the Centre to allow them to
go for in-principle approval initially, so that they can try to get
landuse changed from agricultural to industrial and then purchase them
for SEZ projects.

Non-agriculturists are allowed to purchase industrial land in these
states for purposes like SEZ development.

The Centre had notified in August last year that since the minimum
required area for an IT/ITeS SEZ was only a small land parcel of 10
hectares, developers should apply directly for formal approval after
acquiring the required land and not for in-principal nod without the
land. Currently, the Centre grants in-principal nod to SEZs with a huge
minimum land requirement (sector-specific SEZs with a minimum land
requirement of 100 hectares and multi-product SEZs with a minimum land
requirement of 1,000 hectares).

Saturday, July 07, 2007

Quest plans 300-acre aerospace SEZ in Belgaum


TNN[ WEDNESDAY, JULY 04, 2007 01:40:53 AM]

BANGALORE: Engineering services major Quest is collaborating with
business partners to establish a 300-acre special economic zone (SEZ) in
Belgaum, Karnataka, to build an ecosystem of aerospace supply chain.

The SEZ-which has been granted in-principle clearance by the Board of
Approvals — will be housing suppliers in a single area and carry out
precision machining. "The SEZ is expected to employ 10,000 people. Talks
are on with a handful of potential domestic companies and MNCs to have
them set up units at the SEZ," says Quest Global CEO Ajit Prabhu.

Quest's present facility in Bangalore, set up in collaboration with
Canadian major Magellan, will also move into the SEZ as a 2,00,000 sq ft
plant. The facility marked Quest's move into manufacturing from being an
end-to-end engineering solutions company.

Quest, which is focused on the aviation sector, felt the "the need for a
dedicated aerospace engineering SEZ, following the huge growth in
engineering services offshoring from India as well as the offset clause
for aircraft firms supplying to Indian carriers, which needs to source a
certain part of their supplies from India," explains Mr Prabhu.

The growth of engineering services outsourcing from India is
well-documented. According to latest industry figures released by
Nasscom, global spending on engineering services was $750 billion in
2004, with aerospace accounting for 8% and could rise to $1.1 trillion
by 2020.

The total offshore engineering spend is expected to grow to $150-225
billion by 2020 and India, with its talent pool and experience in
engineering services, could pick up 25% of that. Prabhu says that he
believes that there is an opportunity of close to $1 billion a year of
exports to be achieved by 2012.

The offset clause for aircraft manufacturers is also expected to give a
big fillip to aerospace-linked manufacturing. India has said it plans to
buy 126 fighter jets, valued at close to $10 billion. On the other hand,
Airbus expects Indian firms to place orders for 1,100 passenger and
freighter aircraft valued at about $105 billion over the next 20 years.
"With the current offset clause pegged at 30% of the purchase value and
looking at the buying estimates, at least $3 billion worth of business
is expected in the next 10 years," says Mr Prabhu.

Quest, which has been growing at 40% year-on-year, is the only
engineering services company that works with the top three global
aero-engine makers – GE, Rolls Royce and Pratt & Whitney. Very recently,
the company had announced that it has received Airbus design approval
and AS9100 certification. This will enable QuEST to work on upcoming
Airbus programs like the A350 in the areas of engineering design,
documentation and manufacturing engineering.

"A significant amount of defence offset business and some of the
commercial offset is expected to be routed through HAL, which in turn
could sub-contract it to Indian private players," Mr Prabhu says.


SIR SEZ new success shortcut for small IT cos


TNN[ WEDNESDAY, JULY 04, 2007 02:14:25 AM]

NEW DELHI: IT special economic zones (SEZ) may find a new anchor. The
government is considering setting up special investment regions (SIR)
where the IT SEZs could be housed to enable small and medium IT
companies avail benefits from both the schemes. Under the SIR scheme,
the government would provide basic infrastructure such as roads and
power while the SEZ scheme would provide for tax benefits.

While large companies such as Wipro, HCL and Satyam have proposed to set
up SEZ projects, the government's focus is now on the small and medium
sectors. As an incentive to the sector, infrastructure facilities would
be provided by the Centre and the concerned states. The companies would
also be eligible under section 80 1(A) for tax holiday for
infrastructure projects.

"Given that most of the production of the IT companies would be
exported, the SEZ advantage to the companies would be huge," a source
close to the development said. The SIRs would also encourage private
investment in urban infrastructure by way of assured market and
complement the concessions such as viability gap funding offered under
the public-private partnership (PPP) policy.

The reason why the government is keen to make the SEZ scheme co-terminus
with the SIR scheme is to prevent a trade-off between the advantages
from both and to ensure the success of the SIR scheme. Already,
2,586-hectare area has been notified for IT SEZs.
"In the absence of an integrated scheme, the companies will have to
choose between quality infrastructure and tax benefits. Although the
latter may be more lucrative from the export angle, smaller companies
may lose out on infrastructure advantages," the source said.

As far as the integration with the software technology parks is
concerned, the source confirmed that if the software technology parks of
India (STPI) scheme is extended beyond 2009, then an STP in an SIR can
avail benefits under both STPI and SIR schemes.

According to the proposed SIR policy, the Centre would provide external
physical infrastructure linkages such as national highways, railways
including mass rapid transport systems, airports and state-of-the art
telecom network.

The states would identify the site and make available local
infrastructure such as good quality power, bulk water supply, smaller
roads, sewage, effluent treatment plants etc, as well as facilities for
health and education and other social infrastructure.


Essar Hazira SEZ case before Law Ministry

PTI[ FRIDAY, JULY 06, 2007 02:25:45 PM]

NEW DELHI: The Law Ministry, examining the report of the Development
Commissioner, will decide the fate of Essar's SEZ in Hazira where
alleged flouting of rules was detected.

"The report of Development Commissioner was sent to the Revenue
Department, which referred it to the Law Ministry to decide whether the
Essar already had a unit there which was converted in to an SEZ against
the rules," an official said.

Under rules, a developer has to file an affidavit stating that the land
is vacant and no industrial activity exists at the time of application
for an SEZ.

Essar, however, has so far maintained that it had invested only Rs 60
crore for the development of the site before making an application for
Rs 1000 crore steel SEZ. This money was spent on site development and no
industrial activity had started.

Officials said since it was difficult to clearly establish whether the
activity, which Essar said was related only to the development of the
area, could be categorised as an industrial exercise. "It is not a cut
and dry case and requires interpretation of the Act... that is what we
need Law Ministry opinion for," they said.

It was alleged that Essar had converted its existing facility into an
SEZ, which is not allowed under the Act.


Rehab policy, fertile land security may hold up SEZ notifications

TNN[ SATURDAY, JULY 07, 2007 04:17:27 AM]

NEW DELHI: The policy on special economic zones (SEZ) may have to face
another test. The parliamentary standing committee on commerce has
recommended a freeze on all new notifications and clearances till SEZ
rules and Act are amended to protect fertile agricultural land and
safeguard the interest of farmers and other stake holders.

The committee has suggested a ceiling of 2,000 hectares for
multi-product SEZs built on land that includes cultivable paths. The
present ceiling of 5,000 hectares has been recommended only for
multi-product SEZs built on wasteland.

Proposing a ban on use of irrigated double-crop or multi-crop land for
setting up SEZs, the panel said normally only waste and barren lands
should be used. If unavoidable, the committee said that only
single-crop, rain-fed land should be used up to an extent of 20% of
total area for multi-product SEZs and 40% of total area for others.

While the recommendations of the committee are not binding on the
government, the commerce ministry has to give a point-by-point reply to
all questions raised in the report within three months. The report,
which will be submitted in Parliament, may also be debated there and
this may mount pressure on the government for further tightening of SEZ

Replying to a question on whether the recommended freeze on new SEZs
should be in place for the entire period of time the amendments are
debated by the government, committee chairman Murli Manohar Joshi said:
"Heavens will not fall if there is a delay of few months."

It may be recalled that a 10-week freeze was imposed on notifications
and clearances of new SEZs on January 22 following widespread resistance
to forcible land acquisition by the government. The freeze was lifted on
April 6 when the government decided to impose a 5,000 hectares ceiling
on multi-product SEZs and increase processing area for all SEZs to 50%
of total area.

The standing committee has also recommended ceilings for smaller SEZs.
For multi-services and sector-specific SEZs, the ceiling recommended is
200 hectares for land including cultivable portions and 500 hectares for
wasteland. For IT, gems & jewellery and biotech SEZs, the limit is 20
hectares for cultivable land and 50 hectares for wasteland.

The land acquisition Act, 1894, should be replaced by a modern
legislation which is relevant to the needs of the time, the committee
said. Unless the public purpose for which the land is being acquired
involves an over-riding national interest like defence or national
security, the acquisition should take place with the consent of the
affected parties, it said.

On a suitable compensation package for farmers and other oustees, the
committee said that monetary compensation should be only a part of the
package and should be calculated on the basis of prevailing market rates.


GVK wins bid to develop multi-product SEZ in Tamil Nadu; SPV being readied

Posted online: Saturday, July 07, 2007 at 0005 hours IST

CHENNAI, JUL 6: Hyderabad-based GVK group, engaged in infrastructure
development, power generation, toll roads, airports, has won the
international competitive bidding process floated by the Tamilnadu
Industrial Development Corporation (TIDCO) to develop a multi-product
special economic zone (SEZ) at Perambalur in Tamil Nadu.
GVK will be floating a special purpose vehicle—GVK Infratech Pvt Ltd—in
association with TIDCO—to attract huge investments from domestic as well
as global investors.

A memorandum of understanding between TIDCO and GVK group was signed in
the presence of the chief minister M Karunanidhi on Friday.

GVK Infratech will create common infrastructure such as internal roads,
water supply, captive power plant, CETP, testing, warehousing facilities
among others at an estimated investment of Rs 1,500 crore and these
investments will be made over a period of five years, said a TIDCO
statement issued here.

The state government has already issued administrative sanction for
acquiring 3,156 acres of land of dry and barren land for this project.
The Union government has given an in-principle approval for this
multi-product SEZ.

The state government hopes that the proposed SEZ will generate
investments to the tune of Rs 5,000 crore with an employment opportunity
for more than 50,000 people. The project, expected to be completed
before 2009, would bring in an export revenue of Rs 6,000 crore.

The SEZ will cater to industries such as textiles, garments, leather,
engineering goods, pharmaceuticals, power, IT and ITeS, iron & steel,
fertilisers, chemicals, petrochemicals, floriculture, horticulture,
electronic & communication, said GV Krishna Reddy, chairman, GVK group.

Speaking on the occasion S Ramasundaram, CMD, TIDCO said, "I am very
happy that GVKPIL and the Tamil Nadu government have tied up to jointly
develop a special economic zone in Perambalur district. I am confident
that TIDCO's long experience in setting up industrial parks coupled with
GVK's established track-record as an integrated infrastructure developer
will result in a world-class project that would attract large
investments in the state, create huge employment opportunities for our
people and bring immense prosperity in the region. This would go a long
way in consolidating Tamil Nadu's position as the leading industrial
state in the country."


House panel seeks freeze on new SEZs, wants change in the law

Posted online: Saturday, July 07, 2007 at 0000 hours IST

NEW DELHI, JUL 6: A parliamentary committee on SEZs, headed by senior
BJP leader Murli Manohar Joshi, has demanded an "immediate freeze" on
the approval of new SEZs, until the law regarding this is amended to
"protect farmers and other stakeholders". The committee, in its report,
has also hit out at the UPA government for its "undue haste" in clearing
"hundreds" of SEZs.
"No further SEZs should be notified till the SEZ Act and Rules have been
amended to meet public concerns," the report, submitted to Rajya Sabha
chairman Bhairon Singh Shekhawat recently, said. "There is an imperative
need to understand the cause of farmers' agitation and grievance," the
report added.

"There should preferably be a ban on the use of irrigated double crop
land for setting up SEZs and normally waste and barren land should be
used," Joshi told reporters, while briefing on the contents of the
report. "Heavens will not fall if there is a delay," he retorted when
asked what if amending the Act takes much time. "Undue haste in
approving SEZs and their proliferation has contributed to the resistance
against the policy," he observed.

"We demand a ceiling of 2,000 hectares on multi-product SEZs coming up
on cultivable land. If cultivable land is indiscriminately given to
SEZs, the country would plunge into a famine-like situation," the former
Union minister said. "The directions should be incorporated in the Act,"
Joshi added.

The committee, in its report, has also said that the members were not
allowed to meet affected farmers when visited Jhajjar in Haryana,
Hyderabad, Bangalore, Jamnagar and Mumbai. "The committee members are
pained to note that at some places, the farmers were not allowed to meet
MPs," Joshi said. "The government is bound to respond in the form of
Action Taken Report in three months. We will not let the issue rest
unless the government satisfies us," he added. He also said there should
not be any in-principle clearances.


SEZ old machinery rules set to ease ,

SEZ old machinery rules set to ease

Posted online: Saturday, July 07, 2007 at 0138 hours IST

NEW DELHI, JUL 6: Units in Special Economic Zones (SEZs) will soon be
permitted to shift in second-hand equipment worth up to 20% of their
total investment. This is a departure from existing provisions in the
SEZ Rules which specify that the entire investment in SEZs should be
'fresh', thereby disallowing the relocation of second-hand equipment
from the domestic tariff area (DTA) to SEZs.
To prevent migration from the DTA to such tax-free enclaves, the SEZ
policy had earlier specified that no unit that shifted old machinery
would be given approval.

A proposal to ease the old rules has been forwarded by the commerce &
industry ministry to the law ministry. Government officials said this is
to address difficulties faced by certain sectors in obtaining
much-needed second-hand capital goods. "There are some capital goods
like testing equipment, routers and network equipment which are
considered specialised and very difficult to purchase quickly when a
unit sets up shop in an SEZ. Such equipment may be allowed to shift from
the DTA to an SEZ," an official said.

However, such shifting of old equipment will be considered on a
case-to-case basis and "only where we are completely convinced about the
necessity", the official said, pointing out that even in such cases, the
government would ensure that 80% of the investment is fresh. The amended
rules would also clarify that there was no restriction on second-hand
vehicles from carrying goods in and out of SEZs.

One of the objectives of the SEZ policy is to attract fresh investment
in terms of money and machinery.

• SEZ policy had disallowed shifting of old machinery to prevent migration
• However, some sectors faced difficulties in obtaining critical
equipment when setting up shop in SEZs
• Cases would still be considered on a case-to-case basis, within the
overall 20% cap on old machinery

Experts see the government's new proposal as providing a breather to
units making huge investments. "This would be a welcome change as it
would provide operational flexibility for SEZ units. Earlier, there were
some genuine cases where the restrictions caused a lot of bottlenecks.
Besides, there was no clarity regarding the provision regarding this
rule on second-hand equipment," said Abhishek Goenka, partner &
executive director, BMR & Associates.

"This 20% value is minimal, as 80% coming in is fresh investment. It is
better to use such critical equipment than throw it away as scrap. Even
in the Budget, the finance ministry had amended the Income-Tax Act to
this effect. Now, the SEZ Rules will be aligned to that," said LB
Singhal, director general, Export Promotion Council for EOUs & SEZs.


Wednesday, July 04, 2007

Says such schemes generate very little new investment

OECD seeks review of sops to SEZs

Posted online: Wednesday, July 04, 2007 at 0005 hours IST

NEW DELHI, JUL 3 : The government should review the tax concessions
given to special economic zones, export processing areas and software
technology parks, the Organisation of Economic Cooperation and
Development (OECD) has suggested at the two-day International Tax
Conference on Tuesday.
Pier Carlo Padoan, deputy secretary general OECD, said at the
conference, "The work undertaken by OECD suggests that such schemes
generate very little new investment and that there are considerable
advantages in ending such incentives." The conference was jointly
organised by the ministry of finance, Asian Development Bank (ADB) and OECD

Such schemes also have a tendency to distort the economy and do not
result in sustainable tax revenues, he added. The recommendation comes
at a time when the finance ministry has already made public its
reservations about such schemes.Simultaneously, it is also looking at
cutting down on various exemptions it has given out. The government is
also set to embrace international experiences in its efforts to
modernise and simplify the country's tax procedures and administration.

Issues relating to transfer pricing, international taxation,
strengthening the audit capacity, business process re-engineering and
improving taxpayer services will be some of the key areas where the
finance ministry may embrace international practices.

International models will also influence the movement towards
introduction of the goods and service tax regime. These decisions were
taken based on the recommendations of the conference.

Speaking at the conference on Tuesday minister of state for finance SS
Palanimanickam said, "The conference has provided an opportunity to the
revenue department officials to interact and brainstorm with their
counterparts from other administrations as well as experts and to learn
first-hand from their experiences."

So far, the country's tax reforms have been evenly poised in addressing
tax policy and administration issues, the minister noted. The broad
thrust of policy changes has been to simplify and moderate the rate
structure; rationalise exemptions and remove anomalies as well as to
expand the tax base, he said.

On the administration side, the cornerstone has been procedural
simplification to make it easier for the taxpayer to quantify and
discharge his tax liability, he added.


Tuesday, July 03, 2007

GMR Infra setting up 2 SEZs in Hyderabad

Our Bureau

Mumbai, July 1 GMR Infrastructure Ltd is setting up an exclusive Special
Economic Zone (SEZ) for manufacturing aviation speciality products in

This is one of the two SEZs being set up by the group in the 50-acre land.

The other would be a multi-product SEZ housing IT-ITES, bio-technology,
garments and apparels and electronics industries, said Mr Madhu Terdal,
Chief Financial Officer.

The company will also have two Maintenance, Repair and Overhaul (MRO)
units at the upcoming Hyderabad International Airport in Shamshabad
area. While one will be operated by GMR in association with Lufthansa
Technik, the current MRO run by Indian Airlines will be shifted to the
new airport.

A hospitality district similar to the one in Delhi is being planned in
the new airport in Hyderabad too.

Speaking about plans for developing more airports, Mr Terdal said the
company would look at bidding for Chennai Greenfield airport and Navi
Mumbai too.


Janata Dal (S) flays Congress on SEZ

Staff Correspondent

Mangalore: Janata Dal (Secular) is ready to take on the Congress on a
move by the State Government to allot land for setting up special
economic zones (SEZ) or townships, party spokesperson and Member of
Legislative Council (MLC) Y.S.V. Datta has said.

It is ironical that the Karnataka Pradesh Congress Committee was setting
up a parallel fact-finding committee on land grabbing when a house
committee headed by A.T. Ramaswamy was doing the job, he said here on

Mr. Datta told presspersons that the KPCC fact- finding attempt was a
move to divert the attention of people from the probe by Mr. Ramaswamy
because they were afraid that their misdeeds would be exposed, he said.

Congress government under S.M. Krishna had acquired vast tracts of land
in and around Bangalore ostensibly to create information technology and
bio-technology related infrastructure. Congress leaders should come out
with details on extent of land acquired, compensation paid to farmers,
employment opportunities created for them and, more importantly, if the
land was used for the right purpose, Mr. Datta said.

Mr. Krishna's government enabled realtors to grab lands of poor farmers
by initially getting them notified. When the farmers sold their lands
out of fear that they might not get suitable compensation, the
Government subsequently de-notified the lands, allowing realtors to
acquire the land, he charged.

States get 60-day deadline to clear SEZ proposals

States get 60-day deadline to clear SEZ proposals


NEW DELHI: The Centre has warned state governments that if pending state
approvals for proposed SEZ projects are not granted within 60 days, the
proposals would be taken off the list of cases to be considered by the
board of approvals (BoA) for SEZs. As many as 170 SEZ proposals lying
with the commerce department are still to receive the go-ahead from the
respective state governments, where they are to be set up. Reliance
ADAG's proposal for a multi-product SEZ in Noida also figures in the
list as the Mayawati regime has withdrawn the state's approval.

Speaking to ET, commerce ministry officials said at the BoA meeting on
June 22, it was decided that the board would not keep holding on forever
to proposals that had not received state government nod. It was decided
that letters would be sent to states asking them to take a decision on
the pending proposals within 60 days. "Two months is long enough for
states to decide whether they want to back a proposal or not. If they do
not respond by the given time, the proposals may be taken off the list
and developers would have to re-apply," an official said.

Officials said if the states act immediately, a number of pending
proposals can be taken up at the next BoA meeting scheduled for July 12.
"Till date, there are just 19 proposals on the list for the next BoA
meet. As we can take up to 40 proposals in a meeting, if state
governments hurry, a number of pending proposals can be taken up at the
next meeting," the official said.

The recently sworn-in Mayawati government in UP, however, is expected to
take its time to grant approval to projects. The UP government has
revoked its approval for private sector SEZs that were pending with BoA
on grounds that they needed to be scrutinised again.

A total of 339 SEZs have received formal approval so far, of which 126
have been notified. In all, Rs 35,145 crore has been invested in these
zones, which have created 32,578 direct jobs.


Navi Mumbai SEZ to come up before BoA on July 12

PTI[ SUNDAY, JULY 01, 2007 12:15:46 PM]

NEW DELHI: The much-delayed Navi Mumbai special economic zone promoted
by Reliance Industries chairman Mukesh Ambani will come up for formal
clearance before a central government panel on July 12 after getting a
green signal from the Maharashtra government on the issues raised by
Revenue Department.

Besides, the Board of Approval will be taking up for clearance of a
multi-product SEZ at Chhindwara in Madhya Pradesh, the Lok Sabha
constituency of Commerce and Industry Minister Kamal Nath.

In all, the Board will consider 38 proposals. If approved, this will
take the overall SEZ approvals - formal as well as in-principle - to
over 500 after the new SEZ Act came into force in 2006, government
officials said.

The government has already approved Ambani and Anand Jain-led
consortium's three single-product SEZs in the area where the 1.250
hectare Navi Mumbai multi-product zone is also proposed to be set up.
The Navi Mumbai SEZ was given in-principle approval earlier.

The proposal was earlier referred to the Revenue Department as the
proposed zone was said to be non-contiguous and a highway passes through
it. The report of the department, while giving clean chit on the issue,
also wanted to know what would promoters do to protect the interests of
villagers in the area.

The views of state government were also sought by the Board and its
approval came last week which were circulated among the members of the
BoA for consideration.


Development projects offered salt land sweetener by Nath



NEW DELHI: At a time when India Inc is scrambling to acquire large
tracts of land for industrial development, especially special economic
zones (SEZ), commerce & industry minister Kamal Nath has offered more
than 5,000-acre salt pan land for development projects. The move is of
significance since there is no problem in using salt pan land for SEZs
unlike multi-crop agricultural land the acquisition of which has been
barred. Moreover, a large chunk salt land is located in Mumbai and
Chennai where land prices are steep.

Among the major projects that could benefit from Mr Kamal Nath's offer
is the Mumbai airport. The Maharashtra government, the Centre and the
GVK-led consortium which manages the airport are in consultation to
rehabilitate slum-dwellers encroaching the airport on salt pan lands.

According to details compiled by the department of industrial policy &
promotion (DIPP), nearly 5,378 acres of salt pan land could be freed for
development purposes. Salt pan lands are available in various other
states like Tamil Nadu too, highly-placed government sources said. The
salt department is part of DIPP and is represented by the salt

Some salt pan land in Tamil Nadu is being allotted to public sector
companies like HPCL. This includes areas identified at Ennore near
Chennai for port expansion and a power project. Tamil Nadu Industrial
Development Corp (Tidco) is also in talks for using salt lands for a
SEZ, the sources said.

Mr Kamal Nath feels use of salt lands for industrial development could
make a significant impact in Mumbai. "Several rounds of negotiations
have already been held with state government authorities," the sources
said. The hurdles that need to be overcome are litigation and
encroachment so that these lands can be put to good use. "In Mumbai,
salt pan lands are spread all over the city and the current value is in
thousands of crores if litigation and encroachment are overcome," they

A key proposal under consideration is to use salt pan lands in Mumbai to
relocate the slums that are encroaching airport land. If the slums are
not relocated, expansion and modernisation of Mumbai airport would be
impossible. The GVK-South African Airports consortium, which manages the
airport, has not been able to get land for expansion since encroaching
slums have not been cleared.

Salt pan lands could also come in handy for facilitating SEZ projects
near Mumbai, the sources said. Once corporates acquire land in areas
like Navi Mumbai, salt pan lands could be used for rehabilitation of
oustees. These lands are fit for residential purposes except in the case
of creek lands which are unsuitable for development, the sources said.

As the government has terminated the lease of several salt works, nearly
1,852 acres of land could be made available for development. However,
some of the sat works have moved court against termination of licences.
In the case of another 1,827 acres of land, officials have cited
ownership disputes involving 21 salt works.

In Kanjur village alone, nearly 350 acres of land is in clear possession
of the salt commissioner. In addition, another 350 acres is now being
used by the Maharashtra government as dumping ground.

In Mumbai, there are more than a dozen plots of 5 acres which are being
offered to the Mumbai Port Trust for relocating encroachers holding up
development of a container terminal. Nearly 98 acres of land has been
handed over to the ministry of urban development for socio-economic
projects while the government has handed over 27 acres to a private
party following a Supreme Court verdict.


Wait may be over for new SEZ plans



NEW DELHI: The wait is over for developers of special economic zones
(SEZ) who submitted their proposals to the government after April 6.
After the temporary freeze on approvals was lifted, April 6 was the
informal cut-off date for taking up pending proposals for consideration.
Since there was a huge backlog of pending projects, the government was
focusing on them rather than taking up new ones.

More than a 100 proposals have been approved after the freeze was lifted
and the board of approvals (BoA) is ready to take up proposals submitted
after the cut-off date.

Speaking to ET, commerce ministry officials said the backlog of pending
proposals that have state government approvals have almost all been
taken care of. Nothing was preventing the government from taking up new
proposals, provided they was accompanied by state government
certification. "There was never a ban on new applications. It was just
felt that the older proposals should be dealt with first," an official

The government had frozen approval and notification of SEZs on January
22 this year following widespread protests all over the country,
especially in Nandigram (West Bengal), over acquisition of land by
states. The freeze was lifted on April 6 by the EGoM which decided to
ban coercive acquisition by states. The BoA meet, held on June 22, ruled
that if even one farmer objected to acquisition of land, the state could
not acquire the land for building SEZs.

The BoA reiterated that double crop land in excess of 10% of the total
area cannot be acquired for building SEZs, and state governments should
not give their consent to such proposals.

Interestingly, there are as many as 170 proposals that are awaiting the
state government's nod. Earlier, such proposals would be taken up by the
BoA subject to the condition that states gave their nod within six
months of the approval.However, two months ago, the BoA decided to take
up proposals for consideration only if they were backed by state approvals.


Core sector SEZ units could get cheaper funds

Posted online: Tuesday, July 03, 2007 at 0000 hours IST

NEW DELHI, JUL 2: Some units based in special economic zones (SEZs) may
be allowed to raise loans at core sector interest rates, almost 2
percentage points cheaper than rates applicable to real estate projects.
Currently, RBI treats SEZ development at par with commercial real estate
The commerce department, which oversees SEZ policy, has suggested to RBI
that an SEZ be divided into various sub-groups such as infrastructure,
integrated township and land development, among others. Units in the
infrastructure sub-group should be allowed to raise loans at lower
rates, it said.

Officials said RBI was considering this proposal and a final decision
would be taken after further consultations. The Prime Minister, too, had
earlier asked the empowered group of ministers on SEZs to decide if
these projects should be given infrastructure status.

While the central bank sees SEZs as similar to real estate for lending
purposes, the commerce department feels SEZ activities attract huge FDI,
generate additional economic activity, create employment, promote
exports and help develop world-class infrastructure.

The department has now suggested that SEZ development activities that
are purely of infrastructure nature should be given core sector status.
The RBI and the commerce department would soon reach a consensus on the
issue, officials said, adding that the central bank is favourably
considering the suggestion.

Partition Plan
• Commerce dept has mooted a sub-group formula for SEZs
• Infrastructure projects in SEZs may borrow at core sector rates
• The move could reduce borrowing costs of SEZ units by nearly 2%
• RBI now studying suggestions made by commerce department

Apart from enabling SEZ units to raise cheap loans, the move would also
expand their funding options. Bankers said giving infrastructure status
to sub-groups in SEZs would encourage banks to increase funding to these

"Right now, no bank wants to lend to SEZ units, since they are treated
at par with real estate projects. But a change in status would encourage
banks to increase lending to an SEZ project. Plus the interest rates
will become nearly 2 percentage points cheaper for SEZ activities that
enjoy infrastructure status," said LP Aggarwal, general manager
(credit), Punjab National Bank.

Although the commerce department is yet to finalise what would
constitute the infrastructure sub-group, experts said the entire
processing area within the SEZ could be given infrastructure status. "As
per present norms, SEZ units must have a minimum 50% processing area,
which is entirely an infrastructure activity and not real estate," said
Lalit B Singhal, director general of the Export Promotion Council for
EOUs and SEZs.