A News Blog on Special Economic Zones (SEZ) in India
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
AMITI SEN & G GANAPATHY SUBRAMANIAM
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.
ARUN S 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). http://www.financialexpress.com/fe_full_story.php?content_id=169597
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.
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.
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 rules.
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
INFRASTRUCTURE BUREAU 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
POLITICAL BUREAU 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.
ARUN S 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.
SHIFTING GEAR • 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.
Says such schemes generate very little new investment
OECD seeks review of sops to SEZs
ECONOMY BUREAU 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.
Mumbai, July 1 GMR Infrastructure Ltd is setting up an exclusive Special Economic Zone (SEZ) for manufacturing aviation speciality products in Hyderabad.
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.
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 Monday.
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. http://www.hindu.com/2007/07/03/stories/2007070360570300.htm
States get 60-day deadline to clear SEZ proposals AMITI SEN
TIMES NEWS NETWORK[ WEDNESDAY, JUNE 27, 2007 03:19:08 AM]
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.
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
G GANAPATHY SUBRAMANIAM
TIMES NEWS NETWORK[ MONDAY, JULY 02, 2007 03:37:08 AM]
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 commissioner.
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 added.
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.
TIMES NEWS NETWORK[ MONDAY, JULY 02, 2007 03:38:35 AM]
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 said.
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.
SUNNY VERMA & ARUN S 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 activity. 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 projects.
"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.
Purchases from domestic tariff area to be treated as imports
ARUN S & SUNNY VERMA Posted online: Friday, June 29, 2007 at 0044 hours IST
NEW DELHI, JUN 28: The government is planning to treat 'certain' goods purchased by special economic zones from the domestic tariff area (DTA) as imports. This is aimed at preventing the misuse of tax incentives by SEZs. At present, these are treated as just purchases and not as imports. This will force SEZ units to substantially increase exports to meet the net foreign exchange (NFE) criterion specified in the SEZ Act.
The NFE requires SEZ units to export more than what they import over a five-year period after production starts. Experts see it as a retrograde step, which could jeopardise the entire operational flexibility available to SEZs and reduce investment in such zones.
Government officials, however, said SEZ units would require to export a major chunk of their production instead of selling it in the domestic market. The finance and the commerce ministries have finally agreed on treating purchases from DTA as imports. The SEZ Rules would be modified soon, they said.
A government official said, after SEZ Rules changes were brought in, "any supply from DTA to an SEZ unit —which results in benefits under the Foreign Trade Policy—will be treated as imports, and hence liable for export obligations."
Fresh Curbs • Imports by SEZs Rs 1 crore • Domestic buying by SEZs Rs 50 lakh • Total procurement (import + domestic) Rs 1.5 crore (As domestic procurement will now be treated as import) • Value addition by SEZs (say 10%) Rs 15 lakh • Total product value Rs 1.65 crore
Purchases where export-related benefits —the advance advance licence scheme, duty entitlement passbook scheme, duty-free import entitlement certificate and the duty drawback benefits—are availed of will be treated as imports.
Experts said these changes would defeat the purpose behind setting up SEZs—that of generating additional economic activity.
"It will affect their operational flexibility and further discourage both backward and forward integration of SEZs with the domestic market," said Lalit B Singhal, director-general of Export Promotion Council for export oriented units and SEZs. The finance ministry had earlier pointed out that some SEZ units were selling goods in the domestic market instead of exporting them— the main purpose of SEZs.
In fact, during a meeting of an empowered group of ministers on SEZs in January, it was proposed that zones be denied tax benefits unless they fulfilled their 50-70% export obligation. The fresh move is being seen as a compromise formula between the finance ministry and commerce department.
Proposed norms • If domestic procurement is counted as imports, SEZs will have to compulsorily export goods worth Rs 1.5 crore to meet the positive net forex criterion Current norms • SEZs are entitled to sell domestically goods worth Rs 51 lakh and required to export goods worth only Rs 1 crore to meet the positive NFE criteria
TIMES NEWS NETWORK[ MONDAY, JUNE 25, 2007 12:27:54 AM]
NEW DELHI: In a move that would expedite setting up and operationalisation of special economic zones (SEZ), the government has decided to allow developers to carry out a number of operations including building of roads and boundary walls as soon as the zones are notified without seeking the permission of the board of approvals (BoA) on SEZs.
Other operations such as setting up the manufacturing area, schools, shopping complexes and hospitals would, however, continue to require authorisation certification from the BoA.
Speaking to ET, commerce ministry sources said the BoA members, in their meeting on Friday, decided to identify a number of essential operations that could be allowed without government scrutiny. The operations identified for automatic clearance include setting up of roads, boundary walls and water and power distribution systems.
“It was recognised by all members that there were a number of default activities that had to be automatically allowed and should not require special permission. The activities will be mentioned in the minutes of the meeting that will be published soon,” an official said.
Other activities such as construction of the production area and building of shopping complexes, schools and hospitals would continue to require the BoA’s nod. “The activities falling within the processing and non-processing areas have to be monitored to ensure the given parameters are not breached,” the official said.
As per SEZ rules, the processing area for all SEZs cannot be less than 50% of the total area. The housing, schooling and other facilities have to be in proportion to the number of employees working in the SEZs.
With the relaxed authorisation rules, SEZ developers will now have the freedom to start putting in place the essential infrastructure as soon as they get their zones notified without waiting for the BoA to meet. “Developers will not have to bide time till the BoA decides to meet. Work can start as soon as the notification appears,” the official said.
TIMES NEWS NETWORK[ WEDNESDAY, JUNE 27, 2007 03:19:08 AM]
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.
NEW DELHI: Displacement of people from land sought for special economic zones (SEZs) will be purely voluntary and no forcible land acquisition will be made, Rural Development Minister Raghuvansh Prasad Singh has assured.
Singh, whose ministry has a draft rehabilitation package ready for people who are displaced from their farmland to make way for SEZs, also assured that the compensation in such cases would be attractive and offered before acquisition.
"Even if the rehabilitation package is attractive, it fails to serve its purpose when the people start agitating and hold demonstrations," Singh, who personally fashioned the finer points of the package, told IANS in an exclusive interview.
"The policy seeks to end forcible acquisition of farmers' land. And in the case of agreed acquisition, the rehabilitation package will be awarded to affected people before displacement," added Singh, who has a doctorate in mathematics.
"The displacement should take place only when it is absolutely necessary and fully voluntary."
Piloted by the rural development ministry, the government proposes to enact a new law - Resettlement and Rehabilitation Act - and the relevant bill is being examined by the law ministry.
The government also proposes to amend the Land Acquisition Act to give the new law an overriding effect over the Land Acquisition Act and the Special Economic Zone Act.
The concept of SEZ, seen as a prime mover of the Indian economy, came under criticism after farmers opposed forced land acquisitions for such projects at many places across the country, especially in Nandigram in West Bengal where 14 people were killed in police action against protestors March 14.
In the freewheeling interview, Singh, 61, who represents the Vaishali constituency of Bihar in the Lok Sabha, said that his party, the Rashtriya Janata Dal (RJD), had started preparations to expand its base beyond its pocket borough in Bihar and Jharkhand with a nationwide ambition.
He said his party had won seats in the Manipur assembly and also has a presence in Maharashtra and West Bengal. "People in other states look up to the RJD. But so far we have ignored their aspirations," he said.
"The whole purpose was that the party should grow in strength all over the country. Only then we will be able to fight the communal forces," Singh said and added that the party was formed to empower minorities and the socially weak.
Singh also sought to play down criticism against his party chief and Railway Minister Lalu Prasad that he was ignoring his home state Bihar and spending too much time in New Delhi only to nurse his aspirations to become prime minister.
Even the decision to hold the national executive meeting of the party in the capital last week did not go down well with the cadre.
"All kinds of people keep making all kinds of speculations. This has nothing to do with any of that. What's wrong with holding it in Delhi? It is well connected to every corner of the country," Singh asserted.
"People from all over the country were coming for the national executive meet. So holding it in Delhi facilitated their travel. But the national convention will be held in Sarnath on Aug 25."
The rural development minister also justified his party's total endorsement of every action taken by the United Progressive Alliance (UPA) government and said everything was being done as per the national common minimum programme.
TIMES NEWS NETWORK[ MONDAY, JUNE 18, 2007 12:57:46 AM]
MUMBAI: The Maharashtra government’s special land acquisition officer has recommended the removal of nine villages from the list of 45 earmarked for setting up the Maha Mumbai SEZ.
The official has contended that these villages have already been reserved by the government, in 2003, for a township and an industrial zone, and substantial investments have already been made for these purposes.
The officer’s report, a copy of which is with ET, states that large parts of land in these villages have been mortgaged to raise money for various industries. The report was submitted to the state revenue department in the second week of May.
The Maha Mumbai SEZ is promoted by the Reliance group. When contacted, the company spokesperson refused to comment.
These nine villages are among the 45 where the state government has served notices under Section 4 of the Land Acquisition Act 1894. The notices served last year are meant to seek suggestions/objections from landowners on the government’s decision to acquire their land for the SEZ. As per the procedure, the Section 4 notices were followed by personal hearing under Section 5 of the same Act. Under this, the state’s special land acquisition officer listens to every individual whose land is being acquired for the project.
