Track2Realty Exclusive: A recent commerce ministry discussion paper highlighted that there is a perception that many developers do not set up the proposed SEZ and continue to hold on to large parcels of land with the intention of benefiting from its alternative usage and land price escalation.
The commerce ministry paper on SEZs points out other flaws. For instance, a major proportion of SEZs is concentrated in six states-Andhra Pradesh, Kerala, Maharashtra, Gujarat, Karnataka and Tamil Nadu-and account for 92 per cent of total exports. Also the SEZs are located around urban centres.
Then, there also seems to be a lack of coordination between the centre and the states-the latter can evolve their SEZ policies within the broad framework laid down by the centre. Many developers complain they get tax breaks and concessions from the centre but not from the states.
“SEZ has become a dirty word. Governments do not see any political returns in pushing them and companies thus do not get much political support,” says Aradhna Aggarwal, economist at National Council of Applied Economic Research (NCAER).
While the minister says if there are delays beyond permission, actions are taken, the fact of the matter is that the developers are increasingly approaching the government either seeking more time for implementation of their projects or to surrender their projects.
11 companies, including Posco-India, Raheja SEZ, Andhra Pradesh Industrial Infrastructure Corporation and Enfield Exports have sought more time from the government for implementing their projects. Besides, five SEZ promoters including Maharashtra Industrial Development Corporation (MIDC), wants to surrender their projects. The developers have cited global slowdown, imposition of minimum alternate tax and lack of response from infrastructure developers as major reasons for surrendering projects.
“Now, the developer has requested for de-notification of the SEZ on the following grounds-that due to implementation of proposed DTC and global slowdown it is not possible to develop SEZ …,” MIDC has said in its application. The developer has proposed to set up a multi-product SEZ in Amravati.
Next: Special Economic Zones or Land Zones
