The political fallout of the violence at Nandigram today may stop further notifications of Special Economic Zones well beyond the UP elections.

Though several state chief ministers including DMK’s Karunanidhi and Congress’s Y S Rajasekhara Reddy have written to Prime Minister Manmohan Singh and the chairman of the empowered Group of Ministers on SEZs, Pranab Mukherjee, to lift the freeze on SEZ approvals as investors are getting edgy, a senior government official told The Indian Express today that the ministers’ group may not even meet till the UP elections are over. So lifting the freeze on SEZs seems out of the question till then, he said.

The West Bengal violence comes at a time when the Commerce Ministry had allayed the concerns of the Congress party by briefing at least two former chief ministers as a precursor to the expected meeting of the Empowered Group of Ministers (EGoM) this month to lift the January 23 suspension on SEZ notifications. As of now, only 63 out of a total 235 approved SEZ that are not facing any land acquisition issues have been notified by the UPA government.

Government sources said that even as the UPA government tarries on the notifications, footwear multinational Nike, which has a cleared SEZ plan in Tamil Nadu, has indicated that it would walk out of India as it has commercial commitments to meet next year. Nike has plans to invest $300 million into the SEZ in and has even ordered machinery for the project.

More big-ticket investors are in the process of pulling the plug on their SEZ plans. Apart from Nike, US-based Velankani Communications Tech, which intended to set up a $600 million IT SEZ in Tamil Nadu, is one of them. Nike and Velankani alone were expected to employ over 40,000 workers in the state.

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