Draft law gives Maharashtra SEZs the powers of a local body

Using an enabling clause in the Constitution,the state government has proposed that SEZs be declared industrial townships which would take them outside the ambit of the local body. All powers of local bodies would be transferred to the Township Authority in which the chairman and two members will be nominated by the developer,while one member each will be nominated by the SEZ Development Commissioner and the state government.

The authority would be in charge of rendering all services like ensuring access to public transportation,public hospitals,maternity homes and vaccinations,markets,schools,public monuments,naming of streets,maintenance of open spaces,police stations,checking spread of dangerous diseases and disposal of dead. It would also be allowed to purchase electricity and water from the state government and supply it within the SEZ at tariffs decided by the authority.

A year ago,the state had declared that SEZ developers would act as the Special Planning Authority (SPA) for their zone. As with the Maharashtra Industrial Development Corporation (MIDC) or CIDCO,developers would be allowed approve their own land use and building plans. “In case of an SPA,the powers of taxation and licensing are still with the municipal corporation and other local bodies. Declaring a SEZ an industrial township would take it entirely out of the area of the municipality and would give the Township Authority all roles of governance,” said a government official. The official added this would also mean there would be no elected representatives from these tax-free enclaves that also have residential units.

The Bill allows the government to override all other state laws in case they are in conflict with the Maharashtra SEZ Act. The fiscal benefits proposed in the Bill for the processing units in the SEZs include exemption from Value Added Tax,octroi and sales tax on goods coming from domestic tariff areas to the SEZs. All transactions in these units will also be exempt from stamp duty,registration fee and land assessment tax. “Some of these fiscal benefits already exist in the form of notifications,but having a legislation gives SEZ developers some sort of certainty,” said the official. Maharashtra,with 59 notified SEZs spread over 9,000 hectares,has the second highest number in the country.

Of the six states that now have an SEZ Act in place,Gujarat is the only one where developers have similar powers; in the rest,these powers vest with the Development Commissioners.