Group of ministers does not budge on SEZs even when the naysayer Left is out

NEW DELHI, AUGUST 7 : Special economic zones, which could have been an important tool for the new UPA-minus-Left regime to show its inclination to undertake reforms, will for the time being be subjected to the same land ceiling of 5,000 hectares as before, as decided by the meeting of the Empowered Group of Ministers (EGoM) on SEZs.

Chaired by external affairs minister Pranab Mukherjee, the EGoM met today after almost a year of postponements to discuss a plethora of issues that have been of concern to SEZ developers ever since the SEZ Act of 2005 came into being. But the EGoM did not make any changes to the existing norms. After the meeting, Commerce and industry minister Kamal Nath said, “We discussed operational issues. There is no policy change.”

After the Left withdrew its support from the Government last month, it was expected that certain norms, especially the ceiling of 5,000 hectares on SEZs and the ban on compulsory land acquisitions for SEZs (including being developed by the state industrial development corporations) would be relaxed. However, the group of ministers has collectively decided to wait for some more time before they make any such relaxations. Removal of the ceiling could benefit major players like the Adanis who have the multi-product SEZ and port at Mundra in Gujarat, Reliance Industries whose mega multi-project SEZs are set to come up in Jhajjhar and Gurgaon in Haryana and Navi Mumbai in Maharashtra. The government had imposed the ceiling following widespread protests across the country against land acquisition.

According to official sources in the government, a majority of SEZ developers across the country are suffering because of problems in land acquisition.

The other issues to be taken up by the EGoM, but were left untouched, were those that arose as a result of differences between the commerce and the finance ministries. The finance ministry wanted a minimum alternate tax of 10 per cent to be imposed on the income of SEZ units while the commerce ministry was against it.

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