Friday, April 6, 2007

New rules regarding SEZs

Smaller, kinder SEZs- Bengal projects survive ceiling but land consent must

New Delhi, April 5: The Centre today said land for special economic zones must be acquired with the consent of owners and put a 5,000-hectare cap on their size.
The ceiling will not affect projects in Bengal, where the largest proposed is the Salim Group’s multi-product SEZ to be spread across 5,000 hectares (12,500 acres). Reliance’s 10,000-hectare Maha Mumbai SEZ and another in Haryana will, however, be hit.
“The state governments are free to lower the cap for SEZs below the 5,000-hectare mark if they want to,” commerce minister Kamal Nath said, pre-empting protests from the Left, after the empowered group of ministers lifted the freeze on SEZs imposed in January amid controversy over land acquisition.
The CPM, which had sought a 2,000-hectare cap, was however not complaining about the higher ceiling. “It will help us to go for the proposed chemical hub,’’ Bengal secretary Biman Bose said in Calcutta.
The chemical hub is the 10,000-acre SEZ planned by the Salim Group in Nandigram, which is now expected to come up in Haldia. Had the party’s demand for a 2,000-hectare (5,000 acre) ceiling been met, both the Salim projects would have had to be curtailed. The chemical SEZ might yet be made smaller because Haldia does not have enough land.
“No state can compulsorily acquire land (for an SEZ) from farmers through the Land Acquisition Act,” Nath said, adding that the promoters would have to buy from owners willing to sell, at the market rate.
However, little prevents a government from acquiring land under the act, citing public purpose for which no consent is required but without specifying the use. It can later be handed over for an SEZ.
“It appears that some of our demands have been met,” Bose said, pointing to the decision to raise the minimum processing area to 50 per cent in all SEZs, in line with Bengal.
So far, the 50 per cent cut-off was limited to sector-specific SEZs while in the multi-product projects, only 35 per cent of the area needed to be allocated for processing (the core activity). Even this could be reduced to 25 per cent with special permission.
The low cut-off had come under fire from the Left which alleged promoters were availing themselves of the tax concessions meant to push productive activity but using most of the land for realty projects.
What Bose did not mention was that another demand of the CPM was ignored. The party has been seeking a curb on the tax concessions given to SEZs, but the sops continue.
A rehabilitation policy is being framed which would ensure livelihood from the project to at least one person from each displaced family, Nath said. “The new norms would be applicable to all SEZs, including those already notified.”
But commerce and industry secretary Sabyasachi Sen said a job for each family would be difficult in Bengal, where holdings are “small”.
Eighty-three SEZs that had been approved by the commerce ministry and did not face a land dispute were cleared today by the group of ministers. Among the projects that will be notified now are the Jindal SEZ in Kalinga Nagar and Infosys in Pune.