SEZs get a social face

By Nidhi Jamwal
Published: Tuesday 31 October 2006

-- in orderto allay fears of tax evasion and land grab, the Board of Approval (boa) for special economic zones (sezs) recently issued fresh guidelines for building social infrastructure, hospitals, schools and houses within sez s and also set new investment criteria for developers to qualify for tax breaks.

In its September 21 meeting chaired by G K Pillai, special secretary, Union ministry of commerce and industry (moci), the board decided that sector-specific sez developers must invest a minimum of Rs 250 crore or have a net worth of Rs 50 crore. The multi-product sez developer must invest a minimum of Rs 1,000 crore and have a net worth of Rs 250 crore.moci has already specified minimum land area requirements ('sez cap lifted', Down To Earth, September 30, 2006). Resale of houses will not be allowed within sezs, though the owner could be allowed to sub-lease.

Specifications have also been issued for setting up infrastructure within sezs. While 65 per cent area is open for social, residential and commercial exploitation, 35 per cent is fixed for manufacturing activity. The board has issued instructions for the development of 65 per cent area (see table Infrastructural obligations). In an order that will tighten norms further, the Reserve Bank of India, on September 26, directed all commercial banks to treat sezs on a par with any other real estate development project when it comes to lending.

The central government too, has been put on notice. Kamal Nath, Union minister for commerce and industry, till two weeks back was gung-ho on sezs and criticising P Chidambaram, Union finance minister, for the latter's cautious approach towards the unguarded sez boom. He is now more cautious. This is being attributed to United Progressive Alliance's chairperson, Sonia Gandhi's displeasure towards diversion of agricultural land for sez development, voiced at the Congress party's recently concluded conclave in Nainital. According to Pillai, moci has directed all state governments to acquire either barren/wasteland or single cropland. In case it is essential to acquire double cropland for meeting the minimum area requirements, this should not exceed 10 per cent of the total area acquired.

Among states, Maharashtra has decided to go slow on land acquisition for sezs. But protests continue across the state, with one held recently at Belapur in Navi Mumbai by Maha Mumbai Shetkari Sangharsh Samiti, an all-party front opposing sezs. Recent media reports say that boa has told the Mukesh Ambani-controlled Reliance Industries Ltd to rework its proposal for the 10,000 hectare Maha Mumbai sez as it threatens to displace many farmers.


Union ministries clash over SEZ
[September 30, 2006]

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