Going gets tough for single project SEZs in Orissa

NEW DELHI: Posco, Hindalco Industries and Vedanta Alumina will not be allowed to operate single project special economic zones (SEZs) in Orissa unless they bring in downstream investments.

The state government is planning to introduce this condition for single project-based SEZs. The state will soon be moving a Cabinet note by which it will become mandatory for single project developers to bring in downstream investments in related areas within the SEZ. The Board of Approval of SEZs has already given an-in principle clearance to Hindalco and Vedanta while POSCO is awaiting the nod.

The state government’s decision to introduce this rider is likely to trigger similar changes in other states, as it would make SEZs more broadbased and encourage investments and employment.

According to Orissa government sources, the changes will be part of a new SEZ policy that it is going to be announced soon. The changes would mean that steel major POSCO will be required to bring in its other Korean vendors to set up rolling mills and other value addition projects within the steel complex to get SEZ status for its 12m tonne steel plant.

This would create employment opportunities and industrial development and ensure that demand for SEZ status does not become a norm for single promoter projects, sources added.

As per the state government’s plan, the proposed policy will make it mandatory for metal sector companies initially to set aside 250 acre of land within their project site for development of additional industrial parks involving other companies. Only after this condition is fulfilled that SEZ proposals from large metal based companies would be referred to the centre for approval. The proposal may applied to other sectors at a later stage.

Orissa government officials said that the company has already been apprised of the impending changes in the policy which it has agreed to follow. Vendanta Alumina and Hindalco, the two other metal-based projects in the state which have applied for grant of SEZ status, have also given their assent to proposed changes in the policy.

“The state government’s policy will not be in conflict with the SEZ Act but will only remove its loopholes where even a single project can get SEZ status,” officials said. Orissa has received over a dozen proposals from different companies to give SEZ status to their projects.

While POSCO’s SEZ proposal is yet to go to the Board of Approval for establishing SEZs, Vedanta Alumina and Hindalco Industries’ proposals have got in-principle nod.