SEZ developers may find land pulled from under their feet

NEW DELHI: Corporates and state governments drawing up mega plans for building special economic zones (SEZs) over thousands of hectare are in for some disappointment. The government may introduce an area ceiling of between 1,000 hectare and 1,500 hectare for all projects.

The move, if implemented, is likely to affect big projects not in possession of land, such as Salim group’s controversial chemicals SEZ and multi-product SEZ in West Bengal, Suncity’s project in Rajasthan, Korean steel company Posco’s project in Orissa, the Reliance Group’s Maha Mumbai project in Maharashtra and Indiabulls and Videocon Realty’s multi-product SEZs in Maharashtra.

The ceiling is expected to be with prospective effect and may not affect big projects which have land in possession such as Tata’s Gopalpur SEZ. In case of other mega proposals like Reliance’s projects in Jhajjar and Navi Mumbai, where part of the proposed land has been acquired, the ceiling is not likely to be binding on the land which is in possession. The empowered group of ministers (eGoM) on SEZs, which is expected to meet later this month, will take a decision on the issue.

The minimum area requirement for multi-product SEZs may also be slashed to 400 hectare from the current 1,000 hectare. Many state governments had been asking the Centre to lower the limit for multi-product SEZs to encourage more such zones.

Speaking to ET, official sources said there was a lot of political pressure for reducing the size of proposed mega industrial zones as the land acquisition process was leading to unrest all over the country. While the protests over forcible land acquisition for the Indonesian Salem group’s chemicals SEZ in Nandigram forced the West Bengal government to relocate the project, the Maharashtra government recently put a freeze on land acquisition for the Reliance Group’s Maha Mumbai project fearing a repeat of the Nandigram violence.

Sources pointed out that although the government had earlier thought of limiting the Maha Mumbai SEZ to 5,000 hectare from the projected 10,000 hectare, the growing unrest against acquisition had made it obvious that the size of the SEZ had to be further reduced.

The eGoM will also decide on the need to put sectoral caps on special economic zones. Sources said the eGoM will favour discouraging more IT SEZs as of the 400-odd SEZs approved in all (both formal and in-principal), 177 proposals are for IT SEZs.

The eGoM is also expected to lift the freeze on 83 SEZs, which have been formally approved and have completed all the necessary formalities required for notification.