Time not ripe: SEZ cap still in a haze

NEW DELHI: All may not be lost for mega SEZ developers like Tatas and Reliance that have taken help from state governments to procure land for developing their SEZs. Developers may not necessarily have to give up portions of land already acquired on behalf of them by state governments. According to senior commerce ministry officials, the empowered group of ministers (eGoM)on SEZs, which placed a ban on such procurements in its meeting earlier this month, had not laid down when the ban would apply from.

Put simply, it is not clear whether the cut-off date would be February 10, 2006 — the day the SEZ rules were notified — or April 5, 2007 — the day the eGoM placed the ban. The commerce department is preparing a paper for submission to the eGoM asking for clarification on the issue. Since the eGoM had categorically stated that compulsory acquisition of land by states will be banned, the commerce department will also seek a clarification on whether non-compulsory acquisition of land by states would be allowed.

The fate of a number of SEZs including Tatas’ Gopalpur SEZ and the Reliance group’s Jhajjar SEZ is hanging on the decision as land procurement in these cases happened after the notification in February 2006.

Speaking to ET, official sources said while the government would notify the amended rules on processing area requirement and the ceiling of 5,000 hectares placed on SEZs in the next few days, the notification of the ban on state procurement of land for private developers would take some time.

“We have to be clear about when the ban is to be applied from before issuing the notification and the scope of the ban. The commerce department will shortly send a note to the eGoM asking it to clarify the issue,” an official said.

Sources said since finance minister P Chidambaram, a member of the eGoM, had especially insisted on adding the word compulsory while laying down the ban on land acquisition, it was not clear whether land acquired by states without applying pressure on the owner would be allowed.

If the eGoM decides on applying the ban of state procurement with effect from February 2006, the government would have to sort out the complicated issue of what to do with the land that has been acquired by states. “Issues related to how the land is to be given back to the owner and at what prices will have to be ironed out,” the official said.