Voluntary SEZ land sale gets clean chit

NEW DELHI: This will come as a breather to special economic zone (SEZ) developers. The government has decided to allow states to acquire land for SEZ projects on behalf of private developers as long as owners sell their land voluntarily. Moreover, the ban on compulsory acquisition by states — announced by the government last month — will not be applicable with retrospective effect, a senior bureaucrat said.

This means that developers, including Reliance and Tatas, who took the state governments’ help in purchasing land before April 5, 2007, will be permitted to retain it. For future purchases, state governments will have to produce signed documents by owners of the procured land. This should incorporate details of the terms of the transaction and a certification that it had the owner’s consent. The decision to allow states to go ahead with voluntary acquisition will especially benefit foreign investors with little knowledge of the country.

An official from the Commerce Department told ET that the eGoM, which had placed the ban on state acquisition last month, wanted it to apply only to land where owners are forced to part with their property. “While there was some confusion initially, it is now clear that the ban will be placed only for compulsory acquisition. Where the acquisition is done with the sellers assent, the Centre has no problems,” the official said.

The eGoM on SEZs had decided to bar states from compulsorily procuring land for private developers after large-scale violence and protests erupted all over the country over forcible acquisitions. Two cases in point are West Bengal’s Nandigram, where Indonesia’s Salim Group was to set up a chemicals SEZ, and Maha Mumbai in Maharashtra, where Reliance Group chief Mukesh Ambani is setting up a multi-product SEZ.

While state governments cannot help these SEZs in acquiring land because of opposition from farmers, the SEZs for which land has already been acquired by the government — like the Reliance SEZ in Jhajjar and the Tata’s SEZ in Gopalpur — will be allowed to retain the land. The eGoM’s decision to limit the size of SEZs to 5,000 hectares and increase the processing area (where manufacturing will take place) to 50% of the total land will be soon notified by the government, sources said.