Nandigram ripple washes away states’ acquisition powers

NEW DELHI: Call it the Nandigram effect. Political compulsions have ensured that states have to stay away from compulsory land acquisition for special economic zones (SEZ) but the move is likely to face protests from pro-SEZ states which do not face protests by angry rural populace. Since land is a state subject, the Centre’s decision is unlikely to be relished by state governments.

The only consolation to states is that they now have the option to fix a lower cap for land acquisition while 5,000 hectares is the maximum limit. The move would prevent companies from forming joint ventures with the state government entities like industrial corporations, banking on land acquisition by the state government concerned.

Though land is a state subject, officials feel Centre’s diktat barring land acquisition for SEZs is unlikely to meet resistance as central clearances are necessary to win tax sops available under the SEZ policy.

In fact, some states are very wary of land acquisition after the Nandigram episode and the move may even be seen as a blessing in disguise, an official said.

The move will impact SEZs in states like Maharashtra, Haryana, West Bengal and Gujarat where some of the large zones were proposed to be set up. According to the decision taken on Thursday, private developers would have to deal with land owners directly.

In their first reaction to the decisions taken by the Centre, some of the states indicated willingness to contain the sizes of SEZs. According to Haryana government officials, the state will soon cut the size of SEZs in its state to comply with the new rule.

Similar indications have been given by Maharshtra government where the Reliance MahaMumbai SEZ generated controversy.

State chief minister Vilasrao Deshmukh’s said :”Since the earlier decision to allow the RIL-promoted Maha Mumbai SEZ to expand to 10,000 hectares was taken by the cabinet, we will have to refer it back to the cabinet in the light of eGoM’s today’s decision and political controversy that’s been surrounding the size of the project”.

The Gujarat government, on the other hand, may not find any hurdles in sticking to the 5,000 hectare cap decided by the EGoM. “It’s too early to say anything at this juncture,” said a senior official. But he hinted that the government may stay within the cap.

Adani group’s multi product SEZ in Mundra, which is coming up over 10,000 hectares is the only project likely to be affected due to the cap.

Sources say 2,800 hectares has already been notified and the company plans to scale up to 10,000 hectares. The other big SEZ being developed by RIL at Jamnagar, which will be spread over 3200 hectares, may not face hitches.

The Adani group recently merged its Adani Port Ltd. (APL), the developer and operator of the multi-purpose port at Mundra, and Mundra SEZ Ltd, the company implementing the SEZ project forming a new entity Mundra Ports & SEZ.

Comparatively, Gujarat has not faced too many issues as far as land acquisition is concerned. “Unlike in some states, the government has kept away from land acquision in most cases and left it to the concerned developer,” the official said.