SEZ eGoM likely on Apr 22, to take up 5k-hectare cap

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The Centre is likely to hold the much-awaited meeting of the empowered group of ministers (eGoM) within a fortnight to sort out the outstanding issues on special economic zones (SEZs), including relaxing the controversial 5,000-hectare ceiling on large SEZs. Sources said the eGoM, likely to be held on April 22, would also take up the issue of allowing developers to build additional facilities in the non-processing area (which houses social amenities but have no industrial activity) without tax concessions, as well as granting service tax exemptions to developers, co-developers and units. The meeting may also take up the issue of fixing an export obligation of SEZ units.

The meeting comes after a year of imposing the 5,0000-hectare cap following violent protests at Nandigram in West Bengal (where Indonesia's Salim Group was planning an SEZ), and opposition, including those from the Left parties, over fertile land allegedly being used for SEZs. Besides, the finance ministry had opposed giving tax breaks to SEZs saying it would lead to revenue losses of Rs 102,621 crore from 2006-07 to 2009-10, though the commerce ministry (the nodal ministry for the SEZ policy) had termed the revenue loss estimates as notional.

The eGoM is expected to discuss the issue of denotification of notified SEZs, especially in the light of legal complications that have arisen regarding awarding compensation to developers in the recent controversy over scrapping of SEZs in Goa, sources said. Meanwhile, the next board of approval meeting has been fixed for May 2 to take up several proposals to set up SEZs.

The eGoM, headed by external affairs minister Pranab Mukherjee, will also discuss allowing states to acquire up to 30% of land in a proposed SEZ, in cases where the developer has acquired the remaining 70%.

The move to let developers build additional facilities in non-processing areas without tax concessions will improve the commercial viability of SEZs while relaxation of the 5,000-hectare ceiling will boost the ultra-mega multi-product SEZ plans of developers like Reliance Industries Ltd, DLF, Adani, Omaxe and the Singapore-based Ascendas group.

The commerce ministry has cited the revised relief and rehabilitation policy notified in October 2007 and the Cabinet nod for the proposed amendments to the Land Acquisition Act, 1894, to contend that the eGoM can relax the ceiling now.