Centre show-cause to 12 firms; talks with Goa on SEZs begin

Written by Economy Bureau | New Delhi, Feb 25 | Updated: Feb 26 2008, 05:31am hrs
The Centre has initiated talks with the Goa government regarding the de-notification of three special economic zones (SEZs) in the state, including the 123.2 hectare-Meditab Specialities SEZ planned by pharma major Cipla.

The move follows the controversial decision of the state to scrap all SEZs within its territory following widespread public agitations against such tax-free enclaves.

The developers of Meditab SEZ have already made investments of over Rs 130 crore in the project.

Following a notification in April 2007, Meditab had also committed investments worth Rs 500 crore and imported machinery for its pharma plant. The law ministry has recommended addressing the issue of compensation to SEZ developers if the SEZs are de-notified.

Besides Meditab SEZ, the other de-notified SEZs in the state are 20.36-hectare biotech SEZ by Penisula Pharma Research Centre and 105.91-hectare IT/ITeS SEZ by K Raheja Corp.

The Centre has also issued show-cause notices to developers of 12 SEZs, which obtained formal and in-principle approvals, in the state, commerce secretary GK Pillai said here on Monday. Pillai heads the board of approval (BoA), the nodal body granting permission for establishing SEZs.

(As regards) all the formal and in-principle approval given to SEZs in Goa, the BoA will issue show-cause notices to them (developers) in the light of the recommendation of the state, following the principle of natural justice, Pillai said. The developers will be asked why the permission granted to them should not be cancelled.

On the 8 SEZ proposals that were forwarded by the state but yet to come before the BoA, Pillai said, the Centre has decided to treat them as withdrawn.

The state had on December 31, 2007, asked the Centre to scrap all the SEZs citing representations, which said the zones would adversely affect tourism and environment. The state also said it does not have adequate water and electricity for such massive industrial activities. There was also criticism that SEZs will take away scarce land in the state.

The Centre has indicated that the state government will have to compensate the developers of the SEZs for the investments made along with the interest amount to avoid litigation and further complications.

Officials wonder how the land, acquired for the notified SEZs, would be returned to the original owners. At best, the government can deny the developers the status of SEZ, which entitles them for tax concessions.

Even if the SEZ status is removed, the units will remain in the domestic tariff area, an official said.