Cipla looks north for special economic zone

Cipla looks north for special economic zone
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First Published: Thu, Feb 21 2008. 12 23 AM IST
Updated: Thu, Feb 21 2008. 12 23 AM IST
Mumbai: Cipla Ltd is looking to move a special economic zone or SEZ planned for Goa after the state government reversed its earlier stand and asked the Centre to denotify the zone.
The drug maker, one of the top three in the country by sales, is now considering Indore in Madhya Pradesh and Sikkim as potential locations for its SEZs. A senior Cipla executive who did not wish to be identified said the company plans to take the Goa government to court seeking compensation because it has already spent some money on developing the zone.
Goa, which had initially approved the project, decided in November not to have any special economic zones in the state. It subsequently asked the Union government to denotify three zones in the state. Mint learns that the Centre has told Cipla that there is no provision to denotify a zone once it has been notified. However, Union commerce minister Kamal Nath, whose ministry oversees SEZs, has said the Centre has no desire to force states to host SEZs. And Goa itself has written to the Centre with reasons why SEZs located in the state need to be denotified.
Factories and other units in SEZs are eligible for fiscal and other benefits. The zones were conceptualized as part of an effort to boost exports while encouraging companies to set up units in parts of the country they would not otherwise have considered.
All SEZs have to be approved by both the Centre and the state government. The notification, which means that the zone is now kosher enough for units located within to claim fiscal and other benefits, is done by the Centre.
However, the entire SEZ process has been mired in controversy, largely related to forcible acquisition of land by the state governments on behalf of private developers. The Centre has come up with a comprehensive legislation on rehabilitating people displaced by the zones but Parliament is yet to clear it.
Cipla had already started work at the Bhootkhamb plateau in Keri village in northern Goa after the 400-acre zone was approved. Cipla had spent Rs200 crore, said the executive who mentioned that the company will take the state to court.
The total investment in the project, which envisaged the creation of the country’s biggest drug manufacturing facility, would have been around Rs1,500 crore. The project, which was being set up by Cipla’s associate Meditab Specialities Pvt Ltd, had promised employment to 100,000 people and exports of Rs2,500 crore in five years.
“The work at the Goa site has already been stopped and we are in the process of preparing a contingency plan looking at the best alternative location for setting up this export zone,” said Cipla’s company secretary S. Radhakrishnan.
Cipla already has a 40-acre SEZ at Indore, which it may expand to accommodate some of the plants relocated from Goa, he said.
The 400-acre SEZ was notified in 2007 after it was approved by both the state and the Centre but it hit a roadblock after environmentalists raised concerns about pollution levels in the plateau.
Cipla had responded to these by clarifying that the proposed export zone at Keri was a “green” or pollution-free facility.
“The company had also conceded all the demands such as starting a school and offering jobs to locals that were put forward by the local administration body,” said the Cipla executive.
The executive claimed that a majority of the local population had later come forward to support the project if it was built as an industry rather than as an export zone, but added that this wasn’t possible because “the project was proposed as a dedicated export zone to avail the special incentives granted to such units and not as yet another manufacturing facility.”
Cipla has nine drug manufacturing plants at Verna in Goa. The company’s managing director Amar Lulla had said in an earlier interview that none of these had received complaints regarding pollution.
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First Published: Thu, Feb 21 2008. 12 23 AM IST
More Topics: Cipla | Drug | SEZ | Corporate News | Sector Spotlight |