New Delhi: Even after the Supreme Court refused to provide a breather to the proposed Maha Mumbai Special Economic Zone (MSEZ), promoted by Mukesh Ambani and his close associate Anand Jain, all may not be over for the country’s largest SEZ.
The project could still see the light of day, a commerce ministry official told Mint on Saturday on condition of anonymity.
“There is no question of scrapping the SEZ,” the bureaucrat said. “They have around 5,000 acres of land whereas they need 2,500 acres to run a multi-product SEZ. The judgement does not affect (the future of) the project.”
Ground reality: Land in Raigad that was to be part of the project. MSEZ claims it has agreements with 3,800 landowners to acquire 4,800 acres. Hemant Padalkar / Hindustan Times
A special economic zone is an enclave aimed at increasing investment and exports. Companies based in SEZs are eligible for tax and other incentives.
According to India’s Land Acquisition Act, 1894, land needs to be acquired within two years from the date of the publication of a declaration, and if no award is made within that time, the entire proceeding for the acquisition of the land will lapse.
The Supreme Court on 5 June dismissed a plea by MSEZ to effectively extend the deadline to complete the land acquisition process.
Although, technically, the deadline for land acquisition ends on 8 June, advocate P.P. Rao, who appeared on behalf of the petitioner Mumbai SEZ Ltd, maintains that the company has time till the last week of July to acquire the land. He said the deadline refers to the publication of the land acquisition notice in local newspapers.
“We have a month more to pursue the matter with the district collectors,” Rao added.
Mint couldn’t immediately confirm this with the state administration.
MSEZ was originally envisaged as a multi-product SEZ on 10,000 hectares of land (24,710 acres). However, analysts say that the promoters could reduce the size of the enclave and approach the Board of Approval (BoA) for SEZ, seeking final approval.
The 19-member BoA considers and approves or rejects applications recommended by the respective state governments.
According to the SEZ Act, a promoter needs a minimum of 2,500 acres to build a multi-product SEZ.
If the company possesses at least 2,500 acres of contiguous and vacant land, it can approach the BoA for formal approval, said L.B. Singhal, director general, Export Promotion Council for EOUs and SEZs. EOU is short for export-oriented units.
MSEZ has signed registered agreements with 3,800 landowners to acquire 4,800 acres by investing Rs600 crore, claimed advocate Shanti Bhushan, who also appeared at the country’s apex court on behalf of the SEZ. The total cost of the project is Rs10,000 crore.
The actual acquisition of land can only happen when the state government gives its clearance.
Rakesh Dwivedi, an advocate fighting the case on behalf of landowners, said: “The Maharashtra government has to decide whether it wants to go ahead and allow the project to come up in the fertile land at a time when the state is going to make food security a right of every citizen.”
MSEZ spokespeson Dilip Chaware declined comment.
MSEZ would have been a signature project for a state that hasn’t seen projects of this scale in recent years. The development of the special economic zone in the fertile Raigad district, however, has come under fire from landowners and local activists.
The assembly elections are due in Maharashtra in three months and analysts say the state government may find it difficult to give the go-ahead to the project.
If it does not allow land acquisition, the current process of land acquisition will end, though the government approval for the SEZ will remain valid. This means the promoter will have to go to landholders directly and negotiate, said an executive at an audit firm, asking not to be identified.
The state government may also choose to issue a fresh notification if approached by the company. If a fresh notification is issued, the landowners will get compensation at 2009 prices, but if the present notification is extended, landowners will get compensation at the previously agreed 2006 prices, said an executive at another audit firm who, too, didn’t want to be identified.
“This will benefit the landowners but will increase the cost of the project,” the analyst added.
Incidentally, MSEZ is not the only project that has not been able to acquire land within the stipulated period. The Times of India on 7 June quoted an unnamed Maharashtra state industries department official as saying: “Preliminary reports said seven to eight promoters will have no option but to drop their proposals as they have not acquired the land.”