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Troubled SEZs | Ambitious projects, poor execution

Troubled SEZs | Ambitious projects, poor execution
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First Published: Wed, Jun 10 2009. 12 51 AM IST

Landless: The proposed site of the Maha Mumbai SEZ, which has so far acquired only 20% of the land it required for the this mega project. Hemant Padalkar / HT
Landless: The proposed site of the Maha Mumbai SEZ, which has so far acquired only 20% of the land it required for the this mega project. Hemant Padalkar / HT
Updated: Wed, Jun 10 2009. 12 51 AM IST
Bangalore: As farmers in 45 villages in Raigad, Maharashtra, celebrated the Supreme Court’s decision against extending a land acquisition deadline for the Maha Mumbai SEZ project, Ulka Mahajan, an activist with the Anti-Maha Mumbai SEZ Committee, said the movement against forceful land buying has just begun.
India’s special economic zone (SEZ) story is one of land grabbing and forceful acquisition, alleges Mahajan. “We will hold protests against all such SEZs in Maharashtra. The SC (Supreme Court) verdict will strengthen farmers and will spread awareness among those who are being lured to sell their land for less money.”
Landless: The proposed site of the Maha Mumbai SEZ, which has so far acquired only 20% of the land it required for the this mega project. Hemant Padalkar / HT
An SEZ is an enclave aimed at increasing investment, exports and employment, and companies based in SEZs are eligible for tax and other incentives.
Maharashtra leads other states in terms of the number of SEZ projects that have the Union government’s approval. But of the 195 projects, only 51 have been notified so far, according to information on the SEZ(s) in India website, maintained by the department of commerce. This means only 51 projects in the state have been able to acquire the land needed for their SEZs.
The pattern is seen in other states too. Many of the 568 SEZ projects in India that have the government’s approval are stuck at the land-buying stage due to stiff opposition from farmers unwilling to sell their land. Even large projects aren’t spared. The Maha Mumbai SEZ project, proposed to be the country’s largest covering at least 10,000 ha, is promoted by billionaire Mukesh Ambani and his close associate Anand Jain.
Also See Maharashtra SEZs (Graphics)
The government is, however, upbeat about the prospects that these enclaves will open up.
The 19-member Board of Approval (BOA) for SEZs, which approves or rejects applications for such enclaves recommended by state governments, in its latest meeting in June said exports worth Rs99,689 crore were made from existing SEZs in 2008, 50% more than in the previous year. Investments worth Rs1.09 trillion have been committed till date and 387,439 jobs have been generated.
India is trying to emulate China’s SEZ model and plans to build a staggering number, but that country has judiciously developed only six SEZs in 30 years, said C.S. Sanghvi, an SEZ consultant.
The Indian government, on the other hand, has sanctioned even tiny SEZs measuring 30-40 acres, while China has always built large enclaves, the biggest being a 32,700 ha one in Shenzhen, Sanghvi added.
“The SEZ story in India belongs to developers who took advantage of a real estate boom; indiscriminate sanctions (were) doled out to those who didn’t have experience of building large townships. Here, profitability always remained the prime concern without thinking of infrastructure and other challenges associated,” said Sanghvi.
In Maharashtra, private projects such as the Maha Mumbai SEZ and Videocon Realty and Infrastructure Ltd, a unit of Videocon Industries Ltd, have faced the brunt of the farmer agitations.
Faced with stiff resistance, the Maha Mumbai project has in two years acquired only 20% of the land it needs. According to Indian law, a firm has to buy the land it needs within two years from the date of the publication of a declaration. If that deadline is not met, the entire proceeding for the acquisition will lapse.
Videocon Realty and Infrastructure, a unit of Videocon, too, is struggling to get its three SEZs in Maharashtra off the ground.
“The land situation is the same everywhere. We are still negotiating with farmers for our projects though the process is very slow,” said Venugopal Dhoot, chairman, Videocon Industries. The company was denied an extension for land acquisition on 2 June for its Pune SEZ.
The process has been smoother for projects involving government agencies, which typically acquire the land before seeking the government’s approval. The Maharashtra Industrial Development Corporation, a state-government agency, is developing the maximum number of SEZs in the state. It is building 14 on its own and seven with private firms such as Parsvnath Developers Ltd.
“Land acquisition is expensive and is a slow process. Due to the downturn, many developers and companies are rethinking their decision of going ahead with SEZ projects,” said a senior official with the Maharashtra urban development department, who did not want to be identified.
madhurima.n@livemint.com
Graphics by Sandeep Bhatnagar / Mint
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First Published: Wed, Jun 10 2009. 12 51 AM IST