New Delhi: With no sign of any movement on the special economic zones (SEZs) initiative that has been put in cold storage, state governments are pushing the Centre to act.
For instance, Karnataka chief minister H.D. Kumaraswamy recently wrote to commerce minister Kamal Nath regarding the grant of early approval to a 100-hectare aerospace zone proposed to be located near Bangalore, said a senior government official who did not wish to be identified.
The empowered group of ministers (e-GoM), headed by external affairs minister Pranab Mukherjee, had on 22 January announced a temporary freeze on SEZs, and said it would meet again soon to decide whether the ban should continue for zones for which land has already been acquired. Since then, there has been no indication of when the next e-GoM meeting will take place. The only concession allowed by the e-GoM was that the commerce ministry could issue clearances for the 63 zones which have already been notified.
Politicians are concerned that further delay could see investors lose interest in projects in their respective states. The official said Kumaraswamy had said the project needed to be cleared early in view of the keenness of investors to set up units inside the zone. The proposed zone for manufacture of aerospace parts is being developed by HI Skill Investment Consultancy Pvt. Ltd.
Karnataka has received formal approval for 28 zones; notifications are pending for these. The state has received in-principle approval for 17 other zones. These zones have to be formally approved by the government after details of the land acquired for them are submitted.
The Andhra government has also written to Mukherjee to clear pending proposals as the present ban could adversely impact future investments in the state. The state has 45 zones that have been formally approved; nine zones have in-principle approvals.
Officials accept that companies whose notifications have been held up in the wake of the temporary ban imposed by the e-GoM could end up seeking legal recourse. The SEZ Act, 2005, and the rules lay down the procedure for clearances. “A company that has been given formal approval cannot as per law be denied the notification, which would allow the zone to enjoy the tax benefits,” an official said.
It is not just the states that are pushing for action. The commerce ministry had also urged Mukherjee to intervene and clear 41 pending proposals. The government has so far issued formal approvals to 237 zones and granted in-principle approval to 164 zones.