New Delhi: The Union government has begun the process of closing down three special economic zones in Goa that had been approved by it and the state government after the latter changed its mind and decided that Goa would not have any SEZs.
The Union government is also considering a compensation package for the developers of the three zones.
G.K. Pillai, commerce secretary and the chairman of the Board of Approval (BoA), the government body that authorizes the setting up of SEZs, said the Union government, without setting a deadline, had initiated talks with the state government to denotify the three SEZs.
He said the government will also issue “show cause” notices to the developers of 12 SEZs, which were granted an in principle approval but are yet to be notified, to explain why their SEZs should not be scrapped.
Taking stock: Commerce secretary G.K. Pillai says the eight other proposals for special economic zones in Goa would be treated as withdrawn, but declined comment on the issue of compensating developers.
The notification of a SEZ means the developers and companies located within it are eligible for tax and other benefits. Pillai said that the eight other proposals for SEZs in Goa would be “treated as withdrawn.”
The BoA also gave formal approval to 10 more SEZs across the country.
While Pillai declined comment on the issue of compensating developers, other government officials said on the condition of anonymity that the law ministry had advised the Union government to offer a compensation package to avoid litigation.
The three SEZs that have been scrapped in Goa were being developed by Meditab Specialities Pvt. Ltd, an associate of Cipla (for pharmaceuticals), Penisula Pharma Research Centre Pvt. Ltd (for bio-technology) and K Raheja Corp. Pvt. Ltd (for software and back-office services).
Yusuf K Hamied, chairman of Cipla, which had begun work on a 400-acre SEZ at Keri in Goa, said his company was yet to hear anything from the state and the central government either on the zone being denotified or a compensation. “Since we have already decided not to pursue the project, we are happy if the government is working on a compensation package,” he added.
Mint reported on 21 February that Cipla was looking at relocating facilities planned for the Goa SEZ.
SEZs were conceptualized as part of an effort to boost exports while encouraging companies to set up units in parts of the country they would otherwise not have considered. All SEZs have to be approved by both the Centre and the state governments. The notification is issued by the Centre.
While the SEZ Act of 2005 does not have any provisions for denotifying an already notified SEZ, some experts do not see this being a hurdle for the government.
“I don’t think it should be a problem especially if there are no operating units in the SEZs as yet,” said Mukesh Khandelwal, president, corporate advisory services at Feedback Ventures, a Delhi-based infrastructure consulting firm.
C.H. Unnikrishnan in Mumbai contributed to this story.