Two years after India’s special economic zones (SEZs) policy was officially notified, the Union government has invited representatives from states to discuss ways to improve and standardize the regulatory approval process for such zones, which tends to vary across states.
The states are responsible for two stages in a three-stage approval process for SEZs.
Talking policy: The site for the Maha Mumbai special economic zone. Differences and delays have become evident and the Union government hopes the meeting with states will help streamline the process.
“A lot of differences and delays arise over time and sometimes an urgent reminder can be a wake-up call. The meeting this month will also get state industry secretaries to exchange their knowledge and experience on setting up SEZs,” said Union commerce secretary G.K. Pillai.
SEZs are defined economic regions where the government gives tax and other fiscal incentives to companies in an effort to promote manufacturing and exports, encourage investment, and create more jobs.
The Centre will meet the states on 25 February. Prior to this, the board of approvals for SEZs will meet and discuss the same issue.
The board, overseen by the Union commerce ministry, can endorse or reject SEZ applications recommended by the state governments. After the initial recommendation by the state government, and the approval by the board of approvals, developers of SEZs have to approach the state government concerned again for a so-called “single-window” permit to construct buildings and start operations.
However, developers claim that the 15-day deadline set for this approval is not being met. “It can actually take much, much longer, said Lalit B. Singhal, director general of the Export Promotion Council for SEZs and Export Oriented Units. The delays should not become a roadblock for the zones, he added.
Also, most states are yet to create a specialized body to consider fresh applications for SEZs, although the SEZ policy mandates that they create these. Only Gujarat has, so far, set up such a body, headed by the chief secretary, the senior-most bureaucrat in the state government. The commerce ministry will encourage more states to do so, said Pillai.
There are other issues that need to be considered as well, according to Mukesh Khandelwal, president, corporate advisory services at Feedback Ventures, a Delhi-based infrastructure consulting firm.
“According to the Constitution, large parts of the SEZ subject fall under state jurisdiction,” he said. “The Centre has been asking states to come out with at least a bare legislation governing SEZs.
“However, only Haryana has enacted a law and that too leaves a lot to be desired. I don’t know whether this meeting will help but it is surely required,” he added.
Since February 2006, the Centre’s board of approvals has given the all-clear to 197 SEZs and 439 others have been formally approved, which means developers have completed the land acquisition process.
“SEZs are moving in the right direction. Our concern is the continuity of the scheme itself. There should not be changes in the policy that impact viability and there should be equal implementation in all states,” said Ajay Nijhawan, vice-president of Reliance Haryana SEZ Ltd.
After a string of protests for large-scale industrial projects including SEZs throughout 2007, the government framed a new rehabilitation and resettlement policy and amended an older land acquisition policy. Both are yet to be approved by Parliament.
Udit Misra contributed to this story.