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Govt tries to break SEZ stalemate as foreign investors turn restive

Govt tries to break SEZ stalemate as foreign investors turn restive
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First Published: Fri, Mar 02 2007. 12 35 AM IST
Updated: Fri, Mar 02 2007. 12 35 AM IST
New Delhi: Facing renewed pressure from foreign companies as well as state chief ministers, the commerce ministry has once again petitioned a group of cabinet ministers that is looking at issues pertaining to special economic zones (SEZs) to allow 111 companies ,which have already acquired land and 51 that are awaiting notifications, to be cleared as early as possible.
The fresh petition to the empowered group of ministers on SEZs, headed by external affairs minister Pranab Mukherjee, stems from some foreign investors, who are running out of time on their contractual commitments.
Lotus Footwear Enterprises Ltd, a group company of Feng Tay Enterprises, a Taiwanese company which manufactures shoes for global brands, last week wrote to the commerce ministry seeking a clarification on the government’s stand on SEZ. “We have the land in possession and were contemplating to get the SEZ notified and start construction immediately as we are running against time on account of being under contractual obligation with our worldwide buyers whom we have to export 100% of our production,” the company said in its letter.
Meanwhile, Andhra Pradesh chief minister Y.S. Rajasekhar Reddy, in his letter to the Centre, made a specific reference to Brandix SEZ which was expected to provide employment to 60,000 people. The company is understood to have indicated to the state government that with further delays, the cost of shifting out could prove to be cheaper than the cost of waiting. A Union government official, who did not wish to be identified, said one major builder had started construction in one of its SEZs that is awaiting formal approval since it is under contract to provide buildings to the companies wanting to set up units inside the SEZ by April.
“There is a concern that foreign investors that have only received in-principle approval may not hesitate to exit, since they are not committed to the project until the project is finally approved and notified,” the official said.
Officials also said that several state chief ministers were now writing to the Centre that the freeze should be lifted on cases where the land was already in possession of the company wanting to set up the zone.
In addition to Andhra Pradesh, the CMs of Tamil Nadu, Karnataka and Gujarat have also written to the Centre while some other states, such as Haryana, have indicated their intention to do so.
The GoM had on January 22 had allowed the commerce ministry to issue any pending permission with regard to the 63 SEZ that have been notified so far. It had however imposed a ban on clearances to any other SEZ. There are 237 zones which have been formally approved and are awaiting notification and an additional 300 zones which are in early stages of approval.
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First Published: Fri, Mar 02 2007. 12 35 AM IST