New Delhi: In an apparent bid to give the Goa government some political space to retract its demand for scrapping the three special economic zones, or SEZs, that have already been notified, the Union government is likely to scrap on Wednesday the 12 SEZs in the state that have been given formal approvals but are yet to be notified. Units operating out of SEZs are eligible for fiscal and other benefits and incentives.
Under pressure: Goa chief minister Digambar Kamat. In December, the state had demanded that the Centre scrap all SEZs there.
The board of approval (BoA) for SEZs, the government body that authorizes the setting up of SEZs, is meeting on Wednesday. It first approves the SEZs and after the land acquisition is complete, it “notifies” them. It is only after this that the tax and other incentives kick in.
“I believe the three SEZs in question will be allowed to continue since scrapping them helps none of the parties concerned,” said a senior commerce ministry official, who spoke on condition of anonymity.
The three SEZs are being developed by Meditab Specialities Pvt. Ltd, an associate of Cipla Ltd (for pharmaceuticals), Penisula Pharma Research Centre Pvt. Ltd (for biotechnology) and K Raheja Corp. Pvt. Ltd (for software and back-office services).
In December, the Goa government, under pressure from local groups that saw SEZs as a “land grabbing exercise”, demanded the Union government scrap all SEZs in Goa.
At a 25 February meeting, BoA decided to issue notices to the 12 SEZs that had formal approval, asking them why they should not be scrapped, and said that eight other proposals for SEZs in Goa would be “treated as withdrawn”. The board later initiated talks with the state government over its demand to “denotify” the three SEZs.
The official said the state might have to pay Rs350-500 crore as compensation if it sticks to its demand for scrapping the three notified SEZs, whose developers had moved the Goa bench of the Bombay high court after receiving a “stop work” order from the Goa government in January.
“The Centre has advised the Goa government to find an amicable solution to the issue. I believe the state government will withdraw its notice to the developers within the next two weeks and the scrapping of the 12 SEZs will give the Goa government an opportunity to give up the demand for ‘denotification’,” the official added.
If that happens, “it will send a positive signal to investors. At least we would know that a Goa-like situation will not happen again,” said Mukesh Khandelwal, president, corporate advisory services, at New Delhi-based infrastructure consulting firm Feedback Ventures.