Reliance Industries has termed the decision to cap the size of special economic zones (SEZs) as a "knee-jerk reaction" and has said it will take up the matter with the government.
"The cap on the size of SEZs does not exist in any other country. This is one of the vital issues that will be taken up with the government," Anand Jain, who heads Reliance Industries’ SEZ group and is chairman of the Maha Mumbai SEZ, told PTI.
A day ahead of presenting the annual supplement to the foreign trade policy, Commerce and Industry Minister Kamal Nath on Wednesday indicated that the government was open to relaxing the norms for SEZs beyond the cap of 5,000 hectares imposed by the empowered group of ministers this month.
Most of the applications for multi-product SEZs have been in the range of 1,000-2,500 hectares. A few, including that proposed by Mukesh Ambani promoted Reliance Industries, were for more than 5,000 hectares.
“Should a proposal for an SEZ be for an area larger than 5,000 hectares, after examining its impact on the economy overall, the government could consider it,” Nath said. “Once the rehabilitation policy is in place, the government will look into it. It (the ceiling) is not part of the SEZ Act, but part of the rules,” he added.
Nath also admitted a strengthening rupee was hurting exports and the government would discuss the matter with the exporting community in the coming week. "Of course, the rupee is hurting exporters. We will be discussing that with exporters next week," Nath told reporters after releasing a UN report on socio-economic growth of Asia.
Trade observers will be closely watching the annual supplement to the foreign trade policy that will be announced by Nath on Thursday. The government is expected to set an export target of $150 billion for 2007-08.
Releasing the UNESCAP report, Nath pointed out that “apart from the remarkable performance in IT services, India is rapidly emerging as a force in manufacturing exports, with capital-intensive products featuring prominently”.
The report says India is less reliant than many other countries in this part of the world on exports for growth. “Domestic demand is important for promoting economic growth in India. Private consumption is by far the largest contributor, with a stable share over the last 25 years and a large contribution to GDP growth,” it says.