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SEZ developers redraw plans

The new norms set by the EGOM will see plans being modified, report Arun Kumar and Gaurav Choudhury.

business Updated: Apr 06, 2007 21:41 IST

Developers of special economic zones (SEZs) may have to modify their plans according to the new norms announced by the empowered group of ministers on Friday limiting the size of the zones to 5,000 hectares (around 12,500 acres) and raising the share of the area in them used for principal activities to half, up from the existing 35 per cent.

At the same time, while some SEZ developers hinted that the government might have done them a favour by allowing them to procure land directly from landowners, others felt the government withdrawing itself from the land acquisition process could lead to a logistics nightmare in property title searches.

“The policy will help the smaller SEZs but not the larger ones,” said Mohandas Pai, a director of Infosys Technologies. “In this country it is difficult to find a piece of land -- 1,000 hectares or more -- without inhabitants. It will be impossible for the developers of SEZs to acquire such plots of land,” he added.

An SEZ developer said on condition of anonymity that raising the area of core activity to 50 per cent of a declared zone would jeopardise the viability of SEZs. “Developers will now have to work backwards to achieve financial viability,” he said.

Rajiv Singh, vice-chairman of DLF Universal, which was planning an SEZ of more than 8,000 hectares in Gurgaon, termed the new norms as “investor-friendly”. “Even 5,000 hectares is quite a big area and optimal for an SEZ. The decision to ask developers to acquire land directly from farmers will create a conducive environment and make the process of land procurement easier,” said Singh.

Rohtas Goel, chairman and managing director of Omaxe Ltd, said the government had given a clear indication of forward movement on SEZs. “The acquisition of land directly from farmers will facilitate the process. The clarity will also help in achieving financial closure,” he said.

Reliance Industries, which had planned a 10,000 hectare SEZ spreading from Gurgaon to Jhajjar, will also have to rework its plans. While the company spokesman declined to comment, sources indicated Reliance Industries could take out certain projects from within the SEZ.

“The company has already acquired about 9,000 acres for the SEZ in Jhajjar directly from farmers at negotiated prices. The original plan included an airport across 1,500 hectares, a food processing unit and a mega-power plant. The company may now think about bringing these projects out of the SEZ area,” said a source close to the company on condition of anonymity.

Suzlon Infrastructure, which is proposing to set up a high-tech engineering SEZ in Coimbatore, declined to offer any comment but maintained that it was examining the new norms and changes that these might require in the original plan.