India’s largest SEZ in limbo
The future of India’s largest free-trade zone, the 10,000-hectare Mumbai Special Economic Zone (MSEZ) in Maharashtra’s Raigad district, appeared to be in jeopardy on Friday after the Supreme Court refused to give MSEZ — promoted by Mukesh Ambani (52) and expected to cost Rs 40,000 crore — more time to acquire land for the project. Ketaki Ghoge & Satya Prakash report. See graphicsindia Updated: Jun 06, 2009 09:04 IST
The future of India’s largest free-trade zone, the 10,000-hectare Mumbai Special Economic Zone (MSEZ) in Maharashtra’s Raigad district, appeared to be in jeopardy on Friday after the Supreme Court refused to give MSEZ — promoted by Mukesh Ambani (52) and expected to cost Rs 40,000 crore — more time to acquire land for the project.
At one-third the size of Mumbai, MSEZ was to be built on a site close to the new international airport as well as the Mumbai-Pune Expressway. It was also to be connected to the metropolis by India’s most ambitious sea bridge, the 22.5-km Trans-Harbour Sealink.
<b1>First cleared in 2005, only 20 per cent of the land — occupied by 45 villages comprising mostly paddy farmers — has been acquired despite getting two extensions for the acquisition by a government board. The remaining land was not acquired because of opposition from villagers.
This could seriously impact the SEZ’s fate. The acquisition process must end between June 9 and July 26, leaving MSEZ virtually no time to wrap it up.
An MSEZ spokesperson only said “the company would decide on a course of action later”.
Ambani, through Sea King Infrastructure, is also developing the Navi Mumbai SEZ with City and Industrial Development Corporation as a partner. MSEZ adjoins it at its southern end.
The road ahead
There are two possible scenarios. The project could be scrapped or Ambani, who’s worth an estimated $20.8 billion (Rs 1.04 lakh crore), could try to rescue it.
That would almost certainly jack up the cost to Rs 50,000 crore, said an independent analyst, requesting anonymity.
The land acquired so far — at Rs 10 lakh per acre for fertile land and Rs 5 lakh per acre for unproductive land — is in the Uran and Pen talukas and is not contiguous. Because it is acquired in patches scattered apart from each other, the company cannot even go ahead with the first 2,126-hectare phase.
There are other regulatory problems. The government’s Board of Approvals cannot grant it full approval unless 90 per cent of the land has been acquired.
Even if MSEZ goes ahead, it would have to pay higher rates for the remaining land due to the vehement opposition from villagers who would be displaced by the project.
In a state-run referendum in September 2008, land-owners in 22 villages were said to have opposed the land acquisition. The government has not yet formally revealed the result.
Court not impressed
MSEZ petitioned the Supreme Court against a Bombay High Court order that refused to stay the land acquisition. On Friday, the Supreme Court upheld the high court order. A stay would have allowed MSEZ to go beyond the acquisition deadline.
The SEZ Board of Approvals can still extend the deadline, though.
A bench headed by Justice B Sudarshan Reddy came down hard on MSEZ. It wondered why the company moved the high court only on May 22, 2009, when it knew that the deadline expired less than a month. “You moved the court around May 22 and you expect that the matter will be decided… You pressurised the high court to pass the order, which it refused to do so… What is going on in this country?” the bench said.
The deadlock over the deadline stems from the fact that the Maharashtra government had invoked the Land Acquisition Act (1894) for MSEZ. As per this law, the transfer of ownership must be completed within three years or the entire process lapses.
This means that the state would no longer be required to acquire the remaining land, forcing MSEZ to approach land-owners individually and convince them to part with their property. The price for each property would then have to be negotiated individually.
State officials are tightlipped over what could happen next. “The law is clear. I don’t remember when the procedure lapses. The matter is sub-judice,” said JP Dange, forest secretary in charge of the acquisition.
State to the rescue? Unlikely
Sources said the government could technically still announce land transfers, despite farmers’ protests, if procedures like hearings before the collector are over. The other alternative could be to amend the law. Both seem unlikely.
The Democratic Front government, stung by electoral reverses in Raigad in the recent Lok Sabha elections, is reluctant to do anything remotely unpopular. The Assembly elections are just three months away.
“We have no plan to amend the law. I am yet to see the apex court ruling, but our government stands by the policy that land should not be forced from farmers,” said Revenue Minister Patangrao Kadam. Chief Secretary Johny Joseph said: “We will work within the framework of the law.”
Ulka Mahajan, of the Anti-Globalisation Front that is at forefront of the anti-SEZ protests, said: “We are happy that the Supreme Court rejected [MSEZ’s] plea. This is victory for farmers. We hope the government gets the message.”
In court, MSEZ counsels Shanti Bhushan and PP Rao said if they were not given more time, farmers who had sold their property would be affected, not to mention the whole project would be in jeopardy. The lawyers pointed out that those who had sold their property would lose out on the “attractive” rehabilitation schemes, which included jobs in the SEZ as well as an option to buy the equivalent of 12.5 per cent of their land holdings elsewhere at a subsidised price.
On behalf of the farmers, senior counsel Rakesh Dwivedi said the project was “unworkable”.
(Inputs by Devraj Uchil)
First Published: Jun 06, 2009 00:43 IST