INDIA

Two more SEZs get nod to leave Gujarat

Apart from central tax burden, developers cite sector-specific issues behind dropping plans

Updated : Mar 28, 2011, 06:43 PM IST

It seems the special economic zones (SEZs) which once seemed booming are finding it tough to survive. In Gujarat, two more SEZs were allowed to withdraw their formal approvals just two days back.

Their requests for withdrawal of approvals were granted at the Board of Approval (BoA) of SEZ meeting on Friday last.

Though there are various reasons behind developers withdrawing their SEZ projects, levying of tax on SEZs by the union government is said to be the main reason. The two companies whose withdrawal requests were granted on Friday are Gujarat Hydrocarbons & Power SEZ Limited, and Mexus Corporation.
In case of Gujarat Hydrocarbons & Power SEZ Limited, it had got formal approval for setting up of sector-specific SEZ for energy, including new and renewable energy, at Vilayat in Bharuch district. In its withdrawal request, the developer mentioned two reasons: uncertainty in international market, and complexity in legal
frameworks.

“The company had passed a resolution on withdrawal of formal approval because of uncertainty in the international market and in the legal framework governing SEZs,” said the request sent to BoA.

In case of Mexus Corporation, it had got formal approval for setting up IT or ITeS SEZ at Chala in Valsad district. In the withdrawal request, the developer cited that setting up IT or ITeS SEZ in Valsad might not be encouraging.

“The developer requested for withdrawal of formal approval stating that the environment for sector-specific SEZ for electronic hardware, software including IT/ITES in this part is not encouraging,” said the request sent by Mexus Corporation to BoA.
The developer again stated that the SEZ committee had cut down the area from 20.79 hectares to 11.11 hectares, putting a question mark on the viability of the project economically, aesthetically and in providing world-class infrastructure facilities.

Earlier, the proposed SEZs of DLF and Essar had been de-notified and the withdrawal request of Strength Real Estate Private Limited for an IT or ITeS SEZ in Vadodara had been granted. Ahmedabad-based SEZ consultant, Monish Bhalla, said the union government is giving "step-motherly treatment to SEZs". "Introduction of MAT on SEZs was one such step which may force for withdrawal of SEZs," he said.