INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

GOVT TO LIFT FREEZE ON SEZ CLEARANCES

THE Congress leadership on Thursday gave its nod for lifting the freeze on SEZ clearances. At a meeting with the government leadership, the Congress gave its consent for issuing licenses to 60 "ready to be notified" units. These 60 SEZs have the final nod from the board of approvals but are awaiting a formal notification from the government to become operational.

However, the fate of 160 SEZs which have in-principle clearance but are yet to get a formal nod is uncertain. Same is the case with the 111 zones, which are yet to acquire land. A cap on those units that have got "in principle clearances" - another issue discussed at the meeting - could mean the end of the road for 325 proposals which are awaiting first stage clearance.

In an attempt to get the Left on board, the Congress has asked the government to act on the allies' demand for "a ceiling on the total land area under an SEZ which can be developed by a private entity". Under the SEZ rules, only minimum land area requirements for different classes of SEZs have been mentioned.

At the meeting, Congress leaders were of the view that the government should not give clearances to the entities which are yet to sort out land acquisition issues. A majority in the party is against the government getting involved in land acquisition for corporate. The land acquisition amendment bill is expected to give more clarity on the issue.

The Congress backing for the SEZ policy cannot but be a major relief for the government, which has been facing pressure from the Opposition and civil society after the Nandigram massacre. The ruling party's backing will come in handy while dealing with the skeptics of the policy within the alliance.