INDIA BUSINESS WORLD - MAY - JUNE 2007
The Month that was ...

GOVT FREES VOLUNTARY SEZ LAND BUYS

This will come as a relief to special economic zone (SEZ) developers. The government has decided to allow states to acquire land for SEZ projects on behalf of private developers, provided owners sell their land voluntarily.

Also, the ban on compulsory acquisition by states-announced by the government last month-will not be applicable with retrospective effect. This means that developers, including Reliance and Tatas, who took the state governments' help in buying land before April 5, 2007, will be permitted to retain it.

Land acquisitions have been a vexing issue for SEZ developers-there have been many recent instances of company officials being roughed up by farmers. The resettlement and rehabilitation aspects involved also makes it a contentious issue.

Government decision means that for future purchases, states will have to produce signed documents by owners of the procured land with details of the transaction terms and a certification showing the owner's consent. The decision to allow states to go ahead with voluntary acquisition will especially benefit foreign investors with little knowledge of the country.

A commerce department official added that the empowered group of ministers (eGoM), which had banned acquisitions by state governments last month, wanted it to apply only for land where owners are forced to part with their property. While there was some confusion initially, it is now clear that the ban will be placed only for compulsory acquisition. Where the acquisition by states is done with the sellers' assent, the Centre has no problems.

The eGoM on SEZs had decided to bar states from forcible land buys for private developers following a string of violent protests.