Centre dares Goa, says SEZs once notified cannoat be cancelled

NEW DELHI: In a move that could lead to a direct confrontation with the Goa government over the special economic zone (SEZ) policy, the Centre has said that the three SEZs notified in the state –– pharma major Cipla’s Meidtab Specialities, Raheja’s IT/ITeS SEZ and Peninsula Pharma’s biotech SEZ –– cannot be denotified.

The Goa government that has decided not to house any SEZs is sure to find the Centre’s stand unpalatable. Moreover, the Centre also feels that the onus is on state governments to compensate promoters of notified SEZs if the door is shut on their projects. Goa chief minister Digambar Kamath is expected in New Delhi on Thursday and he is likely to meet commerce & industry minister Kamal Nath to discuss the row over SEZs.

Following a meeting of the board of approval (BoA) of SEZs, which granted formal approval to 24 proposals and in-principle clearance to four, commerce secretary G K Pillai said on Wednesday that there was no provision under law to denotify SEZs. “The SEZs that have been notified have become legal entities and cannot be denotified,” Mr Pillai said.

Mr Pillai said there could be legal consequences if the attempts were made to denotify the notified SEZs as investments has already been made in the zones. Meditab has invested more than Rs 500 crore in its SEZ. "Duty-free equipment has also started coming in. How will the state government compensate the developers," Mr Pillai said. Developers may even approach the court against the decision of the Goa government, he added.

Mr Pillai said the four remaining SEZs, which had been formally approved but not notified, could be cancelled. The ones in danger of cancellation include Inox Mercantile’s biotech SEZ, Paradigm Logistics IT/ITeS SEZ, Panchbhoomi Infrastructure’s IT SEZ and Planetview Mercantile’s gems & jewellery SEZ.

The Goa government had decided to scrap all SEZs in the state following widespread political protests initiated by the BJP and subsequently endorsed by the Congress, NCP and the Catholic Church. There have been protests against individual SEZs in a number of states including West Bengal, Maharashtra and Haryana. However, Goa is the first state where the entire policy is being challenged.

The 24 proposals given formal approval on Wednesday include Steel Authority of India (SAIL)’s SEZ at Salem in Tamil Nadu, Iffco’s multi-product SEZ in Andhra Pradesh, Dr Reddy’s pharma SEZ in AP and Orion’s IT SEZ in West Bengal.

The Centre has formally approved 404 SEZs out of which 187 have been notified. SEZs enjoy several tax sops including income tax exemption for a specified period under the SEZ Act 2005 and SEZ rules notified in 2006.