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SEZ: DIPP Sec says concerns on land use genuine

Written by: Staff

New Delhi, May 10: Joining the inter-ministerial row over land use for the Special Economic Zones, Secretary in the Department of Industrial Policy and Promotion (DIPP) Ajay Dua today said, concern over a large number of real estate firms getting in-principle sanctions for developing SEZs is 'not misplaced'.

He said a large number of developers were given sanction for the SEZs without acquiring land.

''There is a point, because a large number of them (the proposed SEZ developers) got sanction without acquiring land and a lot of them are real estate developers. These concerns may not be misplaced,'' Dr Dua said while releasing an Assocham study on SEZ.

Dr Dua's comments assume significance in the face of sharp differences between the key ministries of Commerce and Finance over the justification of a horde of SEZs being approved without an assessment of the revenue loss to the exchequer by way of tax incentives. Ironically, after the passing of the SEZ Act, notification of rules has kicked up a row within the government.

There is a vertical division on the criteria for minimum land requirement for an SEZ, particularly for the information technology.

The rules as notified by the Department of Commerce stipulate a minimum area of 10 hectares for an IT SEZ while the Finance Ministry wants the minimum area to be 25 hectares.

Dr Dua's remarks give a new twist to the controversy since they indicate not only an inter-ministerial division, but also a divide within the twin Ministry of Commerce and Industry. While the SEZ is an area being dealt with the Department of Commerce, DIPP is involved in certain approval procedures.

Besides, there is a sharp divide within different segments of the industry. ''Sharp developers are unlikely to pass up this opportunity to embark upon a land grab mission, knowing that the one resource tht is scarce and inelastic is land'', President of the National Association of Software and Service Companies Kiran Karnik had stated in his newspaper column yesterday.

Asked whether the Finance Ministry's objections over the revenue leakages are justified, the DIPP Secretary said that while the SEZ law, allowing tax breaks was passed by Parliament,the possible displacement of tax revenue would be of concern to any Finance Minister.

Dr Dua ruled out the SEZ status to the existing STPI (Software Technology Park of India) schemes.''It does not look they will get a SEZ status'', he said.

About the proposed Special Economic Zones, the DIPP Secretary said it is yet to be decided whether a legislation would be required or not.


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