Adani, Essar, Hindalco and 6 other SEZs face govt axe

Days after promising it will unveil measures to revive special economic zones (SEZs), the government has cancelled approvals for nine of them, including Essar and Adani in Gujarat, as progress made by them were not satisfactory.

The cancelled SEZs include Hindalco Industries that proposed to set up an aluminium product SEZ in Orissa, Essar Jamnagar SEZ for a multi-product zone in Gujarat and Adani Townships & Real Estate Company that was to come up with an information technology zone in Gujarat.

Approval to all the three SEZs was given in between 2006 and 2007. Thereafter, in some cases they were granted many extensions from time to time. Some of them did not seek any extension but have not been able to develop the SEZs on some pretext or the other.

The decision for cancellation was taken on September 18 by the Board of Approval headed by Commerce Secretary Rajeev Kher.

The commerce ministry said that the Board had come to a conclusion that the progress made by the developers in each one of the developers was not satisfactory.

In the case of Adani Townships & Real Estate Company, the formal approval was given in June 2007, according to the ministry documents, the approval expired in 2010. The company never applied for any extension. 

Demand scenario

The developer had reported that they could not proceed with the SEZ project due to adverse demand scenario from IT sector and accordingly they are not interested in perusing the project.

Hindalco Industries had proposed to set up an aluminium product SEZ in Orissa. The formal approval to the developer was granted in July 2007. The developer was granted extension from time to time and the last extension granted expired on December 31, 2013.

Essar Jamnagar SEZ Ltd, which was to come up with a multi-product zone in Gujarat, got the permission in August 2006 which according to the rule expired in August 2009. The developer did not make any request for further extension of approval.

The SEZ rule states that the formal approval is valid for a period of three years by which time at least one unit has to commence production. Extension is granted in some cases subject to satisfaction of the Board of Approval.

Earlier this month, on completion of 100 days of Narendra Modi government, Commerce Minister Nirmala Sitharaman has said the government will soon unveil steps to revive SEZs, refocusing them as exports and manufacturing hubs.

She had also indicated adjustments in taxes like minimum alternate tax (MAT) and dividend distribution tax (DDT), levies that have substantially reduced attraction of these zones proposed to boost exports.