Centre cancels 22 SEZ approvals

Laggards get the boot for failing to deliver on vows to create jobs

The government has cancelled the formal approval of 22 special economic zones (SEZs), of which 19 are from information technology (IT) and information technology-enabled services (ITeS). The approvals to set up SEZs were cancelled as the developers had not made satisfactory progress.

Though the Commerce and Industry Ministry gave information on the cancellation on Wednesday, but the decision was taken at the meeting of the Board of Approval (BoA) headed by Commerce Secretary Rajeev Kher on May 19.

 Two of the cancelled SEZs are that of Tamil Nadu Industrial Development Corporation (TNIDC) and True Developers — both from Tamil Nadu. The former had proposed to set up a multi-product zone, while the latter had plans to set up an IT/ITeS zone. 

Sunwise Properties, Gurgaon (IT/ITeS); Progressive, Gurgaon, (IT/ITeS); Township Developers, Maharashtra (Engg.); and Uppal Group, Gurgaon (IT/ITeS) are few of the other cancelled SEZs.

Recently, the Comptroller and Auditor General (CAG) had analysed a representative sample of 187 developers and 574 SEZ units spread across the 13 states of Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal, and the union territory of Chandigarh, for the period 2012-13.

It found that most of the SEZs fell short of growth, employment, and export expectations by a wide margin. The report had also found that in many cases, the land remained idle with the developers. Manufacturing was supposed to be a key focus of SEZs, but that did not happen.

The board, which cancelled the formal approval of 22 SEZs, said the developers have to submit a certificate attesting to non-availment of any tax benefits, including service tax exemptions. It said that if they had availed any exemptions under SEZ rules, they have to refund the same.

More time for 27 players

The board, however, has given more time for 27 SEZ developers to implement their projects. They include Karnataka Industrial Areas Development Board, Gulf Oil Corporation, Vedanta Aluminium, Kandla Port Trust, and Navi Mumbai SEZ Pvt.

Of the 392 notified SEZs in India, about 77 per cent are located in developed states. Andhra Pradesh has 78 units, followed by Maharashtra (65), Tamil Nadu (53), Karnataka (40), Haryana (35), and Gujarat (30). The CAG finding said that a key reason for the uneven spread of the SEZs across the states was the absence of single-window clearances in many states. This has led to approval delays.

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