News: Land cap queers Reliance SEZ pitch

(TT 05/10/2006) New Delhi - Mukesh Ambani-owned Reliance Industries’ plans to establish special economic zones (SEZs) in Navi Mumbai and Haryana could run into trouble with the government deciding to impose a 10 per cent ceiling on the double-cropped land that can be acquired for these projects.

Younger brother Anil Ambani’s proposal to set up an SEZ at Dadri in Uttar Pradesh could be snarled in similar problems as it is also coming up on fertile land where farmers produce two crops a year.

Commerce secretary G.K. Pillai today said under the new norms for SEZs, not more than 10 per cent of the total area of such zones can comprise double-cropped fertile land.

The norm has been introduced as the government wants to protect farmers from being displaced from fertile land and confine the SEZs to non-arable tracts that are not suited for farming.

Just two weeks ago, UPA chairperson Sonia Gandhi had said at a Congress conclave in Nainital that the government would announce measures to ensure that the SEZ projects did not displace farmers from fertile land.

Pillai said he anticipated the RIL proposals for setting up SEZs on huge tracts of fertile land in Navi Mumbai and Gurgaon to run into trouble because of this norm.

He said Reliance had not even applied for clearance for the proposed SEZ near Gurgaon in Haryana which is expected to cover a whopping 10,000 hectares.

The company is reported to have applied for approval for its Navi Mumbai project.

Pillai said even the 10 per cent fertile area was being allowed only in cases where it was absolutely essential to include an extra bit of contiguous land without which it would not be possible to set up the SEZ.

Defending the SEZ projects that have already been cleared, Pillai said, “Not a single farmer had been displaced in the 181 SEZs that the commerce ministry has cleared till now.” He said the state governments had already been informed not to include fertile land for SEZ projects.

Pillai said the hue and cry about farmers being displaced through SEZs was misplaced. The issue has been blown out of all proportion by those with misinformed opinions, he added.

Pillai said he had also written to the deputy governor of the RBI that SEZs could not be equated with real estate projects. He said, “I have asked him if any case of using an SEZ as a real estate project was brought to his notice, action would be taken immediately for violation of norms.”

Recently, the RBI had directed banks to raise the risk weightage on loans to SEZ developers to 150 per cent – on a par with the norms for loans to commercial estate developers. The move is seen as a major deterrent to credit access to build SEZs.

Pillai, who has just taken over as commerce secretary, said he had drawn up a vision plan that would spell out what was to be done to kickstart the process of establishing SEZs, including a drastic reduction in the time required for clearing export and import cargo.