The Hindu Business Line : Lending to SEZs: `eGoM to take call on RBI's stand'

New Delhi March 13 The Union Commerce and Industry Minister, Mr Kamal Nath, on Tuesday said that the Empowered Group of Ministers (eGoM) would take a call on the Reserve Bank of India interpretation of bank lending to special economic zones (SEZs) as "exposure to commercial real estate".

Talking to newspersons here on the sidelines of an international seminar on the WTO, organised by the Commerce Ministry here, Mr Nath has also sought the intervention of the Prime Minister, stating that the apex bank was not right in treating banks' advances to SEZs as exposure to real estate.

He said SEZ was an industrial cluster with dedicated infrastructure designed to promote the country's exports through focused value-addition activities.

"If a hotel comes up on the land, it does not become a real estate," the Minister quipped.

Mr Nath also said that several Chief Ministers and Union Ministers have written to him urging for some forward movement on SEZs development arguing that these "vehicles for growth and development" should not be grounded. He said that he has forwarded these letters to eGoM, which would decide on the issue.

Officials in the Commerce Ministry have denied that the land allotted for SEZs were being largely diverted for real estate business. They said the land area notified as SEZ is required to be developed within three years of the date of notification.

The Board of Approval on the basis of list of activities notified by the Central Government grants the authorised activities eligible for tax concessions. The development of infrastructure such as housing, commercial spaces, recreational amenities is allowed in a phased manner depending on the progress in allotment/occupancy in the processing area, they said.

No fresh acquisition

They further said in the 234 valid formal approvals granted till date for SEZs, the extent of land involved is 33,807 hectares of which roughly 17,800 hectares of land was already in the ownership/possession of State industrial development corporations. The rest of the land was already in the possession of the developers. Thus in all these 234 cases, there was no fresh acquisition of land.

Out of the 234 valid formal approvals granted till date, 63 SEZs have been notified where investment of Rs 13,435 crore had already been funnelled. Expected investment in these SEZs is of the order of Rs 53,561 crore by December 2009, they said.