The Hindu Business Line : SEZs: House panel flays ‘undue haste’

New Delhi, July 7 Coming down heavily on the ‘undue haste’ in approving proposals for establishing Special Economic Zones across the country, a Parliamentary Standing Committee has favoured a freeze on further notification of SEZs till the Act and rules are amended to address the public concerns, and the farmers’ agitation over acquisition of their lands.

In its report presented to the Rajya Sabha Chairman, Mr Bhairon Singh Shekhawat, recently, the House Panel led by its Chairman, Dr Murli Manohar Joshi, unequivocally said that “SEZs should not be allowed to come up at the cost of farmers. The country should develop its own model for industrial growth and expansion, while safeguarding the interests of the farmers.”

Addressing newspersons after releasing the report on the functioning of the SEZs here, Dr Joshi also protested against the local authorities for not allowing MPs of the sub-committee to meet the affected farmers in Haryana, Andhra Pradesh, Karnataka, Jamnagar and Mumbai. He said the Government is obliged to respond within three months with an action taken report on their recommendations and “we will not let the issue rest till the Government satisfies us”.

Slow down

To a query about a complete freeze on further notification might slow down SEZ development and delay the putative benefits, Dr Joshi snapped back, “Heavens will not fall if there is a delay.”

Stating that the Committee is not in favour of double-crop/multi-crop/irrigated land being used for SEZs, it said that there should preferably be a ban on the use of irrigated double-crop or multi-crop land for setting up SEZs, and only waste and barren lands should be used for setting up SEZs.

This direction should be incorporated into the Act, Dr Joshi said. Where it becomes inevitable to make use of cultivable land, only single-crop rain-fed land should be used and the percentage of such land should not exceed 20 per cent of the total area of a multi-product SEZ. For other sector-specific SEZs this ceiling could be 40 per cent.

Taking exception to the exclusion of a representative in the Ministry of Agriculture on the Board of Approval for SEZs, it said that this is a surprise omission. It said that it should be mandatory for the developer to obtain permission of the State Governments for purchase of single crop cultivable land for SEZ use.

Recycling land

It asked the Government to consider unlocking and recycling of land and assets of the closed industrial units under liquidation. Land acquired for growth centres and other schemes, which have not been found sustainable could be diverted for SEZs, it said.

Since developers would be tempted to acquire more area for executing lucrative support activities in the non-processing area, the Committee said that for multi-product SEZ the maximum area with an element of cultivable land should be 200 hectares and on wasteland it should be 5,000 hectares.

It urged the Government to take a call on extending the tax holiday for a further period so that “the mad rush for SEZs in IT sector would stop”.

On tax benefits conferred on SEZs, the Committee contends that SEZ rules appear to have gone farther than the enabling provision under the SEZ Act. Hence an assessment must be made of the loss of revenue that the States would suffer as a result of extending such tax exemptions to developers and units.

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