`Govt won't allow SEZ Act to be sabotaged'

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Kamal Nath admits there were interests working against such such zones


Our Bureau

Point of view

Minister willing

to have an "open debate" on real concerns, legislation issues

Says the

RBI has to decide on the role it would like to play on the country's infrastructural development

New Delhi, Sept. 28

The Commerce and Industry Ministry, Mr Kamal Nath, on Thursday asserted that the Government would not allow the Special Economic Zones Act 2005 to be sabotaged, even as he admitted that there were interests working against creation of such zones.

This assertion comes in the wake of a raging controversy over issues such as land acquisition and rehabilitation policies involved in the establishment of such zones.

`Open debate'

Addressing a meeting organised by the Export Promotion Council for EOUs and SEZs (EPCES), Mr Nath said that he was willing to have an "open debate" on the real concerns and issues relating to the legislation and rules governing such zones.

Asked whether the Reserve Bank of India's recent clarification to commercial banks on SEZs would hurt infrastructure build-up in these zones, he said that it was for the RBI to make up its mind on the role it would like to play on the infrastructural development in the country. He also said that the Prime Minister was looking into this issue.

Later, Mr Nath told reporters that it would be better for industry to approach the RBI in this regard. The RBI had recently clarified that banks should treat their lending to SEZs as real-estate exposure and make provisions accordingly.

Concerns on land

Commenting on land, the Minister agreed that the concerns expressed on land were "real" and pointed out that everybody accepted that land used for SEZs must not be prime agricultural land. "I have already written to all the Chief Ministers on this," he said, maintaining that there was no controversy as such on the issue of land acquisition for SEZs.

In the case of the first 150 SEZs, he said that not an inch of land has been acquired for these zones after the SEZ Act came into force.

Concerns about SEZs

Stating that concerns about SEZs are both real and imaginary, he said that only real concerns could be addressed. He appealed to those with "imaginary concerns" to not let such concerns hurt economic activity and employment generation in the country.

Referring to the views expressed by the International Monetary Fund (IMF) on Indian SEZs, Mr Nath said that he did not want to be preached by the IMF on this issue.

"Somebody from the IMF was preaching us. I have said that the IMF, sitting in Washington, need not try and give me wisdom on what SEZ is all about. I don't want to be preached by the IMF at all," he said, adding that ground realities and track record of such zones in various countries should be studied before a view is expressed.

The Commerce Minister underscored the need for SEZs to be looked at from the Indian context and not be compared with China.

The outgoing chairman of EPCES, Mr Sharad Jaipuria, urged the Minister to extend the sunset clause in the income-tax law and save the export oriented unit (EOU) scheme. Exports from EOUs had recorded a decline of 7 per cent during 2005-06 to Rs 22,312 crore.

(This article was published in the Business Line print edition dated September 29, 2006)
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