The Telegraph
Since 1st March, 1999
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Go-slow on infotech SEZs

New Delhi, Nov. 8: The government today said it would soft-pedal approvals for special economic zones (SEZs) in the information technology sector and may consider a ceiling on the maximum land area that can be acquired for multi-product zones.

The move appears to stem from the pressure from the Left parties to stop the untramelled farm land grab in the guise of establishing SEZs and a rethink within the Congress party after party president Sonia Gandhi's statement at the recent chief ministers’ conclave in Nainital where she acknowledged that some of the fears were genuine.

“The Left parties had demanded a cap on IT SEZs. We are not putting a cap, but the board of approvals (BoA) has decided not to give more in-principle approvals. We will go slow for the time being,” commerce secretary G.K. Pillai said at an Assocham seminar today.

The Left parties had criticised these zones on the ground that builders would exploit them for real estate gains rather than carry out developmental activity and generate employment as envisaged. They had pointed out that the Centre’s norms fell short of the more stringent Bengal model for setting up these zones. The Bengal norms stipulate that a larger slice of the land should be allocated for processing activities than the central government's guidelines.

However, the government does not intend to go in for any amendments in the SEZ act as demanded by the Left parties.

Pillai, who heads the BoA, said so far the board has given formal clearance to 148 IT SEZs and in-principle clearance to another 70. While most of these zones would be spread over 10 hectares, which is the minimum area required, some zones are being established over an area of 100 hectares.

“We are possibly reaching a limit on IT SEZs... we need to debate that. Moreover, all these zones may not come up, about 25 per cent may drop out,” he said, citing the example of Hewlett-Packard, which recently surrendered its formal approval for an IT zone in Bangalore.

The IT SEZs approved so far would be spread over an area of 125 million square feet of built-up space and are projected to create 12.5 lakh additional jobs in the next 2 to 3 years.

“We are adopting a wait and watch policy. We will see after six months to one year, how many come up,” he said.

Pillai, however, made it clear there was no proposal to fix a cap on sector-specific or multi-product SEZs, as only a few such zones have been approved so far.

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