The Telegraph
Since 1st March, 1999
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Scramble to plug SEZ loopholes

New Delhi, March 21: Developers of special economic zones (SEZ) will have to rehabilitate displaced farmers and landless farm workers, according to new rules announced by the Centre a week after the police firing in Nandigram.

“The developer of special economic zones shall make adequate provision for rehabilitation of the displaced persons as per the relief and rehabilitation policy of the state government,” a commerce ministry notification said.

A little while earlier, Prime Minister Manmohan Singh was asked how the Nandigram killings could impact the policy to create SEZs. “I would not like to speculate on that right now,” he replied.

Singh, however, broke his silence on the deaths that have raised a storm and forced Bengal to drop plans for a chemical SEZ in Nandigram. “It is a very sad event. It should not have happened,” he said on the sidelines of an official ceremony at Rashtrapati Bhavan.

At a dinner for UPA and Left allies tonight, Singh pre-empted a discussion on SEZs, saying a separate meeting will be held soon. Railway minister Lalu Prasad had earlier said he would bring up Nandigram and SEZs.

The commerce ministry — the nodal agency for clearing SEZs and an advocate of such zones — has changed the rules even before the rural development ministry has finalised a relief and rehabilitation policy. Fresh approvals have been frozen, pending the policy.

The new rules aim to reduce the scope for real estate speculation in SEZs — another reason these projects have been attacked. The validity of “in-principle” approval has been reduced from three years to one year so that there is less room for real estate speculators to make a quick buck.

However, the validity of “formal approval” remains three years because possession of land is now essential for getting the final nod.

Developers will have to show they have irrevocable rights over the land on which the SEZ is to be set up — this implies they will have to either buy it or get the state to allocate the land before approaching the Centre for approval.

To ensure that only companies with resources to set up the projects get approval and not speculators who might be banking on roping in partners later, the new rules say applicants will have to reveal their net worth and details of any foreign direct investment.

The stringent rules have allowed one relief though — tax benefits to contractors working for the developers will continue. The budget had proposed to remove the concessions to contractors

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