Even as there is a freeze on fresh approvals and notifications of special economic zones, the commerce ministry has written to 50 developers of SEZs, which already have formal approval, to furnish details of the projects' current status.
This will result in these projects being notified, allowing the developers to begin work. Developers who have made little progress may see the approvals being cancelled.
It may be recalled that the commerce ministry was planing a six-month time limit for completion of procedural formalities for the approved zones.
"There is no formal decision on the six-month period for notification. But we have written to about 50 SEZ developers, asking them the status of the formalities, which are a must for notifying the zones," said a commerce ministry official. These zones were approved before August 2006.
The government grants formal approvals to those SEZs that possess the required land. After the formal approval is given, the developers have to complete various procedural matters in their respective states, which include furnishing proof of legal right and possession as well as a certificate that the area is free from any legal liabilities from other parties.
"If we find that there has been no real development in the procedural matters related to notification, the formal approvals will be cancelled," said the official.
Two developers have already dropped out of the SEZ race, in spite of having formal approvals. "A couple of months ago, Hewlett-Packard and CA Computer Associates intimated us that they will not be part of the SEZ process," said the official.
Hewlett-Packard, which wanted to set up an infotech and enabled services SEZ in Bangalore, spread over 60,000 square metres, had got the formal approval in September 2006. But the minimum area for infotech and enabled services SEZs was changed to 100,000 square metres, which the company did not find feasible.
"They did not require so much area and hence opted out of the SEZ process," the official said.
CA Computer Associates, which also wanted to set up an infotech and enabled services SEZ near Hyderabad, has intimated the commerce ministry that it will not be setting up the zone any more as it is not feasible for them.
With this, the total number of formally approved SEZs has come down to 235, of which only 63 have been notified. The Empowered Group of Ministers on SEZs has put all decisions related to SEZs on hold, barring the notified ones.
Of all the formally approved SEZs, Maharashtra has the highest number with 48, followed by 44 in Andhra Pradesh, 28 in Karnataka and 25 in Tamil Nadu. There are 22 functional SEZs, which have recorded exports worth Rs 22,000 crore (Rs 220 billion) in 2005-06.