The government on Wednesday said it has decided to "go slow" in approving Special Economic Zones for IT sector and may consider putting a ceiling on the maximum land area that can be acquired for multi-product zones, but rejected Left parties' demand for amendments in the SEZ Act.
The board of approvals in the commerce ministry would no longer give in-principle clearance to IT SEZs, although it would continue giving formal nod to developers who have acquired the required land and meet other criteria.
"The Left parties had demanded a cap on IT SEZs. We are not putting a cap, but the 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.
Pillai, who heads the BoA, said so far the board has given formal clearance to 148 IT SEZs and in-principle nod to about 70 more. While most of these zones would be spread over 10 hectares, which is the minimum area required, some zones are being set up over an area of as much as 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 built up space and are projected to create 12.5 lakh (1.25 million) additional jobs in the next 2-3 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.
Pillai said the BoA was also considering whether a maximum limit was required on the land that can be acquired for setting up multi-product SEZs.
At present, developers need a minimum of 1,000 hectares for a multi-product zone. But Left parties, among others, had raised concerns about the massive zones proposed by companies such as Reliance Industries that would be spread over an area of more than 10,000 hectares.
"There is a talk about the ceiling on total land holding. The issue needs to be debated upon. It is something which we are considering," he said.
Pillai also said the government would modify the SEZ Rules 2006 to remove procedural hassles and fine tune certain provisions, but ruled out an amendment to the SEZ Act.
"There is no need for amending the Act. We will make some minor changes in SEZ Rules within 2-3 months," he said, when asked whether the Act would be amended in view of Left parties demand to revisit tax concessions, ban acquisition of farm land and frame a rehabilitation policy for those displaced.
Asked about the finance ministry's projections of revenue losses to the exchequer, he said according to commerce ministry estimates the government would, in fact, collect more taxes in the next 3-5 years from the additional economic activity that is being generated in the SEZs.
"We are appointing an independent agency to conduct a comprehensive study on the potential losses and benefits. The study would be prepared within 3-6 months," he said.
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