Special Economic Zones (SEZ):India
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Diversion of land acquired for SEZs
CAG exposes profiteering in the name of SEZs
The Times of India Dec 03 2014
Several hectares of land acquired for special economic zones (SEZ) invoking public purpose were later sold off or used for other purposes, the Comptroller and Auditor General has found.
Among the groups that diverted land acquired for SEZs are Reliance Industries and Essar Steel, according to the audit report. In a report submitted to Parliament last week, CAG said SEZs of Essar Steel in Hazira and Reliance in Jamnagar in Gujarat de-notified an area of 247.522 ha and 708.13 ha respectively , and allotted them to ineligible (DTA -domestic tariff area) units.
In case of Sricity SEZ in Andhra Pradesh, the audit found that 2,070.12 ha of the allotted land was not used for the intended purpose. This de-notified land was allotted by the SEZ operators to private companies such as Alstom, Pepsico, Cadbury , Colgate, Kellogg's etc. “Land appeared to be the most crucial and attractive component of the scheme. Out of 45,635.63 ha of land notified in the country for SEZ purposes, operations commenced in only 28,488.49 ha (62.42%) of land,“ the audit said.
The audit found many developers approached the government for allotment purchase of vast areas of land in the name of SEZ. “However, only a fraction of the land so acquired was notified for SEZ and later de-notification was also resorted to within a few years to benefit from price appreciation,“ the CAG said.
Govt land mortgaged for loans
SEZ SCAM - Govt land mortgaged for loans: CAG
TIMES NEWS NETWORK The Times of India Dec 04 2014
A few Special Economic Zone (SEZ) developers mortgaged government land and raised over Rs 6,300 crore from banks, and three of them managed to get over Rs 2,200 crore despite diverting land for other uses.
In its latest report on SEZs, the Comptroller and Auditor General (CAG) said public sector banks failed to carry out due diligence before extending loans to these developers in Andhra Pradesh, West Bengal, Karnataka and Maharashtra, ignoring the fact that the mortgaged property was government land. In three cases, the auditor said the SEZ land was diverted to other use yet the developers managed to raise Rs 2,200 crore from banks.
Interestingly , when CAG pointed this out to the com merce ministry for restricting mortgage of government land by issuing instructions, it refused on the grounds that it was the subject matter of banks extending loans.
While issuing NOC for SEZ land, it is categorically mentioned that land is not a subject matter of mortgage.The commerce ministry , however, in its response (in June 2014) to the auditor, said that “SEZ Act does not restrict the developer from mortgaging the leasehold rights in favour of banks and the bank has the right to proceed“ against the developers in case of default.
“There are also no clear provisions or instructions as to how banks would realize the loan amount in the case of default by the borrowing developer as the leased land belongs to government and, further, SEZ land cannot be sold,“ CAG said in its report.
In terms of area of land, out of 39,245.56 ha of land notified in the six states, 5402.22 ha (14%) of land was de-noti fied and diverted for commercial purposes in several cases, the audit found. “Many tracts of these lands were acquired invoking the `public purpose' clause. Thus, land acquired was not serving the objectives of the SEZ Act,“ the audit said.
As per SEZ Act, 2005, land for establishment of SEZs needs to be contiguous and the developer is required to have irrevocable rights over the land. Lands are being allotted by the state government directly or through land banks agencies on the basis of proposals made by the developers.
2007-14:Status of approvals and exports as a percentage of notified zones
From: The Times of India
See graphic:
State-wise details SEZs
Rules
Minimum land requirement eased/ 2019
The government has amended the minimum land requirement and categorisation of special economic zones. The new rules will now enable co-existence of any SEZ from any sector with others.
From now, all existing and new SEZs would become multi-sector enclaves and help in co-existence of such entities from any other sector. Earlier, the rules were sector specific prohibiting existence of several sectors within one SEZ.
The government has also simplified the provisions governing the minimum land requirement and also simplified the rules. Now, the minimum land required for setting up a multi-product SEZ has been revised from 500 hectares to 50 hectares. Similarly, the minimum built up area for services have also been reduced. The step may help unlock the potential of SEZs to attract investments and boost exports.
