The commerce ministry on Wednesday reiterated that the three notified special economic zones in Goa could not be scrapped by the Centre. It added that the issue had to be sorted between the state government and developers of the zones.
Even as the Goa government has raised the issue of scrapping three notified special economic zones with the Centre, the state administration has till date not sent any formal communication to the SEZs in this regard.
A clear picture on the status of the SEZs in Goa is expected to emerge in mid July.
"The state government was asked to sort out the issue with the developers and reach an amicable solution. The issue of scrapping notified SEZs is over for the Government of India," Commerce secretary Gopal K Pillai told reporters today after the meeting of the Board of Approval for SEZs. The BoA formally cleared 23 zones today, including the 113-hectare SEZ by Bangalore International Airport Ltd and L&T's 15-hectare infotech SEZ at Vadodara.
"If Goa is serious about scrapping the zones, the state government should have followed a proper procedure. There was no representative from the Goa government at today's meeting (BoA meeting). Moreover, the state government has not communicated to the developers of the notified SEZs in the state regarding its intention to scrap them. In addition, the Goa SEZ policy is still functional and has not been revoked," government officials said.
The SEZ board also decided to forward the views of four other formally-approved zones in the state facing de-recognition to the state government. Developers of four formally approved zones in Goa, who were given show-cause notice by the BoA earlier, presented their case to it.
Earlier this year, the Goa government had recommended to the commerce ministry to scrap three notified, four formally-approved and 12 in-principally approved SEZs after widespread political opposition.
Notification is the final clearance from the central government before an SEZ can become functional, while formal approval is the penultimate stage and is given to zones that possess land.
However, the Goa government has refused to budge from its stance. Chief Minister Digamber Kamat yesterday convened a meeting on the issue, which was attended by State Chief Secretary JP Singh and Member of Parliament Shantaram Naik among others.
Legal experts maintain that the issue was complicated. "The BoA had notified the zones only after the state government recommended it. Subsequently, the state government asked to denotify the zones. But the Centre cannot do it because there are no provisions related to it in the SEZ Act of 2005," said Hitender Mehta, Vaish Associates, Gurgaon.
Options available to sort out the issue include paying compensation to the developers for the investments made in the zones, which is more than Rs 500 crore (Rs 5 billion).
Industry insiders say it would not be possible for the developers of the notified SEZs to operate the zones without the support of the state government, which includes providing power, road connectivity, and a host of exemptions of state levies.
They say the developers of the zones were looking at various options to minimise their dependence on the state government.
Meanwhile, the three notified SEZ developers have also approached the court against the Goa government recommendation to scrap the zones.
