The board of approval (BoA) for special economic zones (SEZs) has decided to cancel “formal approvals” given to 27 of these zones, including those proposed to be developed by Reliance Infocom Infrastructure, Emaar MGF Land and Sail, after noting that the progress made by the developers was not satisfactory.
As per SEZ Rules, formal approval is valid for three years by which time at least one unit has to commence production and the SEZ then becomes “operational”.
The BoA proposal for cancellation of formal approvals is, however, subject to the development commissioner furnishing a certificate that the developer has either not availed any tax/duty benefits for SEZs or has refunded benefits availed. The final call is also subject to the respective state governments furnishing no objection certificates. However, of the 43 cases that the BoA examined on July 24 for cancellation of formal approval, the board decided not to cancel approval in 15 other cases given that the development commissioner requested that Deccan Infrastructure and Land Holdings’s 14 cases and AP Markfed's one case be given more time to be operational.
The commissioner's request was in view of the scenario after the bifurcation of Andhra Pradesh and creation of Telengana, that must have contributed to the delay in these SEZs becoming operational.
The board also granted its conditional approval to a GMR Group proposal to buy out the 50% stake owned by its partner Malaysian Aerospace Engineering in an aircraft maintenance repair and overhaul (MRO) unit. The MRO unit is in a SEZ near the Hyderabad International Airport. Further, the board agreed to extend the validity of formal approval of many cases including that of Navi Mumbai SEZ, DLF Info Park and Gulf Oil .
These developers who have requested the government to
grant more time to complete their projects.
As reasons for delay seeking more time to complete their projects, some of the developers have cited Minimum Alternate Tax and Dividend Distribution Tax imposed on SEZ developers and units, delay in grant of environmental clearance, problems of land acquisition, uncertainties of the tax incentives available in the proposed Direct Taxes Code and poor response of entrepreneurs for setting up unit due to economic slowdown in the major export markets.