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SEZs on hold, millions to behold


SEZs on hold, millions to behold

Last updated: April 13 2007
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  • SEZs on hold, millions to behold

    The private participation in the development of the infrastructure of the country has received a jolt with the government putting the approvals to new Special Economic Zones (SEZs) on hold. As a result, 304 pending applications for SEZ status have been held up. The deferment of any further SEZs’ approvals will have a direct cascading effect on the realty sector of the country, which has already geared itself up to develop the SEZs.

    Recently, Kamal Nath, Minister for Commerce & Industry, had stated, “In the next five years, if all the projects get implemented, investments by SEZ developers are expected to be over Rs.3,000 billion. By December 2007, it is expected that investments of Rs.1,000 billion, including FDI of Rs.2,500 billion, will take place in SEZs. If we take into account the number of SEZs that are already approved, we get a peep into the enormity of the opportunities these SEZs offer to the construction companies for developing the social infrastructure.

    In West Bengal, the Salim Group will develop the SEZ and also build a 100 km six-lane expressway bypassing Kolkata and the new township at Rajarhat & Salt Lake. Reliance Industries announced an investment of Rs.670 billion in the Jamnagar SEZ where Chevron is a partner, and another Rs.400 billion to set up the SEZ on 25,000 acres of land between Gurgaon and Jhajjar, near Delhi. The Adani group plans to pump in Rs.250 billion in ports and SEZs. DLF plans SEZs at Ambala (2,500 acres) and Gurgaon (19,880 acres); it is investing Rs.8 billion in a 1,100 acre SEZ in Amritsar. Unitech has obtained clearance for a Rs.100 billion, 20,000-acre SEZ in Haryana and the Ansals have joined hands with the housing finance major, HDFC, for developing a Rs.10 billion IT SEZ in Noida (NCR).

    Parsvnath Developers Ltd. plans to set up 14 SEZs in the country at a cost of Rs.400 billion, for which they have already tied up 6,000 acres of land. PS group applied for 250 acres land outside Kolkata for an SEZ in the services sector, and is also in plans for an education SEZ in Jaipur and IT SEZ in Pune.

    SEZs have emerged as the single largest investment sector in the just-concluded Vibrant Gujarat Global Investors Summit. It accounted for 38.1% of a total investment of Rs.44,800 billion in 308 MoUs signed with Gujarat government. In financial terms, the MoUs relating to SEZs have promised an investment of Rs.17,060 billion in Gujarat alone. Man Industries Limited, a flagship company of the UK-based Man Group, and a leading producer of steel saw pipes in India, is increasingly in an expansion mode that will see the firm build IT/ITeS SEZs near Indore.

    Since the SEZ Act came into effect, the government has approved 237 SEZs. A $100 million ***** plant in Tamil Nadu has begun commercial production and employs 2,800 people. Finally, SEZs are expected to generate 1 million jobs and attract investments amounting to Rs.5,900 billion by 2009.

    If we take all the SEZ into account (including the pending ones), then just the infrastructure cost of developing 388 SEZs could exceed Rs.1,000 billion. If the approvals for the new SEZs continue to be on hold, then don’t be surprised if billions worth of investments disappear & development of infrastructure remains a dream far away!
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