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Goa Govt can�t denotify notified SEZs in State: Comm Secy

Published on Wed, Jan 02, 2008 at 15:01 | Source : CNBC-TV18

Updated at Thu, Jan 03, 2008 at 09:37

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By Abhijit Neogi , CNBC-TV18

In another twist to the tale, the Union Commerce Secretary has made it clear that the State Government has no locus standi to denotify notified zones in the state. The Chief Minister of Goa said that he will write to the Centre to denotify SEZs in a few days.

This is a classic case of the State Government waking up to the fact that SEZs are not welcome in their State. Typically, the process that is followed for SEZs' approval is that the Government gives a lost of SEZ names that have to be approved by the Centre; more specifically, by the Board of Approvals (BoA). The BoA, under the aegis of the Commerce Ministry, goes and does that.

Now, in Goa, out of the 15 SEZs, 3 are notified. A notification happens only by the Central Government; by the BoA. This means that the SEZ is a legal entity and can commence operations. There are 3 notified SEZs in Goa right now, Cipla being one of them. Cipla's pharma SEZ has already pumped in investments of about Rs 500 crore and costly equipment from abroad has already landed.

I am not convinced that companies like Cipla would like to give it away so easily. Under the rules of SEZs, the State Government has no locus standi whatsoever to denotify an existing notified SEZ. The Commerce Secretary, GK Pillai reiterated this. The Commerce Ministry is reluctant to denotify all these SEZs. It does seem that they are on a collision course. The matter may now land up in the courts, though legally, these SEZs can be operational and functional.

Pillai said, "Notified means the State has no locus standi to withdraw anything - there's no provision under the law for the State Government to recommend denotification."

Its Congress versus the Congress. That is the new twist in the SEZ battle. Under pressure from the Opposition, the Congress ruled Goa government has scrapped all SEZs in the state. But the Center says SEZs already notified cannot be scrapped.

Congress-led UPA government may well be on a collision course with the Goa government, incidentally also a Congress government. The bone of contention is Goa's Special Economic Zones.

In fact, the BJP had threatned to pull the plug on Goa's New Year revellery, if the government pressed ahead with its SEZ plans. The Goa government seems to have caved under pressure, but Commerce Secretary GK Pillai says the Board of Approvals, the nodal agency for SEZs will not denotify the three notified SEZs in Goa. Pillai says current SEZ rules do not allow state governments to denotify SEZs.

"There is no provision under the SEZ rules, where the State government can denotify the SEZs. We at the BOA will not denotify the SEZs either," said GK Pillai , Commerce Secretary.

But Goa Chief Minister Digambar seems to be unfazed by the Centre's stand. Kamat says the state government will go ahead with its decision to scrap all 15 SEZs in the state, which are at different stages of approval.

"We do not have any communication from the Centre on this. We will go ahead with our decision to scrap SEZs," said Digambar Kamat , Chief Minister, Goa.

But this decision may lead to litigation. Cipla, for instance, has already started work on a notified SEZ and has even pumped in about Rs 500 crore into the project. The Commerce Secretary has also made it clear that any claims for compensation will have to be borne by the state.

"Compensation is an issue that has to be decided between the developer and the state. We have nothing to do with it," said GK Pillai.

Clearly, the battle over SEZs promises will hold centrestage in the New Year as well.

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