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Maha plans exit option for SEZs, use land for local parks

Maharashtra is in the process of preparing an exit policy for SEZ developers and then convert the surrendered land-banks into local industrial parks.

May 18, 2012 / 11:44 AM IST

Maharashtra is in the process of preparing an exit policy for SEZ developers and then convert the surrendered land-banks into local industrial parks, as the Centre is unlikely to rollback its decision to tax such clusters, chief minister Prithviraj Chavan said.

"I had a discussion with the Union finance and commerce ministers, and I am not very hopeful whether they will go back to a tax-free regime for SEZs as was promised initially," Chavan said told Ficci meet.

Chavan said promoters of special economic zones (SEZs), particularly those in the manufacturing sector, are increasingly shying away from going ahead with plans due to tax burdens they foresee due to certain provisions in the proposed Direct Tax Code (DTC) and the move to bring SEZs under the dividend distribution tax and minimum alternate tax.

The SEZs, inspired by the Chinese experience to promote exports and enjoying a slew of tax immunities, suffered a jolt last year when the Centre decided to bring them under the purview of DDT and MAT. Certain conditions in the DTC, which will be in force from next fiscal, are also making the SEZ promoters uncomfortable, Chavan said.

Maharashtra has so far acquired 27,000 hectares for SEZs and is increasingly coming across cases where promoters are turning away from developing the land.

In the face of this, the chief minister said, his government is contemplating a policy to turn this land into local industrial parks and join the league of specially notified Maharashtra Industrial Development Corporation (MIDC) parks.

The exit option given to promoters will free up a lot of land for investments, especially around Mumbai and Pune where there is otherwise an acute shortage of land, the chief minister said. "Those who want to continue, let them continue; those who want to opt out, the land which is procured for SEZs will have to become local industrial parks, just like MIDCs," he said, adding the forthcoming new industrial policy will address this issue.

Conceding that MIDC townships--built in the latter part of the last century--are not planned well and lack being modern townships, Chavan said the same policy will also have provisions under which land will be acquired in contiguity and used for social purposes.

To transform MIDCs into modern industrial townships, the newly acquired land will be used for housing, schools, colleges, medical facilities, recreational facilities, something which they are lacking at present, he said.

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