SEZs can't be denotified:
Comm Secy
Agencies, New Delhi
2 January 2008
In another twist to the Goa SEZ 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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