Centre clears ten SEZs, three petrochem hubs

Centre clears ten SEZs, three petrochem hubs
The Financial Express, February 24, 2009, Page 1

Economy Bureau, New Delhi

The UPA government on Monday cleared a slew of proposals to boost big-ticket investments, even as it sought to play down concerns about the economy and held out the promise of more sops for embattled exporters.

The board of approvals for special economic zones (SEZs), the UPA’s flagship investment idea, cleared ten more zones, including the country’s largest zone to date, while the Cabinet paved the way for three massive petrochemical hubs, an outcome of another pet policy formulated in May 2007.

RBI governor Duvvuri Subbarao has, meanwhile, said he would “take appropriate policy action” (read: rate cuts), at a meeting with finance minister Pranab Mukherjee. “The Bank is constantly monitoring the situation,” an RBI statement said.

Besides the new SEZs, the rate cuts should help spur investments in the three petroleum, chemical & petrochemical investment regions (PCPIRs) in West Bengal’s Haldia, AP’s Visakhapatnam and Gujarat’s Dahej that the Cabinet cleared on Monday. These regions will be set up through the PPP route.

The government’s PCPIR policy envisages faster statutory and environmental clearances, quick approval from the Foreign Investment Promotion Board, with the Central and state governments ensuring better road, rail, port and airport connectivity. The region would be a combination of production units, public utilities, logistics, environmental protection mechanisms, residential areas and administrative services. A PCPIR could also include one or more SEZs, industrial parks, free trade & warehousing zones and export-oriented units.

Among the SEZs approved on Monday was an application to merge three notified SEZs of the Adani group to create a single 6,214-hectare SEZ. The company has two port SEZs of 4,846 hectare and 1,074.17 hectare, along with a 293.88 hectare power SEZ. The total investment proposed is Rs 1 lakh crore and the zone is expected to employ 5 lakh people in the next ten years.

This is the first time after an empowered group of ministers fixed a 5,000-hectare cap on SEZ projects that the Centre has allowed the cap to be breached. The board of approvals nod came as the notified areas of all three SEZs are contiguous and treating them as one SEZ would help prevent duplication of administrative requirements, do away with separate boundaries for each SEZ and also ensure that the developers could build seamless infrastructure connecting all three.

The other SEZs cleared include the Navi Mumbai gems & jewellery SEZ promoted by an aide of Reliance Industries chairman Mukesh Ambani, and L&T’s shipbuilding SEZ. This takes the total number of approved SEZs to 714.

The government has also decided that commerce & industry minister Kamal Nath would unveil an interim foreign trade policy akin to the interim Budget. The policy will do away with many procedural bottlenecks to reduce the transaction costs of exporters and also extend the period of export obligation under various schemes like the export-oriented unit scheme, advance licensing scheme and Export Promotion Capital Goods scheme.

While the interim Budget extended interest subsidy on pre- and post-shipment credit for exporters in labour-intensive sectors like gems & jewellery, the commerce ministry would announce more measures, including procedural simplification, on February 26 to help tide over the global demand slowdown.

Government sources, meanwhile, said total exports are likely to contract on a year-on-year basis to June 2009. They said this was because shipments from India were lying at several godowns abroad due to the drastic fall in demand in major markets like the US and EU.

In a final stock taking of the economy before the polls, finance minister Pranab Mukherjee said despite the financial crisis, the government would collect Rs 6.7 lakh crore in gross tax revenues. “We may not exceed the Budget estimate, but in nominal terms, we will exceed the 2007-08 tax collections,” revenue secretary PV Bhide also said.