ibnlive » Business

Jan 03, 2008 at 12:34am IST

Congress battles Congress in Goa SEZ issue

New Delhi: The new twist in the Goa SEZ battle sees a case of odd politics: the Congress government in Goa is now at loggerheads with the Congress-led UPA at the Centre.

Just days after Goa CM Digambar Kamat announced his decision to scrap the projected 15 SEZs in the state, the Commerce Ministry has refused to denotify the three SEZs that had been notified earlier in Goa.

In mid-December 2007, the BJP had threatened to pull the plug on Goa’s new year revelry had the government pressed ahead with its SEZ plans. Kamat’s government had seemingly caved under the pressure and had declared the SEZs would be scrapped.

But Commerce Secretary G K Pillai has said that the Board of Approvals – the nodal agency for SEZs – will not denotify the three Special Economic Zones, and even added that SEZ rules are exempt from state governments’ meddling.

“As far as we are concerned, they (the Board of Approvals) have notified SEZs,” said Pillai.

The Commerce Ministry further contends that the state government were never the issuing authorities for notification and hence, they do not have the right or the authority to denotify SEZs.

“No, there is no provision under law for state government to recommend denotification,” he responded to a query on the state government’s stance.

“We at the Board will not denotify the SEZs, either,” he stated, firmly.

The Commerce Ministry’s contention is that once SEZs are notified, they actually become legal entities, and when that happens, under the rules, they cannot be denotified.

But despite the statement made by the Commerce Secretary, the Goa Chief Minister remained completely unfazed.

He, in fact, has said that he will go ahead with his plan to scrap all the 15 SEZs in Goa, which are at different stages in approval, and that includes the three notified SEZs.

"We do not have any communication from the Centre on this. We will go ahead with our decision to scrap SEZs," said Kamat. "I am yet to receive any communication from anybody, hence I would not like to make any comments on this."

Kamat’s decision, however, may lead to litigation.

Pharma giant CIPLA, for instance, has already started work on a notified SEZ and has even pumped about Rs 500 crores into the project.

The Commerce Secretary, meanwhile, has also made it clear that any claims for compensation would 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 G K Pillai.

This is one skirmish that may well head for the courts.

From the investment point of view, this development may well invite investor apathy because if there are such policy flip-flops on what has been heavily touted as an SEZ or an export-led vehicle for India's growth, investor sentiment definitely would be dim.

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