Govt policies, slowdown hit development of SEZs in Madhya Pradesh

Government policies, coupled with economic slowdown, seem to have derailed the development of several special economic zones (SEZs) in Madhya Pradesh.

The state, which was the first in the country to set up a greenfield SEZ, has been lagging behind others in the number of functional SEZs.

Out of 199 operational SEZs across the country, MP is home to only two -- a multi-product SEZ in Pithampur near Indore and an information technology (IT) SEZ in Indore.

While Tamil Nadu, Maharashtra and Telangana are way ahead of the state, it has also ranked behind states such as West Bengal, Uttar Pradesh and Haryana.

During the real-estate boom in the mid-2000s, several developers had launched integrated township projects with SEZs and office complexes.

However, a decade down the line, most of the projects have failed to take off even as the residential townships have been completed.

“SEZs have become unattractive after the introduction of minimum alternate tax (MAT),” Pithampur Audyogik Sangathan president, Gautam Kothari said.

In March this year, the Union government cancelled formal approvals granted to six SEZ projects in the state. Former Indore development commissioner, A K Rathore blames it on the global economic slowdown.

“The approvals were cancelled since no significant progress was made by the developers even after many years,” he said.

Industry sources say that all the states offer tax breaks and land at concessional rates, but the backbone of SEZ is high-class infrastructure, which is lacking in MP.

Another factor is that MP is a land-locked state and loses out to states that have ports. While seven SEZs have been notified in MP, there has been no progress in four and at least two of them are about to be shelved.

“We have applied for de-notification of two SEZs as investors have not shown interest many years after the zones were notified,” Audyogik Kendra Vikas Nigam (AKVN) Jabalpur managing director C S Dhurve said.

The only silver lining for the state is that it has three major IT SEZs in the pipeline. TCS, Infosys and Impetus Infotech are setting up IT/ITES SEZs that are slated to become operational next year. However, these are sector-specific and limited in scope.

The concept of SEZs was introduced by the Union government in 2000, through a revision in the Export-Import Policy 1997-2002. These industrial enclaves were treated as foreign territories for the purposes of industrial, service and trade operations and were exempted for all the taxes. The aim was to boost the manufacturing sector and create jobs.