Industrial area plan: Bold move, old obstacle
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For narrow political gains, the Nationalist Congress Party (NCP), an ally of the Congress in the Maharashtra government, is trying to sabotage a bold and innovative industrial policy that aims to induce corporates to invest in manufacturing and create jobs. Despite Ajit Pawar, the Deputy Chief Minister from NCP, signing on the dotted line, the party is opposing a plan in the policy that allows Special Economic Zones (SEZs) to denotify and turn themselves into integrated industrial areas (IIAs) in the state.
The policy announced by Industry Minister Narayan Rane and Chief Minister Prithviraj Chavan on January 2 reckons the problems states face in bringing home investment. While they would still want to believe that their state retains its primacy in industry attractiveness, it is not hidden from them that competitive states such as Gujarat and Tamil Nadu have moved ahead. In India, the most critical factor of production is land today, particularly so in the backdrop of the proposed acquisition law that will make it prohibitive.
In the past 5-6 years, the state attracted as many as 124 proposals for SEZs spread over 29,000 hectares. The global meltdown and fall in exports demand prompted many companies to freeze their SEZ plans. Some others felt it was unviable after the Centre changed the tax goalposts mid-way and said SEZ companies would attract minimum alternate tax (MAT and dividend distribution tax). Of the 124 SEZs, only 17 spread over 2,400 hectares, are operational.
Chavan's new policy allows the rest to become IIAs, but mandates 60 per cent land use exclusively for industrial activity. While another 10 per cent of land can be used for commercial purposes, the remaining 30 per cent can be utilised to create social infrastructure such as housing, hotels, hospitals, recreational centres, etc. In SEZs, companies were required to use only 50 per cent of land for core activity.