The case of Goa's SEZs first raised the question of denotification. After initially supporting the applications of various SEZs at the Commerce-Ministry-led Board of Approvals (BoA) in Delhi, the state government eventually bowed to pressure from within Goa's civil society and announced its decision to 'scrap' the planned SEZs. The Goa government's requests to the BoA and other authorities in Delhi to have the notifications withdrawn met with a curious response: that there was no provision in law for denotification of SEZs. This delayed the process of scrapping the SEZs.
Just this week, the Board of Approvals announced that it would allow the the withdrawal of the Matyas biotech SEZ planned for Hyderabad that had been promoted by the relatives of the former head of IT giant Satyam. Whether there is a distinction between withdrawal and denotification is unclear. Presumably it matters which party initiates the request for denotification -- that is, the promoter or the state goverment. But in the Goa case, where the state government was a co-promoter in at least some of the SEZs, this distinction is less meaningful.
The bureaucratic machinery charged with implementing and overseeing the SEZ policy is making up the rules as it goes along. There is nothing inherently wrong with that, unless you believe that those framing the initial legislation and regulatory guildelines should foresee every potential contingency. On the other hand, it is perfectly legitimate to ask whether, in the process of framing and revising officials rules -- whether with regard to SEZs or any other policy domain -- biases manifest themselves. In the case of SEZs, it will be important to track whether the pressing concerns for equity and transparency among civil society receive the same treatment as corporate interests.
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The 'formal' change in the government's position on de-notification appears to have started here:
With Ref to DLF's application for de-notofication of 4 SEZsthe Board of Approvals (02/06/09) said,
"....The opinion of the representative of Ministry of Law present in the meeting was taken on the issue and it was opined that though there is no specific provision in the SEZ Act and Rules, as per General Clauses Act, the power to notify includes power to de-notify also. DG, EPCES (Export Promotion Council for EOUs and SEZs) was of the view that units in SEZ are allowed to quit as also units under EOU. Similarly, the SEZs who may find it difficult to continue should also be allowed to quit. While under the existing SEZ Rules, there are no specific provisions for de-notifying the SEZs, suitable provisions should be made for SEZs also. BoA noted that M/s. DLF Limited is facing acute liquidity crunch and is not in a position to continue with the projects. Representative of DoR then requested for the details of functional/approved units and duty benefits availed by M/s. DLF Limited in respect of the above mentioned 4 proposals for de-notification...
After deliberations, the Board decided to grant in-principle approval for de- notification...subject to getting confirmation from the concerned authorities that all the benefits including customs/excise/income tax etc. that have been availed on the strength of their being an SEZ have been returned. The Government order of de-notifying these SEZs will be issued only after receiving the above confirmation. The Department of Commerce will also propose suitable
provisions in the Act/Rules for denotifying SEZ "
So far the Dept of Commerce does not appear to have amended the rules with ref to de-notification;
Since then a Raheja SEZ in Navi Mumbai has also received conditional approval for de-notification.
This is a very helpful clarification. Thanks! Interesting that they should need a senior official from the Law Ministry to attend a meeting to 'opine' that of course you can denotify if you can notify!
So far the issue of de-notification has focused on SEZs that are still in the process of being set up. Now the Surat Apparel Park SEZ which has 11 functioning units is seeking de-notification. GIDC and the union textiles minister have offered to help. It will be interesting to see how this plays out.
http://timesofindia.indiatimes.com/news/city/surat/GIDC-comes-to-rescue-of-crisis-hit-apparel-SEZ/articleshow/4983635.cms
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