After struggling for four years to develop an engineering special economic zone (SEZ) at Rajoda near Changodar in Ahmedabad district, city-based developer NG Realty has now finally decided to abandon the plan and de-notify its Gallpos SEZ.
The SEZ had got formal approval in May 2007. Four years on, the company wants to de-notify it and is now planning to convert it into an industrial park. With this, Gallops becomes sixth SEZ to be withdrawn in Gujarat.
After investing Rs350 crore in this project, including Rs100 crore in development and Rs250 crore in acquiring land, NG Realty has sent a request to Board of Approval of SEZs for de-notification of its SEZ at Rajoda.
In the request, the firm has cited unstable SEZ policy and imposition of minimum alternate tax (MAT) as reasons for shelving the project.
The SEZ, spread in around 230 hectares, got notified over an area of 217.14 hectares. With many ups and downs, the developer was left with no other choice but to de-notify it.
NG Patel, chairman of NG Realty, confirmed that they are mulling to de-notify their engineering SEZ and said that the SEZs are not viable anymore due to change in the government policy.
"The government has withdrawn majority of the benefits and only certain benefits like relaxations in income tax are available. The central government decision of imposing MAT has been a fatal blow to the SEZ," he said.
Now, the group will set up an industrial park on demarcated land.
"We will not have to bear major loss as land price appreciation will compensate it," Patel said.
Before applying for the de-notification, NG Realty had tried to bring in partners but in vain. First it tried to rope in a Delhi-based company. However, things did not work out so it tied up with Mumbai-based Kalpataru Power Ltd.
Both the times, it was said to be 50:50 joint venture but the deal was not struck. Lately, local company Electrotherm Ltd had shown interest in taking over the project but negotiations failed.
Minister of state for industries, Gujarat government, Saurabh Patel believes that the change in policy by the Centre is unfortunate for Gujarat. "Because of the tax on SEZs, the investors have lost confidence in government and started withdrawing SEZs. Not only the state governments but even central government stand to lose revenue under this policy," he said.
Before Gallops SEZ, five more developers had either de-notified or withdrawn from such projects. Earlier, the proposed SEZs of DLF and Essar had been de-notified and the withdrawal request of Strength Real Estate Private Limited for an IT or ITeS SEZ in Vadodara had been granted.
Three months back, two companies whose withdrawal requests were also granted were Gujarat Hydrocarbons & Power SEZ Limited, and Mexus Corporation.
