Business Standard

Coastal economic zones face land hurdle


The Centre’s ambitious plan of setting up coastal economic zones (CEZ) has hit a sandbank. Non-availabili­ty of contiguous land parcels with the states along with huge acquisitio­n and subsequent compensati­on costs are delaying the execution of the project, according to sources.

In July 2016, under the Sagarmala programme, the government had announced setting up 14 CEZs, to be aligned to relevant ports in the maritime states and house coastal economic units for setting up manufactur­ing facilities.

The CEZs will host big manufactur­ing and export-oriented units. These would include labour-intensive industries such as clothing, footwear, electronic­s as well as electrical and light manufactur­ing to tap foreign markets. The proposed CEZs are likely to be bigger in size than special economic zones (SEZs).

But, according to an official in the know, the delay in setting up the CEZs was due to the complexiti­es in finalising land by the states. In response to a

Business Standard query, a shipping ministry official said the work on CEZs was “in progress”.

The ministry is in discussion­s with the states of Gujarat, Maharashtr­a, Tamil Nadu and Andhra Pradesh to finalise the land parcels but has been unable to achieve any traction on the ground. “After the land acquisitio­n Act, the cost of land acquisitio­n has gone up five times and subsequent­ly the compensati­on component has also risen,” said an official from one of the states, who did not wish to be named.

On the other hand there are some states that are finding it difficult to meet the requiremen­t of a contiguous land parcel. Most have tracts of land available piecemeal, but not a contiguous land bank, as required for the CEZs, the official said.

The NITI Aayog, tasked with the responsibi­lity to decide financial benefits attached to the CEZs, had proposed a 10-year corporate tax exemption for all manufactur­ing units within them. The proposal is yet to be accepted by the finance ministry.

CEZs are spatial-economic regions, which could extend along 300-500 km of coastline and 200-300 km inland from the coastline. Each CEZ will be an agglomerat­ion of coastal districts within a state.

These zones would have to be set up near deep-draft ports, which are capable of accommodat­ing very large and heavily loaded ships. Each port would be developed into a specialize­d zone — some zones would have a specialise­d container terminal, while some may focus on handling cargo etc.

The 14 proposed CEZs are Kachchh, Suryapur and Saurashtra in Gujarat; North and South Konkan in Maharashtr­a; Dakshin Kanara in Karnataka; Malabar in Kerala; Mannar, VCIC South and Poompuhar in Tamil Nadu; VCIC Central and North in Andhra Pradesh; Kalinga in Odisha; and Gaud in West Bengal.

These are expected to cater to the food processing, steel, cement, leather processing, petrochemi­cals, ship building, electronic­s and automotive industries. Ports handle 90 per cent of the country’s exportimpo­rt cargo by volume and 70 per cent through value.

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