No takers for SEZs as 43 per cent of land remain unsold: CAG report

Chennai:

In what could be a blow to special economic zone (SEZ) initiative, the Comptroller and Auditor General report found that of 1770.23 acres of land developed for SEZs by State Industries Promotion Corporation of Tamil Nadu (SIPCOT), more than 43 per cent could not be marketed.

Interestingly, the report excludes Bargur SEZ, which is among the eight SEZs developed by (SIPCOT) during the period 2006-11.

The report said that of the seven SEZs audited, only two SEZs (Sriperumbudur and Oragadam), which were closer to Chennai were marketable while other five suffered due to poor marketability. CAG report said that infrastructural facilities created at a cost of Rs 15.38 crore for these SEZs remained largely unproductive and the objectives of formation of SEZ was not fulfilled.

In four SEZs, the allotments made were insignificant ranging from nil (Cheyyar SEZ) to 35.59 per cent (Perundurai SEZ).

“The poor demand was mainly attributed to incorrect selection of location on account of company’s failure to conduct detailed feasibility study before establishment of these SEZs to ensure locational advantages and proximity to resources,” said the report.

The report said that SEZs at Cheyyar, Ranipet, Bargur and Gangaikondan were not proved ideal locations for respective industries – auto ancillary, leather, granite band transport engineering.In Cheyyar, an auto ancillary SEZ, the company abandoned it due to poor response. Similarly, in Ranipet, the SIPCOT changed the product line from leather to engineering.

“This indicated lack of clarity about the demand potentials before embarking on SEZs. In Gangaikondan SEZ, which was formed in May 2008, except an allotment of 115 acres of land to an memorandum of understanding company ATC Tires, the balance of 89 acres of land remained vacant when the report was filed,” CAG said.