The Government has deferred a decision on Reliance Industries Ltd’s (RIL) request seeking permission to lay a pipe rack through its Jamnagar Special Economic Zone (SEZ) connecting its refinery and chemical production complex, both situated outside the zone.
The Board of Approval for SEZs, that examined the request in a recent meeting, noted that the matter was complicated as it could lead to violation of SEZ rules and asked the Commerce Ministry to further examine the issue.
“BoA members were not sure whether reasons given by the company for building the pipe rack running through the SEZ were enough to justify it as it had nothing to do with production within the zone,” a Commerce Department official told
The BoA, which includes senior officials from a number of ministries including Commerce & Industry, Finance, Agriculture and Home, asked the Department of Commerce to study the matter further and give its observations at a later meeting.
RIL had sought right of way through the SEZ on the grounds of it being the shortest route. The alternative route would be longer, cause technical problems and lead to higher costs. The company proposes to invest Rs 20,000 crore in the production complex in the domestic tariff area (DTA) outside the zone for producing chemicals such as Ethylene.
SEZs are deemed foreign territory and are subjected to tax laws that are different from units in the DTA. Operations in an SEZ are, therefore, totally delinked from those in the DTA.
“If an exception is made for a particular developer, the reasons should be sound, as it would open the doors for more such requests to pour in,” the official said.
More time to developers
The BoA also gave more time to 14 SEZ developers, including Cognizant Technology and Parsvnath SEZ, to execute projects.
Four developers were also allowed to surrender notifications and approvals given for their projects.