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Ambani's Navi Mumbai SEZ may turn into IIA

Cidco will seek the Cabinet's clearance and after that it will become the first case at the national level of migration of SEZ into IIA.

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The Maharashtra government will soon take a decision on conversion of Navi Mumbai Special Economic Zone (SEZ) initially proposed on 2,140 hectare into integrated industrial area (IIA) due to lack of any development since 2006 due to procedural and tax-related issues. The government thereby will allow 85% of the land by the Navi Mumbai SEZ CO (NMSEZC) as IIA and balance 15% for the residential purpose as per the original contract.

Dronagiri Infrastructure, promoted by Reliance Group Tradecom LLP, along with Jai Corp and SKIL, holds 74% in NMSEZC while the 26% is held by the state run City & Industrial Development Corporation (Cidco). After conversion, Cidco will continue to hold 26% equity, and it will initially get 5% revenue share and later 7.5%.

Cidco is exploring an option of imposing additional lease premium penalty worth Rs 1,000 crore and liquidated damages worth Rs 470 crore for the NMSEZC's failure to achieve various milestones and complete the project.

A state urban development department official told DNA Money, "The issue has been discussed at length at the meeting convened by the chief minister Devendra Fadnavis in the presence of Reliance Industries chairman Mukesh Ambani and other stakeholders. Cidco will seek the Cabinet's clearance and after that it will become the first case at the national level of migration of SEZ into IIA.''

Cidco had selected Videocon Industries (VIL) as a strategic partner in 2002 for the Navi Mumbai SEZ project. However, VIL opted out of the project and thereafter the high power committee headed by the state chief secretary in January 1, 2006 allowed rest of the members with SKIL as lead consortium member to proceed with the project.

Cidco had handed over 1,842 hectare of land to NMSEZC. However, NMSEZC sought revision in milestones due to non-enactment of a state SEZ Act and global slowdown. Subsequently, the government in 2010 granted extension of two years. However, the NMSEZC sought second extension in August 2012 due to lack of development of SEZ project.

But till date there is no decision about the second extension either by Cidco or by the state government. Cidco, in the meanwhile, had sought opinion from legal experts, who noted that granting further extension for project completion is futile unless there is certainty to grant incentives, and reopening the contract as non-SEZ is not viable.

The legal experts also pointed out that while exploring an option of termination of lease or contract it was necessary to take into account the expenditure incurred by the company to carry out the development, including availability of funds with Cidco in case the latter intends to carry out development on its own and its feasibility.

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