On the matter of establishing Special Economic Zones in the country, The UPA government is finding its feet in deep trouble now. On one hand, UPA’ government main ally, CPM has showed its change in thought on SEZ policy and Sonia Gandhi has announced in a public rally in Haryana that farmers’ interest is more important than the SEZ policy.

On the other hand, two state chief ministers within the UPA have urged the Central government to review the freezing of SEZ policy urgently. In a letter written to Prime Minister Manmohan Singh, the DMK chief Karunanidhi has said that any delay will have adverse impact on investor confidence and investment.

Earlier in January, the government had taken the decision to put on hold all notifications and approval for Special Economic Zones. The government said that it would wait for the National Relief and Rehabilitation policy to come into place that is expected to come in place in three months.

On this decision, The Andhra pradesh CM YSR Reddy and Tamil Nadu CM Karunanidhi has written a letter to PM and Pranab Mukherjee and has registered their disapproval on this decision.

Karunanidhi has written that the big investors such as Nike would take their investments out of India if they would find any uncertainty in India’s SEZ policy. The government should review the current decision to put on hold all SEZ proposals and facilitate immediate approval of pending proposals where land has already been assembled.

Y S R Reddy has written to Pranab Mukherjee, chairman of the Empowered Group of Ministers on SEZs, and asked to allow notification of already approved SEZs with no pending land acquisition or relief and rehabilitation issues.

The Indian Express has reported that the vagueness of the SEZ policy is making investors anxious. Some of the foreign investors, who were in partnership with Indian SEZ developers, have already abandoned their plans worth of Rs 1,000 crore. They have already informed the government that they will not be pursuing their approved projects now.

Karunanidhi has written as

We need to sustain this investor interest, economic growth and job creation. Tamil Nadu is following a balanced policy in so far as land for SEZs is concerned.

The sudden halt to the process of SEZ approvals has sent unwelcome signals to the investor community.

Here are some main reasons why Andhra Pradesh and Tamil Nadu are worried over the suspension of the SEZ policy in the country-

# Tamil Nadu has 10 of 44 approved SEZs notified. Among the 44 proposal, 16 have in-principle approval and 18 have been finally approved.

# Nike has planned to invest Rs 400 crore in a sports shoe SEZ and it has already ordered machinery. Now. It is panning to go out of the plan if there would be no progress in this matter.

# 25,000 people would get employment in the state. The other four operational SEZs have already employed 10,000 workers in the very first year of the SEZ plan.

# Andhra Pradesh is worried because Brandix Apparel SEZ in Vizag is all set to start operations and just waiting for the notification. 60,000 people would get employment in the state by early-2009

# Among 235 formally approved SEZs, 44 are in Andhra Pradesh and till the date only 10 have been notified.

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