HYDERABAD: GVK Power and Infrastructure is abandoning a special economic zone in Tamil Nadu and deferring work on a port venture in Gujarat, GVK group vice-chairman Sanjay Reddy said.
The multi-product
SEZ project, conceived about five years ago, is being dropped because of a change in the tax regime as well as the deterioration in the economic environment.
"It is not viable. In today's times, even SEZs have to pay minimum alternate tax. The SEZ was planned on the basis that there will be no taxes. The general economic environment has also come down."
In the 2011 budget the government brought SEZs under the ambit of minimum alternate tax, charging 18.5% on book profits of developers and units.
GVK has also decided to defer the development of a greenfield seaport project at Okhamadi in Gujarat. The company had signed an agreement with the Gujarat government for developing a new terminal for importing gas, a private coal terminal and maritime city at Okhamadi involving an investment of Rs 7,000 crore. Reddy said there is little progress on the project.
"It really depends on the hinterland. Lot of infrastructure need is there and land acquisition is there. Right now we are not in the stage where we can say we are going ahead with our investment. However, we won't drop it. We will keep developing slowly and see where it goes."
The GVK group, the operator of the Mumbai and Bangalore airports, is among India's largest infrastructure conglomerates with over Rs 30,000 crore of projects in the pipeline. It has interests in energy, resources, airports, ports, transportation, urban infrastructure, hospitality and life sciences.
GVK's sole SEZ in Tamil Nadu's central Perambalur district was being implemented as a joint venture with the Tamil Nadu Industrial Development Corporation.
More than 3,000 acres had been acquired for the project, whose fate will be decided in consultation with the state government. A senior Tidco official said the government and the corporation are yet to take a call on the future of the joint venture. Of the total estimated cost of Rs 750 crore, the company has so far spent Rs 117 crore, most of it for land acquisition.
"Accumulation of land itself has become a big issue now in India. We don't see that we will lose money. The question is what do we use it for? We don't have any answers right now," Reddy told ET.
Source : economictimes.indiatimes.com