Haryana approves Reliance Industries' quitting SEZ; to give Rs 343 crore for land

Reliance Industries' proposal to opt out of Gurgaon special economic zone (SEZ) has been approved by the Haryana government, which hyas said it will reimburse Rs 343 crore to the company.

The amount offered by the state government for taking back the land is lower than Rs 1,172 crore demanded by Reliance.

Chief Minister Bhupinder Singh Hooda told reporters in Chandigarh on Friday that RIL's proposal was approved by the state Cabinet at its meeting here.

Mukesh Ambani-led RIL had sought the reversal of 1,383.68 acres - from Reliance Haryana SEZ Ltd (RHSL) to the Haryana State Industrial & Infrastructure Development Corporation (HSIIDC) - saying that the project had become unviable.

An official release said the SEZ Project at Gurgaon had "been rendered economically unviable due to the mid-term corrections in the SEZ Policy viz. imposition of the Minimum Alternate Tax (MAT), withdrawal of the Tax holiday, slowdown in the global economy, prohibitively high prices of land and other problems associated with aggregation of land through private negotiations".

Sensing the difficulties posed in this behalf, the Chief Minister had requested Reliance to return the HSIIDC land, it said.

"As such, RHSL offered to return the HSIIDC land and abandon the SEZ project in Gurgaon vide their letter of January 2012," the release said.

"RHSL had requested for refund of the amount paid by them to the HSIIDC and re-imbursement of expenditure incurred on the site, apart from interest on the said amount aggregating to Rs. 1,172 crore," it added.

The proposal was considered at the level of the Haryana Investment Promotion Board, headed by the Chief Minister, after examining all the legal aspects of the Joint Venture Agreement, it said, adding that HIPB recommended acceptance of the return offer strictly in accordance with the provisions of the JV agreement.

"Accordingly, the Haryana Cabinet today approved the return of the land to HSIIDC, in lieu of payment of an amount of Rs 343.51 crore to RHSL as against Rs 399.85 crore paid by RHSL at the time of transfer of land and the demand of Rs 1,172 crore by RHSL," the order noted.

"The claims on account of Administrative charges forming price of the subject, refund of the Stamp Duty, re-imbursement of development expenditure and interest amount have not been accepted. The refund amount has been worked out strictly as per the terms of the Joint Venture Agreement date 19th June 2006 signed between the HSIIDC and RVL."

HSIIDC and Reliance Ventures Ltd, wholly-owned subsidiary of RIL, had entered into a JV Agreement on June 19, 2006 for setting up of the SEZ over an area of 25,000 acres in Gurgaon and Jhajjar districts.

HSIIDC had transferred about 1,383.68 acres at Village Garhi Harsaru to the special purpose vehicle floated by HSIIDC and RVL for implementing the project - Reliance Haryana SEZ Ltd, for about Rs 399.85 crore.

The project configuration was subsequently changed to SEZ in Gurgaon district over 12,500 acres and a Model Economic Township over 12,500 acres in Jhajjar district. Reliance was able to purchase, and aggregate, about 7,100 acres in Jhajjar, and another about 1200 acres in Gurgaon, but it was not contiguous.

RHSL also paid Annuity to the landowners whose land was acquired/procured in Gurgaon & Jhajjar amounting to Rs 50.71 crore up to March 31, 2013. It included Rs 17.61 crore on HSIIDC land in Gurgaon and balance amount of about Rs 33.10 crore in Jhajjar where they had procured land through direct negotiations.

Soon after the Haryana government received the land return offer from RHSL, it has been engaged in discussions with the Union Ministry of Commerce & Industry for the best utilisation of the subject land, the release said.

"It has been agreed with the Ministry of Commerce & Industry to use the subject land for establishment of a state of the art Global City Project as a send investment node under the Delhi Mumbai Industrial Corridor (DMIC) Project," it further said.

"The Global City is envisaged to be developed as a high value added manufacturing infused area which, apart from adding to the economic development, would also help in generating skilled employment in Haryana."

Mr Hooda said the land acquired for the Reliance project would not be returned to the original owners of the land. The new project is envisaged to be an integrated model township in Gurgaon, comprising of the exhibition and convention centre, high value innovation and knowledge industries, central business district and township facilities.

The Global City Project is proposed to be developed jointly by the HSIIDC and the DMIC Trust/DMICDC through a special purpose vehicle (SPV) with equity participation by DMIC Trust and HSIIDC in equal proportions.