Yielding to backlash from various quarters, the Centre on Thursday decided to put an end to compulsory land acquisition by state governments for Special Economic Zones and limited the size of SEZs to 5,000 hectares.

The Empowered Group of Ministers of SEZ, which met in New Delhi, also cleared 83 SEZs with no dispute and increased the processing area of the SEZs to 50 per cent of the land size.

"The decision will be applicable to all SEZs including those which have already been notified," Commerce and Industry Minister Kamal Nath said after the meeting.

The move follows opposition to the SEZ policy from various political parties including the Left and the massive protests by farmers against acquisition of farm land.

According to the decisions taken today, compulsory acquisition of land for SEZs by the states under the Land Acquisition Act would not be allowed, leaving it to the developers to directly purchase land from farmers.

Further, the states would be empowered to reduce the size of SEZs below the 5,000 hectare limit set by the Centre.
Nath said under the new Relief and Rehabilitation Policy, which would be finalised soon, at least one member of the displaced family would have to be employed in the project. This would be in addition to the compensation paid to farmers.

With the freeze lifted, the government would approve all pending applications where there is no land dispute.

Of the 234 SEZs with formal approvals, 63 have already been notified, while 83 more were today cleared for notification. The Board of Approvals will now take up 162 SEZs with in-principle approval and 140 pending applications.

The decision on limiting the size would hurt plans of companies such as Reliance Industries which is setting up mega SEZs like Maha Mumbai and one near Gurgaon.

Nath said Rural Development Ministry has been asked to amend the Land Acquisition Act and make it more comprehensive.

He said Relief and Rehabilitation Policy is already under preparation by the Rural Development Ministry.

Barring two cases of Reliance Industries, most of the multi-product SEZs have been proposed on the land size up to 2,500 hectares.

The maximum proposals have come for IT specific zones, which require minimum land size of 10 hectares.

The increase in processing area to 50 per cent from 35 per cent has been decided after persistent demand from UPA allies who wanted safeguards against the zones becoming real estate activity.

According to official sources, the 234 SEZs with formal approvals would require 33,808 hectares of land of which 17,800 hectares is already in possession of state agencies while the rest is with the developers.

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