The government will not stop companies from filing fresh applications seeking permission to set up special economic zones. However, it will not process any fresh applications until it clears the backlog of over 360 pending proposals.

According to commerce ministry officials, proposals sent in after April 5, the date on which the empowered group of ministers on SEZs headed by External Affairs Minister Pranab Mukherjee lifted the freeze on zones, will be taken up after pending cases are disposed of.

"We have more than 360 pending proposals of SEZs with us. Considering and approving them would require at least 7-8 months involving several board of approvals meetings. Therefore, we would first like to clear all pending proposals before processing new ones," said a commerce ministry official.

He added the EGoM had not imposed any fresh freeze on new proposals. In effect, while the likes of Reliance Industries may seek to beat the new 5,000-hectare cap on zones by splitting the originally planned 10,000-hectare Mahamumbai zone into two, its plan will not be approved immediately.

However, there is no ban or limit on the number of zones that a company can set up. Neither have any "proximity restrictions" been put in place till now.

The Board of Approvals, an inter-ministerial body that had to approve the SEZs, also had to process another 162 zones, which had received approvals in principle, as well the 234 zones, that had won formal approvals, the official added.

India's great rush for SEZs

Essentially, this does not mean a freeze on or fresh suspension of the SEZ policy. Commerce Minister Kamal Nath has already said the government will continue to accept new proposals.

Observers say this could well be a ruse to prevent companies from skirting around the 5,000-hectare land cap in the immediate future.

Some believe this marks a temporary setback for such plans. Apart from Reliance Industries' Mahamumbai and Jhajjar zones, the Omaxe SEZ in Alwar, Rajasthan and a DLF project in Gurgaon have been affected by the cap.

Meanwhile, the next Board of Approvals meeting is scheduled for May 9 to consider 19 pending proposals.