IL&FS, Reliance to join hands for industrial township in Haryana
NEW DELHI: Infrastructure Leasing & Financial Services will become an equal partner with Reliance Industries to develop an industrial township in Haryana, a project that is a pale shadow of what was planned as an ambitious special economic zone sprawling over 25,000 acres.
IL&FS will be given a 45% stake in a so called ‘Model Economic Township’ at Jhajjar which will focus on the domestic market, documents prepared by a Haryana government agency, and seen by ET, show. Reliance Ventures, a subsidiary of Mukesh Ambani-led RIL, will own 45% in the project and the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) the rest. Of the about 10,000 acres acquired for what was meant to be an SEZ, 9,000 acres will be used to set up the township, which is meant to host global manufacturers keen on Indian opportunities.
The remaining 1,088 acres will be retained for the multi-product SEZ in Gurgaon, a project in which Reliance Ventures will have a 90% stake and HSIIDC the rest. Both IL&FS and Reliance declined comment. One of the key reasons for splitting the Haryana SEZ, in two, is because of the uncertainty over tax concessions for SEZs under the proposed new direct tax law, said an official familiar with the development.
The Direct Taxes Code Bill, which was tabled in Parliament in August, says only units in SEZs that commence commercial operations by March 2014 or are notified before March 2012 will be allowed profit-linked deductions. To make the township project attractive, its promoters have proposed that the location should be the main hub in north India for the Delhi-Mumbai Industrial Corridor being developed in partnership with the Japanese government.
The Haryana industrial investment agency has approved the setting up of the township and has sent the proposal to the DMIC, said a state government official. The deal with IL&FS values the township at around $1 billion (Rs 4,500 crore), said a person aware of the matter. The promoters of the township are in advanced talks with Mitsui, the largest export house in Japan, to divest a minority stake in the project.
They are also in discussions with several companies to lease land, among them Panasonic, which has agreed to take around 100 acres on long-term lease for nearly Rs 100 crore. More than half a dozen companies are expected to follow suit. The Harayana SEZ was to be India’s largest, with a target to generate 5 lakh jobs, a cargo airport and a 2,000-mw power plant with rail linkages from Delhi Metro.
However, due to protests across the country over land acquisition, the government capped the size of SEZs at 12,500 acres. Reliance then said it will develop two SEZs of 12,500 acres each in Jhajjar and Gurgaon but that plan has been stymied by its inability to obtain contiguous plots of land. When the plan was conceived in 2005, the projected investment in the project was in excess of Rs 50,000 crore. Till now, Reliance has invested around Rs 4,500 crore to acquire some 10,000 acres of land in the Jhajjar district of Haryana that lies between Gurgaon and Sonepat districts.