New Delhi: In response to concerns expressed at the Congress Chief Ministers' conclave, the Centre has directed State Governments to ensure that prime agricultural land is not given to special economic zones (SEZs).

Commerce Minister Kamal Nath on Monday said land being a State subject, his Ministry had written to States urging them not to get into land acquisition for private players.

Speaking on the sidelines of a conference organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here, the Minister said he totally agreed with Congress president Sonia Gandhi that good farmland should not be diverted for industrial purposes. Wherever possible, SEZs should come up on wasteland or on not very good farmland. The Board of Approvals decided that proposals for setting up SEZs on prime agricultural land would not be cleared.

Mr. Kamal Nath's comments come in the wake of Ms. Gandhi's warning at the Nainital conclave that farmland should not be diverted for non-agricultural purposes, while proposing that farmers be given proper compensation for land acquisition. On the Reserve Bank's decision to consider SEZs real estate projects for lending purposes, he pointed out that the RBI itself had commended the SEZ scheme in its report and described it as an engine of growth. It was now for the SEZ developers to take up the issue with the RBI. Its decision to treat SEZs as real estate projects was bound to affect the economic viability of these projects as the cost of lending would go up.

Addressing the FICCI conference, Mr. Kamal Nath said India and Japan were moving towards a Comprehensive Economic Cooperation Agreement (CECA) to boost mutual trade and investment ties. Based on the India-Japan Joint Study Group's recommendations, progress was made in preparing a road map for the CECA.

Japanese Ambassador Y. Enoki said talks on an economic partnership agreement could begin by January next and conclude within two years.

The two countries would together contribute about 60 per cent of Asia's Gross Domestic Product when the agreement was signed.

He said bilateral ties would get a boost after the new Japanese Prime Minister Shinzo Abe took over on Tuesday and Prime Minister Manmohan Singh visited Tokyo later this year.

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