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Andhra Pradesh - Vijayawada Printer Friendly Page   Send this Article to a Friend

Slowdown shadow on SEZ?

G.V.R. Subba Rao


Apprehensions are rife whether the SEZ would get off the ground due to impact of global meltdown


VIJAYAWADA: The global meltdown and the sub-prime lending crisis in the US are likely to cast a shadow on the Vijayawada Guntur Tenali Mangalagiri – Urban Development Authority’s (VGTM-UDA) prestigious Special Economic Zone (SEZ) project for Information Technology (IT) and Information Technology Enabled Services (ITES) in Amaravathi Township at Mangalagiri near here.

The State government gave its nod on October 18 to award the 40-acre SEZ to New Delhi-based Parsvanath Developers Ltd, which will be the co-developer.

There are apprehensions whether the proposed SEZ would get off the ground in view of the possible impact of the global financial crisis on the IT industry. UDA officials say that the SEZ at Mangalagiri is “unlikely to be implemented immediately and on a faster pace in view of the prevailing volatile situation globally.”

They agree that the uncertainties are likely to remain high for a few more months.

There are divergent views on the impact, as some believe that the global crisis will have very little impact on the software industry, except in respect of companies that have sole exposure to the US market.

They say that the sub-prime crunch is likely to accelerate the ongoing IT & Business Process Outsourcing (BPO) off-shoring trend. But there are more takers for the view that the slowdown in the US will hurt.

When contacted, UDA Vice-Chairman Y. S. B. S. Vittal said: “We are trying to implement the SEZ as per schedule. A meeting with the co-developers and APITCO, will be convened shortly. We will ask them to take up the works at the earliest.”

Bidder’s plan

The bidder proposes to develop the project with an investment of Rs.880 crore. Against an upset price of Rs.75 lakh an acre fixed by the UDA, Parsvanath Developers quoted Rs.75.71 lakh an acre. The UDA proposes to build 17.69 lakh sft of infrastructure. The UDA is expecting to get Rs. 30 crore to Rs. 40 crore from the co-developer. The land would be given on lease to the co-developer for 99 years with the condition that an SEZ with the employment potential of 10,000 should be ready in not more than three years.

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