DLF seeks denotification of four infotech SEZs

DLF, India’s largest property developer, said it had sought denotification of four IT Special Economic Zones (SEZs) planned in Sonepat, Gandhinagar, Bhubaneswar and Kolkata. The company cited economic slowdown and lack of demand for IT space as reasons for the decision.

With this, DLF has scrapped plans for five of the 15 IT SEZs envisaged across the country. An SEZ in Delhi was the first one to be scrapped. The decision comes months after DLF claimed that its SEZ plans, though delayed, were on track. While five of its SEZs are functional, the company is yet to take a decision on the rest five. Senior DLF officials said new projects were unlikely until demand rises.

The commerce ministry, which approves the SEZ projects, allows its derecognition to change the end-use of the land earmarked as SEZs, if no construction work has started at the site. All four projects, the de-notification of which had been sought, thus qualify for denotification, company sources said.

DLF had recently stated that it has stalled a quarter of its total projects (residential as well as commercial) due to lack of demand and liquidity crunch.

The company halted the construction work on nearly 16 million sq ft of office and retail mall space out of the 62 million sq ft of planned construction. In the office space, the developer has stalled construction on nearly 12 million sq ft of office space out of the 36 million sq ft of space being planned. DLF top officials had said that the projects would remain suspended until its finances improve and there is a demand push.

DLF officials maintain that seeking denotification of SEZ has nothing do with the liquidity crunch being faced by DLF. “Due to the slowdown, we do not see any value proposition in going ahead with the projects. However, all our commercial projects, where construction work is on, will be completed in one year. The space in these projects have already been pre-leased,” an official said.

With the SEZ and other commercial space projects on the backburner, DLF is currently concentrating on the residential property development. Its mid-income or affordable housing schemes are receiving good response, officials claimed.