Land stir hurts investments in Tata Steel's Gopalpur industrial park

Company has reportedly received conditional approval to develop the industrial park under DTA

Sporadic protests by land losers and project affected people are impeding the flow of investments to Tata Steel's industrial park at Gopalpur. Locals, agitating over jobs and compensation issues, have blocked the main gate of the park since November 2016 and are intermittently disrupting the operations of Tata Steel's ferro-chrome plant at the site.

As an anchor investor, Tata Steel has developed a ferro-chrome manufacturing unit spread over 155 acres. The plant has a capacity to produce 55,000 tonnes per annum. The entire park covers a stretch of 2,970 acres of which 1,235 acres is notified as a special economic zone (SEZ). The non-SEZ patch is proposed to be developed as a domestic tariff area (DTA) by Tata Steel. Accordingly, the steel maker has sought 1,735 acres to be registered in the name of Tata Steel Special Economic Zone (TSSEZ).

Tata Steel has proposed to develop the SEZ and DTA concomitantly to speed up investments in the industrial park. The move to develop the DTA stems from the reducing appeal of SEZs in the backdrop of waning demand for export oriented units and doubts over extension of SEZ-related benefits beyond 2020.

The steel company has been striving to woo investors for the park by staging roadshows within the country and overseas. Tata Steel has received expressions of interest for 190 acres of SEZ and 235 acres of the non-SEZ area. But potential investors are apprehensive to sign firm agreements due to the prevailing agitation.

Arun Misra, MD of TSSEZ, said, "There have been some prospective investors who have visited the site and have shown interest. But disturbances  and disruptions at the site could have a bearing on their investment decisions."

For the SEZ notified area, Tata Steel has signed a memorandum of understanding (MoU) with BS Minerals for a manufacturing unit on 2 acres. In the non-SEZ patch, other than Tata Steel's ferro-chrome plant, Sure Safety Solutions has put up a unit over 5 acres for aerial manufacturing targets.

"The process of obtaining environmental clearance for the SEZ area (1,235 acres) is under way. We already have an MoU with one investor for the SEZ area, which will be converted to a sub-lease agreement after the environmental clearance. We expect more investment in the SEZ area once the environmental clearance is obtained," Misra said.

The land at Gopalpur being developed as an industrial park was originally acquired for a shore-based steel plant proposed by Tata Steel in 1995-96. However, the steel maker shelved its plan and the state government suggested developing a multi-product SEZ on the acquired land. Keeping in view the changed land use plan, 1,235 acres was registered in favour of TSSEZ by the state government in October 2015, which was accompanied by a revised compensation package.

Misra said more than 2,000 families had been paid the additional compensation and the balance was under process. This apart, 78 persons from nominees of core displaced families have been offered jobs in the ferro-chrome plant. Sure Safety Solutions has also shortlisted 10 candidates from displaced and land-loser families and has offered engagement to four in the first phase.

An engagement guideline for providing opportunities to locals has been firmed up with the help of the district administration. A state government official said, "We are trying to sort out the agitation at Tata Steel's Gopalpur site by engaging the local administration. Tata Steel has requested for registration of an additional 1,735 acres of land for developing a DTA, but our decision will be guided by the progress of investments in the SEZ."

The state has given conditional approval to Tata Steel to develop the industrial park under the DTA. The conditions are the period of implementation of the SEZ and the industrial park should not exceed five years and that TSSEZ will explore the possibility of reducing the price of sub-leased land to make it attractive for investors.