Reliance Industries Ltd (RIL) appears to be pulling out of the its special economic zone (SEZ) project near Gurgaon as the company is in the process of informing the Haryana government that it is ready to hand back 1,400 acres of land allotted to it for setting up the venture.

RIL's Haryana SEZ was being set up through a special purpose vehicle (SPV) in which RIL had a 90 per cent stake while the Haryana State Industrial and Infrastructure Development Corp Ltd (HSIIDC) held the remaining 10 per cent as sweat equity.

According to Haryana government sources, RIL is expected to send a formal letter containing the offer to give back the land to HSIIDC "very soon". The land was allotted for the project without a bidding process and will now be given back to the Haryana government. As part of a larger plan, RIL had acquired an additional 5,000 acres adjacent to this land.

Market sources disclose that the total value of the 1,400 acres would work out to around Rs 20,000 crore as the price of land in the region is roughly Rs 15 crore an acre. The move represents a setback for the SEZ policy, which was put in place to bring in fresh investments and create more jobs.

Haryana chief minister Bhupinder Singh Hooda has already admitted that SEZs have turned out to be a failure in the state as they have failed to generate jobs.

The RIL spokesperson did not revert to Mail Today with the company's version on the issue till the time of going to the press. RIL had originally planned one giant SEZ at Jhajjar, but after the government limited the size of such zones to 12,500 acres, the company decided to create two adjacent SEZs.

The Haryana SEZs were expected to bring in an investment of around Rs 25,000 crore and have provisions for a cargo airport and a 2,000MW power plant. RIL was going slow on the project as due to the global economic meltdown there was uncertainty among investors and the demand for commercial space had shrunk.

The company had sought a four-year extension for the project from the Union commerce ministry, which notifies SEZs and allows them various tax concessions to promote exports and generate jobs.

However, in March last year the government had granted Reliance Haryana SEZ a one-year extension. The extension was given by an inter-ministerial Board of Approval (BoA) headed by commerce secretary Rahul Khullar at its meeting on March 25 last year.

While RIL had sought extension of the original letter of approval to March 2015, the board decided to extend the validity of the LOA up to March 31, 2012. The SEZ projects had also got delayed initially as RIL could not acquire contiguous land to meet the minimum holding requirements of the commerce ministry.

Land buying had gone well to start with but then the remaining farmers had suddenly jacked up prices to unreasonable levels.

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