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CHENNAI: In what could be a blow to the special economic zone (SEZ) initiative, the Comptroller and Auditor General report found that of 1770.23 acres of land developed for SEZs by State Industries Promotion Corporation of Tamil Nadu (SIPCOT), more than 43 per cent could not be marketed.

The report excludes Bargur SEZ, which is among the eight SEZs developed during 2006-11. The report said that of the seven SEZs audited, only two SEZs (Sriperumbudur and Oragadam), which were closer to Chennai were marketable while other five suffered due to poor marketability.

The report said that infrastructure facilities created at a cost of `15.38 crore remained largely unproductive and the objectives of formation of SEZ was not fulfilled.In four SEZs, the allotments made were insignificant ranging from nil (Cheyyar SEZ) to 35.59 per cent (Perundurai SEZ).

"The poor demand was mainly attributed to incorrect selection of location on account of company's failure to conduct detailed feasibility study before establishment of these SEZs," said the report.

The report said that SEZs at Cheyyar, Ranipet, Bargur and Gangaikondan were not ideal locations for respective industries. In Cheyyar, an auto ancillary SEZ, the company abandoned it due to poor response. Similarly, in Ranipet, SIPCOT changed the product line from leather to engineering.

"This indicated lack of clarity about the demand potentials before embarking on SEZs. In Gangaikondan SEZ, 115 acres were allotted to ATC Tires, the balance 89 acres of land remain vacant," CAG said.