In a significant development the Haryana government asked DLF to pay the prevalent market rates to the farmer instead of a flexible mutual price while acquiring land for its Gurgaon SEZ. The floor price of the designated land is otherwise 4-5 times less than the market rates.

The additional burden is likely to increase the company’s investment in acquiring land for its ambitious SEZ project. It had expected to maintain strong operational profits in 2007-08 by investing in SEZ developments. But the government’s directive is set to squeeze DLF’s expected profits.

Even the market price of the Gurgaon SEZ land is much higher than what Reliance Industries had paid for its SEZ in Jhajjar. DLF claims that they did not consider the floor price while buying land for the multi-product SEZ. During an earlier development, DLF had approached the Haryana State Infrastructure and Industrial Development Corporation (HSIIDC) to assist them in acquiring the land.

However, HSIIDC turned down its request saying that unless the company acquires 75% of the total land area, it would not help in acquisition.

This might delay the whole process as even the state government can not acquire land from unwilling farmers as per the Central government policies. However, in the midst of acquisition issues, DLF proposes to develop the Gurgaon SEZ in four phases: the first phase set to be completed by 2009. The SEZ should be ready by 2018.

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