The mad rush to set up Special Economic Zones that house export-oriented manufacturing units

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three years ago turned cold in 2009, as demand for commercial space waned due to the global meltdown.

Rentals for commercial complexes fell sharply and the land, developers felt, could be employed for other purposes.

Realty major DLF got four such SEZs denotified by the Commerce Ministry, citing lack of demand for commercial space, and Parsvanath has put 12 projects on hold.

Non-realty players like Essar have also sought permission to pull out of an SEZ project at Hazira, Gujarat, while about 90 developers were given more time by the Board of Approval in the Commerce Ministry to execute their business plans.

These included the likes of Reliance Industries, Infosys Technologies, Jindal Stainless Steel and Wipro.

"With slowdown in economic activity,developers need more time to execute their projects," Ajay Midha, Director for Rahejas SEZ Ltd said. He said the impact of global economic crisis was "definitely felt" on SEZs.

As there were not many seekers for the tax-free enclaves, the BoA met less frequently dealing more with requests for withdrawals and time extension than fresh proposals.

Developers cited reasons like demand slump, fund shortages and land acquisition problems as the reasons for seeking denotification and delay in projects, a Commerce Ministry official said.

In 2006, when the SEZ rules were notified, there had been a mad rush for setting up such enclaves.