Tata Steel and the Orissa government will set up a special purpose vehicle (SPV) for the proposed Gopalpur special economic zone (SEZ).

The advantage of a SEZ is that the Gopalpur port can handle deep draft vessels. Moreover, the steel ministry had also approached the railway minister for setting up a railway transport corporation in Gopalpur.

The Orissa government is also looking at converting the fair-weather port into an all-weather one. The SEZ will effectively utilise the 4,000 acre acquired in Gopalpur by Tata Steel for its proposed 10 million tonne steel plant, planned in the 1990s. Work on the project was never initiated.

The first phase of the mammoth project was estimated at Rs 7,000 crore. The land was acquired by displacing one village completely and four others partially. Three factors prevented Tata Steel from going ahead with its plan — no progress on the port, poor linkage of iron ore and non-availability of water.