India slides back on SEZ

By Dhruva Jyoti Chowdhury Kolkata, India: Land is a life long asset to the poor rural people an immovable asset that never undergoes depreciation. The plan of the government to withdraw intervention from this process of land acquisition may bring even worse affect for the society. Since India cannot afford to invest a huge amount of money to develop the infrastructure of the whole India, setting up Special Economic Zone (SEZ) is the only viable option to match Chinese economic development to attract Foreign investment as well as from the residential industrial community. But due to lack of home work to built up infrastructural facilities for the land owners the Indian Government has gone on the back foot is at present is moving at a snails pace in this regard. The Chinese started their liberalization and industrialization with the formation of SEZs in late 70s and early 80s. But in india, the liberalisation process started after about a decade from China. But still the land acquisition process for the SEZs still a dream for the Government as hasty decisions and lack of home work pre acquisition of land for setting up SEZ are turning into a source of societal conflicts and revolts. The basic concept of the Indian government is to promote Special Economic Zone in India to generate additional economic activity, promote exports, promote investments, create employment opportunities and develop infrastructural facilities.

A 19 member inter-ministerial SEZ Board of Approval (BoA) has also been formed as a single window SEZ approval mechanism. Very recently, the BoA has put a limit on the maximum land acquisition by a SEZ project to 5000 hectare. It has also laid down compulsory export business for such projects. Apart from this, it has been made mandatory to provide employment to at least one member of the displaced land owner’s family. However, these Suez’s are expected to generate 50,000 direct jobs by the end of financial year 2007-2008. Currently, more than one lakh seventy thousand people are employed in these SEZ’s, 40% of which are women. As a matter of fact, SEZ is being incorporated 15 years after the start of liberalization process. Comparing China, the process of acquiring land and laying down infrastructure was a slow process. The Government convinced the land owners how beneficial it will be for the development of the country. The Chinese Government had a Master Plan and an economic framework on how to build and proceed with SEZs, most probably inspired by the success of Asian Trading Hub, Hong Kong. The Dragons started building massive cities for manufacturing and industrialization under their SEZ framework. Dragons also rolled out red carpet for foreign companies to build and operate from these SEZs. Now the question arises how the Government wants to facilitate the Indian and Foreign companies through SEZs ? Well, the answer is that lots of incentives are being provided to the businesses operating under SEZ’s, some of which are duty free imports or domestic procurement of goods for development, operation and maintenance of SEZ units, exemption from minimum alternate tax, exemption from central sales tax, 100% IT exemption for the first 5 years, 50% during the next 5 years and 50% of the ploughed back export profit for the next 5 years. But the real answer is quite different from the above. These mega projects ask for hundreds and hundreds hectare of land which are normally bought from respective rural land owners at a rate fixed by the government. In the past too, people have given away their land much below the then market price. All those projects could not also generate expected level of employment for the local residents due to their financial structure and lack of any formal training. Witnessing this situation, the group of ministers has come out with a provision that will ensure direct dealings between the farmers and the land acquirers. There is also a fair chance of overlooking the issues and problems of the weaker section of the country regarding acquisition of land for setting up Special Economic zones as after ‘massacre’ in Nandigram in West Bengal, the Government is fearing of violent protests all over the country against the forcible acquisition of fertile agricultural land which will lead to penury for the landless farmers Even the journalists were not spared by the hooliganism by the ruling party cadre but even by the police force. Few incidents in the past and current, like Nandigram incident have brought a great deal of uncertainty in implementation of SEZ plans towards industrialization of the nation, where many people died in police firing while opposing the acquisition of their land for a proposed SEZ by a Indonesian company, The Salem Group. The West Bengal government's decision to put on hold the proposed special economic zone at Nandigram has sent the Orissa government on the back foot forcing the Naveen Patnaik government to cancel a proposed project by the Orissa Industrial Infrastructure Development Corporation (IDCO) at Kalinga Nagar. The state-owned IDCO had earlier proposed to establish a sector specific metallurgical-based engineering and downstream industry for manufacturing stainless steel spread over 250 acre at Kalinga Nagar Industrial Complex The cancellation took place in order to avoid any violence over land acquisition which will profusely hold up many foreign companies who have already been invited for setting up industry in Orrisa. Though the Orissa government does not want to express its apprehensions over the SEZ issue, ruling BJD-BJP alliance insiders admitted that the administration does not want to have a repeat of the Kalinga Nagar blood spill. The state government has so far received proposals for setting up 17 SEZs. The center has announced hundreds of SEZ plans all across the nation, but their future seems to be uncertain. Recently, another such social revolt has been registered in the state of Maharashtra, where Reliance Group has declared to acquire 10,000 (approx) hectare of land for building up two mega SEZ projects.

Dr. J J Irani, former CMD of Tata Steel and currently one of the powerful Directors on Tata Son's is of the opinion, "India should also go slowly like China has done".

Mohandas Pai, Executive Director, Infosys Technologies said,"We should look at entire districts, with a port and a hinterland for SEZ. We should make large-scale investments in that so there is synergy, and we should ensure that manufacturing has priority, followed by services, but the vision has to be much larger. The way it is today, the vision is too myopic, and too small, and I am afraid we will not get the benefit that China did".