Introduction:

India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ setup in Kandla, Gujarat in 1965. With a view to overcome the shortcoming experienced on account of the multiplicity of controls and clearances: absence of world – class infrastructure, and an unstable fiscal regime and with a view of attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000 under the Export and Import (EXIM) policy. The IMF and the World Bank commended this concept as a “global idea” in the 1960s.  

Brief History of SEZs  

 

 

In India the concept of SEZs was adopted after the tremendous success of SEZs in China. The first SEZ in the Asian region was set up in Shenzhen in 1979. China has become a developed or advanced country only after the establishment of SEZs and it has become a center for high technology industries, indeed a “new technology tiger”. 

 In India the SEZ policy was described as an “engine for economic growth” supported by quality infrastructure complemented by an attractive fiscal package, both at the Center and State level with the minimum possible regulations. SEZs in India functioned from 01.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant status.

 The SEZs Act, 2005 was passed by Parliament in May, 2005 which received presidential assent on the 23^rd of June, 2005. The draft rules came into effect on 10^th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.

 The main objectives of the SEZ Act are:

 (a)    Generation of additional economic activity

 (b)   Promotion of exports of goods and services;

 (c)    Promotion of investment from domestic and foreign sources;

 (d)   Creation of employment opportunities;

 (e)    Development of infrastructure facilities;

 The SEZ Rules provided for different minimum land requirement for different class of SEZs. Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing are where the supporting SEZs infrastructure is to be created.

 The United Progressive Alliance (UPA) Government provided concrete shape to SEZs through the SEZs Act, 2005. SEZs are crucial for generating employment, boosting manufacturing, and allowing India to capitate with countries such as China. There has been an extraordinary flood of SEZs. While the entire world has only 400 SEZs and China only six, India has already crossed 200 approvals within a year, 48 of them in Maharashtra alone.

 In India the most debatable issue is that the SEZs. Majority of the Indians were saying that, the concept of “SEZ is healthy for the country in terms of economic growth but not for the people in terms of their social development”. It is true because the establishment of SEZs is only benefited to the SEZ developer through offering incentives and facilities i.e., exemption from minimum alternate tax under section 115 JB of the Income Tax Act, external commercial barrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels, Exemption of Central Sales Tax, exemption from Service Tax, Single window clearance for Central and State level approvals, Exemption from State sales tax and other levies as extended by the respective State Governments. But it is a not healthy for the people who are living in the SEZ area.

 Most of the multi national companies like Tata, Reliance and Deccan Airlines Pvt. Ltd., are showing their interest to set up an SEZ because they can enjoy with all the concession and incentives offered by the state and central Government. But in contradictory most of the marginalized like farmers, tribals, local artisans were becoming poorer to poorest condition this is because the concept of SEZ is adversely effecting on the livelihoods of the marginalized sections in Indian society.

 Most of the people (70%) in India are depending up on the agriculture and agri allied activities like sheep rearing, dairy, poultry etc. But the SEZ developer with the support of Government is grabbing the fertile lands from the farmer with out giving any prior notice and compensations according to the Rehabilitation and Resettlement(R&R) Policy.

 Land grabbing under SEZs

 The State or Central Government is following the policy of “growth at any cost”. In Indian context it has proved with the incidents of Nandigram and Singhur. In this most of the farmers were agitated against their state Government with  request to stop the land grabbing but the Govt. has not taken any proper action to solve their problem instead it has taken police fire, lati charge etc. Most of the farmers were committed suicide.

 This is not only happened in only with these two states it is happening in all over the India. Now a day the SEZ developers offering the compensation that is also very meager amount when compared with   the current marketing value.

 Migration under the SEZs

 The displaced people were not resettled properly instead they are migrating from country side to urban areas with a little compensation what they got. In urban areas these displaced were not able to live in a good house because of the high cost of living gradually they have to live in the slums they would not get good water and sanitation facilities finally it creates health related problems. Here they have to struggle for their existence because they don’t know how to utilize or how to invest their money to make profit because they are unskilled they don’t have modern core competencies to capitate with the modern world. In the case of rural artisans like potter, carpenter they are becoming from poor to poorest condition because they are semi skilled people they could not capitate with the advanced technology and they couldn’t get market for their products.

 The problem of food security and SEZs

 With the effect of setting up of more SEZs the fertile was grabbed by the SEZ developer so that the agriculture production is becoming less but in the contradictory to this population is growing more and more here the imbalance will arise between the population growth and reduction in agricultural production and it will lead to the problem of the food security in the country. 

 Natural resources and SEZs

 The condition of natural resources in the SEZ and surrounding areas are declining because in SEZ areas water will use 24 hours during the entire year and in case of industries every day carbon die oxide will release and it will cause to the air pollution again this air pollution will lead to the problem of less rain fall.

 Rural unemployment and SEZs

 One more negative impact of the SEZs is increase of rural unemployment. The jobs which are going to create by the SEZs will be of the high skill variety which the displaced farmers (with different skills or with low skills) would not be able to perform. Further, given their enclave like character they would not encourage the entry of low skilled workers displaced from rural economy flooding their territory. Such people would of necessity become encroachers’ ad slum dwellers in some urban areas. Thus the existing urban areas would face problems while the new enclaves would flourish creating differential urbanization more problems. 

 Conclusion

 As India prepares for becoming an economic superpower, it must expedite socio economic reforms and take steps for overcoming institutional and infrastructure bottlenecks inherent in the system otherwise the definition given by an economist that is “India is a rich country inhabited by the poor people” becomes true. Availability of both physical and social infrastructure is central to sustainable economic growth. To achieve the above objectives, SEZ policy initiatives will be a successful tool in India also. The concern of farmers and loss of agriculture land are also duly addressed and catered for in this policy. The Rehabilitation and Resettlement of schemes for the project affected people is needed to be designed for the betterment of farmers. The economic growth and increase in income level of farmers will also increase a whole. 

  Further References:

 1.      Justice, Peace, Equality, Democracy, Humanity for all by Sudipta on 30^th July, 2007.

 2.      Special Economic Zones in India : Growth and Blood an Analysis article by Mr. Arun Kumar on 23^rd May, 2007

 3.      The Hindu Editorial on 29^th Spe, 2006

 4.      Financial Express, India on 31^st March, 2007

 5.      The Hindu press note on 21/10/2006