Scope Of Improvement In SEZ Policies In India


Special Economic Policy in India was announced in year 2000. Special Economic Act was passed in the parliament in May 2005 and came into effect on February 2006. The main objectives of Special Economic Zone in India are to generate additional economic activity, promote exports, promote investments, create employment opportunities and develop infrastructural facilities. A single window SEZ approval mechanism has been created through a 19 member inter-ministerial SEZ Board of Approval (BoA).

In addition to this, lots of incentives are also 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, all these developmental initiatives are turning into a great source of societal conflicts and revolts. 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, Salim Group.

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 Maharastra, where Reliance Group has declared to acquire 10,000 (approx) hectare of land for building up two mega SEZ projects.

The state government of West Bengal as well as Maharastra has temporarily put a Holt on the projects until a mutually agreed solution is being reached.

There are many SEZ projects already planned to be rolled out in near future in different states of the country, like TATA MOTOR’ s facility location at Singur ( West Bengal), Jindal steel plant at Midnapore ( West Bengal), Ruia Group’s Ship building and ship yard project at Jelingham etc.

All 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 also people have given away their land much below the then market price. All those projects could not generate expected level of employment for the local residents.

Witnessing this situation, the group of ministers have come out with a provision that will ensure direct dealings between the farmers and the land acquirers.

Unfortunately, the question here is not about giving a reasonable compensation to the rural land owners but to detach them from their land. They are the son’s of soil.

Land is an immovable asset that never undergoes depreciation. It is a life long asset to the poor rural people. The plan of the government to withdraw intervention from this process of land acquisition may bring even worse affect for the society.

Some of the corporate has expressed their concern in this regard. People have been asking questions about why these Special Economic Zones are always planned on the land owned by the poor farmers? Why the barren, non-utilized lands are not proposed for that? Why the poor farmers should always become the victim of industrialization?

However, these SEZ’s are expected to generate 50,000 direct jobs by the end of December, 2007. Currently, more than one lakh seventy thousand people are employed in these SEZ’s, 40% of which are women.

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, a SEZ should also provide employment to atleast one member of the displaced land owners family.

But, in a country of more than hundred crore population the quantity of employment generated by such mega projects are less if not negligible. There is a darn need for looking into the pros and cons of this. One probable solution could be restructuring the benefits and perks provided to such SEZ projects, may be in terms of providing additional incentives for selecting and developing a non-populated geographical location.

Incentives or tax benefits may be decided on case to case basis and may be directly related to the degree of development in terms of societal uplifment of the standard of living, envoronmental friendliness and overall contribution towards the economy of the nation done by each project rather than having a even benefit policy for all.

Though, this may raise the cost of those projects by some degree but which may be compensated through extending the tax benefits for some more years under a different tax slab.

India is the second largest growing economy in Asia and when the pace of growth is so high, there is a fair chance of overlooking the issues and problems of the weaker section of the country and all these incidents are probably telling us the same story.


Source by Mrinmoy Bhattacharjee

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