SEZ, how special?

  • 14/11/2006

SEZ, how special? Roughshod riding
SEZs will trample on farmers' rights

A farmer in Cheete Kalan village in Amritsar, Harjeet Singh Hundal, has big plans. For the past year, he has been using organic manure on his fertile and irrigated agricultural land and he can't stop talking about it. Using waste produced by his cattle and sludge from his household gobar-gas plant, he makes his own vermicompost. He produces enough not only for his land but also to sell to other farmers in the village. "I hope that in two or three years I will be able to do away with chemical fertilisers completely,' says Hundal, while harvesting his new crop of pulses. Hundal is ready to experiment. With his fertile, multicropped land, he can afford to.

dlf Universal, the big hitter in real estate, also has big plans. It wants to build an approximately 500-hectare (ha) special economic zone (sez). Unfortunately, Hundal's land is organic to their plans. It's right in the middle of the land the company wants for its new venture.

The sez will comprise textile and garments industry units (spread over 162 ha), engineering units (142 ha), food-processing units (101 ha), a free trade and warehousing zone (40 ha) and an inland container depot and an air cargo handling space. It will also include commercial centres, residential areas and institutional facilities like schools and hospitals. dlf will invest Rs 800 crore in the sez to build an island of industrial growth where Hundal wants to make vermicompost the buzzword. The state has promised dlf it will acquire Hundal's 12 ha and the rest of the fertile land in the public interest.

Hundal is not alone. Massive tracts of land are being acquired in the name of public interest and being sold off to private developers for sezs. The Union ministry for commerce and industries sees these zones as a big boom, boosting the economy through exports, building infrastructure and generating hundreds of thousands of jobs. In June 2005, the government passed the sez Act and in February 2006, framed rules. Till now, the Board of Approval (boa), which approves sez proposals, has granted formal clearances to 212 proposals and in-principle approval to 152, despite stiff opposition from the Union ministry of finance, the Left parties and the Reserve Bank of India.

"I can't watch the fields I have tilled with my hands for so long get bulldozed"


Act I, Scene II
The sez Act was notified last year. It provides for enclaves that will be given major fiscal concessions. Units in sezs will not have to pay import duties, state taxes on raw material, or cesses/duties on electricity. State governments have to assure sezs water. They will also get single-window clearances.

The requirements on minimum area, processing area, social infrastructure and investment have been contested. After finance ministry warnings on revenue losses, the commerce ministry tweaked requirements for minimum processing area and investment to pre-empt real estate deals, but revenue concerns were not addressed (see table: Mostly carrots).

But sezs have an unfortunate genealogy. Earlier experiments with export processing zones (epzs) and free trade zones have not worked.

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