Special Economic Zone: The New Conflict Ground in India
More than a decade after the opening of India, the Special Economic Zone (SEZ) probably has become the most controversial economic reform announced recently. While some consider it India’s supersonic engine of growth, others severely criticize it as the latest land grab instrument in the hands of the industrialists. Serious discourses on development models, displacement and rehabilitation, employment generation, foreign investment, and the primacy of industry over agriculture are being raised in justification and against the whole concept of SEZ. Despite the heated argument as of January 2007, the Union Government has given final approvals to 237 SEZs and in-principle nod to about 165 zones. Besides, 300 more applications are in the process of approval.
While announcing its new Export-Import Policy in 2000, the Government of India also introduced SEZs, which are deemed foreign territory for trade operations, duties, and tariffs. As per the SEZ Act 2005, SEZs are geographical regions with economic laws that differ from a country's typical economic laws. Among all other incentives announced with the SEZ Act to woo investment, the most lucrative is the 100 per cent tax exemption for industries on export profits for the first five years and the provision of 100 per cent foreign direct investment in sectors under automatic route. However, in 2006, the Commerce Minister of India, Kamal Nath, announced the detailed rules and regulations with regard to the SEZ. Since, millions of people from states like Haryana, Orissa and Maharashtra are engaged in a sustained agitation against the "unjust" acquisition of their land for many SEZ projects. The threat of massive displacement from agricultural areas has been the main focus of these agitations. Strange but true, the opposition to SEZs is taking the shape of a loose alliance of incongruent outfits, which include activists like Medha Patkar, former Prime Minister V P Singh, many NGOs and even outfits owing allegiance to Left extremists.
The Indian corporate giant Reliance wants to develop a SEZ in Chirner, a suburb in Mumbai. Reliance wants the entire stretch from Navi Mumbai to Dharamtar Creek and plans to make it Mumbai's satellite city, which would spread over 35,000 acres. The government is acting as a perfect real estate agent and will eventually acquire 45 villages for the Reliance project. Although the government has issued notifications for land acquisition, the local people have no clue how much they will get for their land. As per the local reports Reliance has been trying to buy up land at Rs.3 lakhs to Rs.4 lakhs an acre. In contrary, the market rate is said to be anywhere between Rs.20 lakhs and Rs.40 lakhs an acre. The irony is that most of the land that will be acquired is owned by Agris and Kolis, traditional farmers and fisher folk who have already faced displacement from Mumbai and Navi Mumbai. The reality is that even they would forgo their land they don’t have a place in the Reliance SEZ.
Recently, Arcelor Mittal's Rs 40,000 crore SEZ project planned at Patna Tehsil in Keonjhar in Orissa ran into rough weather when angry villagers from the 17 villages demonstrated a protest rally at the Keonjhar District Collector’s office demanding that their land should not be acquired for the Mittal steel plant. Thousands of protestors have given a clear ultimatum to the Orissa government to look for infertile lands as they are not going to hand over their land. The resistance to the SEZs has been particularly intense in left-party-governed West Bengal. In January, at least five people were killed and dozens injured when communist supporters clashed with activists opposed to the plan for a 14,500-acre economic zone set up by TATA at Nandigram in West Bengal.
The confusing signs emerging within the government departments have misled people from both the sides and which in return has led to violent protests and clashes. While the Commerce Ministry expects the zones to draw nearly 600 billion rupees ($13.5 billion) in investment by 2009 and create 890,000 jobs, an internal assessment of the Finance Ministry has estimated that by 2010 the country will forgo about Rs.1, 60,000 crores in direct and indirect taxes because of the SEZs across the country. The government of India wants to follow China's way, but while in China there are only six SEZs, in India, twenty-four SEZs have been established just in 11 months, and over 200 SEZs are in the pipeline. This shows that proper ground work has not been done before implementing the concept of SEZ.
Feeling the heat from various quarters, the Empowered Group of Ministers (EGoM) on SEZ met on 22nd January 2007 but could not reach any concrete decision on the fate of SEZs. After the meeting the Commerce and Industry Minister, Kamal Nath told reporters that the Board of Approval would not clear any fresh applications till the EGoM reaches a decision. SEZ in itself is not a bad idea, what is important is the proper policy of land selection, land acquisition, and compensation. Destroying prime agricultural plots for the sake of industrialization doesn’t necessarily result in equitable development, as farmers don’t make an easy transition for the jobs that are offered in the SEZs. Equally important is to closely monitor the activities of the SEZs to find out whether they are really contributing for the growth as originally conceptualized or have become simply the real estate brokers.
It is necessary that the government implement all the mechanisms of good governance to compensate local farmers and treat them as subjects of governance who should have the maximum share in the development process.