Government of India has planned to have Special Economic Zones in many parts of the country in order to attract Foreign Direct Investment (FDI). Any private company, public undertaking or its agencies can establish SEZs with the approval of the competent authority. An SEZ enjoys liberal economic policies, maximum facilities and freedom from labour law hassles.
Interested party has to submit 15 copies of the application giving complete details i.e. name and address along with the project report which should specify the proposed area, the land, outline of structure, nearest harbour or railway station, main road and the source of finance, etc. The application is addressed to the Chief Secretary of the State Government concerned. The State Government forwards this application to the Union Commerce Ministry. The SEZ project enjoys 100 per cent FDI, exemption from Income Tax and Service Tax. A unit approval committee comprising of Development Commissioner and representatives of Custom Department and State Government has annual evaluation of the project. The owner of this project may set up his industry in 25 per cent of the area and use the rest 75 per cent land for building a township for residential, educational and commercial activities. There is a proposal for having no labour laws in SEZs. They enjoy the privilege of ?Hire and Fire?.
To have or not to have SEZs have been in the head-lines for some time. It created a sort of controversy. It is for the first time that the two ministries of the UPA Government at the Centre (Finance and Commerce and Industry) had different approach on the subject and stood face to face. The Finance Ministry is worried about the large revenue loss due to tax and other concessions in SEZs where as the Commerce Ministry is hopeful of making up this loss in the long run besides creating more than one lakh jobs.
The Finance Ministry fears that it would suffer Tax-revenue loss to the tune of Rs 90,000 crore. The Reserve Bank of India report too reads that SEZs may cause transfer of sources out of the less developed areas. RBI has, therefore, placed SEZs in real estate category. It will deprive them of cheap loans from banks. Some experts are of the view that the business houses instead of making fresh investments may shift their business of SEZs in order to save on taxes. The hope that SEZs may generate enhanced tax revenue and create over one lakh jobs may turn out to be an illusion as happened in the case of Export Processing Zones (EPZs) which could not create substantial jobs although sufficient tax relaxations were given to them. SEZs may get benefits of reduced taxes under captive (kapkxr) system and minimum investment but only the big companies will gain from them. Will its gains reach the common man is a big question mark?
It is all the more interesting that in spite of controversy on this policy of the government the interest of state governments and the private enterprises in SEZs has not deflated. Reliance plans to have a SEZ in Navi Mumbai spread over 14,000 hectare land (One hectare=10,000 sq meters). This will contain power plant of 2,000 MV capacity, a dam to store water and easy access to the harbour and the airport. Tata Consultancy Services (TCS) will have four SEZs and two Infosys in Karnataka mainly for Software and Banking services.
A policy on SEZs was declared in April 2000 in order to enhance exports and attract FDI. The Parliament changed it into an Act in 2005. SEEPZ in East Mumbai, Kandla in Kutch, Noida in Uttar Pradesh and Falta in West Bengal all eight EPZs were promoted to be at par with SEZs. The provisions in SEZ are so attractive that Finance Ministry fears that the existing business houses who have already been exporting their products may shift their manufacturing units to SEZs so that it is exempted from paying taxes and duties. According to Ministry of Commerce 94 SEZs will start working in the next 18 months of them 22 have already been notified and will be functional in the coming six months.
Developing SEZs is against the interest of the farmers, labourers and the common man. The land of crisis ridden tiller is already being sold for pittance to the industrialists to be converted into real Estate. The farmers of Singur in Hugli District of the West Bengal are fighting a hard battle to prevent Tata Motors from taking over their fields for their factory. Smt Mamta Banerjee took out a huge demonstration against West Bengal Government on September 26, on the issue. The Uttar Pradesh Government is also forwarding 12 such proposals to the Central Government.
The Union Government has, as yet sanctioned 164 proposals. These will require 26,800 hectares of land. About 266 more proposals requiring 75,000 hectares of land are under the consideration of the Government, which may be cleared in another month or so. These include PASCO and Haldia Projects also.
The SEZ scheme does not seem to have been evaluated properly. Where as the Finance Minister P. Chidambaram is talking of Rs 90,000 crore loss in tax revenue, the Commerce Ministry'sG.K. Pillai is hopeful of garnering 45,000 crore annually as indirect taxes besides generating jobs for 5 lakh persons and an investment of 1,00,000 crore including FDI of 25,000 crore.
We demand that government should form a Regulatory Authority to reconsider the whole issue of this type of zones. Moreover, waste and barren land should be put to use for such purposes instead of fertile and productive farm land. It is wrong to acquire agricultural land for this purpose.
To establish SEZs in Green Belt area is a big land scam, a move to usurp farmers land and to destabilise the villages.
Bharatiya Mazdoor Sangh demands the Government of India to permit trade unions to function in SEZs so as to prevent exploitation of labour. 75 per cent of the land should be used for setting up the industry and 25 per cent for other commercial activities. Otherwise this sort of industrialisation will not serve national interest.
(The author is the President Bharatiya Mazdoor Sangh and can be contacted at Ram Naresh Bhawan, Tilak Gali, Pahar Ganj, New Delhi-110 055)