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The Government of India has formulated a policy for setting up Special Economic Zones (SEZ) in India. SEZs are proposed to be specially delineated duty free enclaves for the purpose of trade, operations, duty and tariffs. These zones are self-contained and integrated having their own infrastructure and support services.
India’s industrial growth is dictating its own dynamics that treats farmers and workers as merely subservient classes. The working classes are getting continuously margin-alized. The affluent sections, on the other hand, seek to gain maximum benefits from globalization. Special economic zones (SEZs) are meant to accelerate this process. These would be the enclaves of the world-class infrastructure, with their own ports, airports, power stations and water supply. India’s SEZ law promises the exemption for another five years, and exemption for five years more for units set up with reinvested profits. The developers of the zones get tax breaks for 10 years. The core manufacturing area of SEZs would be only 25-30 per cent of total area.
The SEZs will mainly come up in Maharashtra, Gujarat, Uttar Pradesh, Tamil Nadu, Orissa, Karnataka and Haryana. India is looking at developing more than 350 SEZs with more than Rs.1,00,000 crore investments. As many as 150 of them have got formal approval. Another 129 have been cleared in principle and nearly 200 others are awaiting clearance. Reliance plans to buy nearly 25,000 acres of land from the Haryana government to set up Rs. 25,000 crore multi-products SEZ that will have a cargo airport and a 2,000 MW power plant. Apart from this, Mukesh Ambani, the Reliance industry chairman, has bigger plans. He wants to set up one of the biggest SEZ in India. In association with the Maharashtra government, he wants to set up the two of these zones in an area as large as 14,000 hectares in Navi Mumbai and Maha Mumbai. Both these would be impossible if irrigated land is not allowed to be acquired. Apart from Reliance, companies like Wipro, Infosys, Satyam, Bajaj, DLF and many others are firming plans to set up SEZs. The SEZ rush is on. In the second week of November, Noida in Uttar Pradesh got the okay for eight SEZs.
The sector-specific SEZs would be less than 100 hectares in size, and less than 50 hectares in special category states. SEZs for IT, biotechnology and jewelry could be as small as 10 hectares but with all these facilities. Clearly the mini- SEZs in India will provide no world class infrastructure, and all likely to be simply tax havens. The tax holiday for IT companies is ending in 2009. Moving into mini-SEZs will enable them to get a tax holiday for another decade. IT companies are not infants needing protection. The top ones have sales exceeding $1 billion and operating margins of over 30 per cent. When old industries with a thousand problems pay tax, why not IT?
Will it be a fair deal for farmers? As protests by farmers in various parts of India created a whirr with activists joining in, the government toned its enthusiasm and determination down a bit saying that agricultural land would not be taken over to build SEZs. The government is touting SEZs as the future islands of excellence. But at what cost will it be achieved? As thousands of acres of agricultural land are converted into concrete jungles, how will it affect food security? Will the farmers who are ready to give off their land get a fair deal? Most of them fear they will get peanuts compared to what the developers will make.
Will our SEZs be Maquiladora? US transnational companies shift their factories to such countries where the tax collection is lax, environmental checks are absent and labour is cheap. So lot of US MNCs have set up plants in Mexico’s maquiladora zones, something like India’s SEZs, where a worker gets $ 1.64 a day against $ 16.17 in the US, where there are no restrictions on dumping toxic wastes and polluting groundwater and water bodies and no right to workers to form trade unions. Thus Mexicans sacrifice their lives, health and future on the altar of global competition. MNCs pick up sites for their companies where company executives could enjoy year round temperate climate, where Golf courses could be located and where affordable housing is available. For all this the State helps them to select the site. And the site preparation at the state cost help the companies to enjoy benefits which should not belong to them. This is how taxpayers subsidize the MNCs. This is how the game of global competition is rigged. It pits companies against people in a game in which people are bound to lose.
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