Aspects of SEZ policy

The Hindu, April 28, 2009
The past few years have been marked by considerable controversy over the Special Economic Zone scheme, initiated through Government of India’s Export-Import Policy of 2000 and later given a firm legislative and operative framework. SEZ is an enclave legally deemed to be outside the customs territory of India for the purpose of undertaking authorised operations for export of goods and services, facilitated by a regime of fiscal concessions and investment incentives. The main objectives of the scheme are export promotion, generation of economic activity and investment stimulation. But its implementation has been assailed as ‘pro-industry anti-agriculture’, and causing farmer displacement and violation of human rights and women’s rights, while the more basic issues of structural shift in the economy, land usage and environmental impact needed critical attention.


P. Arunachalam, who had earlier authored the book, Special Economic Zones in India: Principles, Problems and Prospects, has accomplished a rather difficult task of gathering 21 analytical contributions from 25 authors, predominantly academic, based in different parts of the country. It seems that most contributors could access only secondary data on the implementation of the scheme up to early 2008. Published in 2009, the volume appears rather dated and is marked by repetitive presentation of details of the scheme, as per the SEZ Act of 2005 and the rules framed under it in 2006. There is however compensation by way of detailed analysis of the emotive aspects and economic issues involved in land acquisition, displacement, impact on farmers, employment, and so on.

Taken as a whole, the articles enable us to appreciate the nuances of the debate on SEZs. Pradeep Mehta and N.C Pahariya offer a balanced assessment of potential costs and benefits of SEZs in India and follow it up with an analysis of results of field surveys in 14 SEZs in different parts of the country, and conclude that, “as against the Chinese model of ‘big and few’ India has adopted a policy of ‘small and many’ while developing the SEZs in the country.”

Three contributions covering the Nandigram agitation, the SEZs in West Bengal and the neo-liberalist factors spurring the SEZs help us understand the vehement protest against the SEZs based on the perception that they are no more than “farmer displacement” initiatives in the name of industrial growth spurred by incentives for industrialists. Another article highlights the arguments of various activist organisations against the acquisition of land in 45 villages in Raigad district for the Maha Mumbai SEZ. While arguments in favour of the SEZs as contributors to exports, foreign investment and infrastructure development have been dutifully recorded and analysed, most contributions have focussed on land acquisition and its adverse impact on farming and landholders.

Detailed analysis

On the whole, the volume provides a dated but detailed analysis of social, political, economic and environmental concerns emanating from the SEZ policy and its implementation from multiple locational perspectives. Placing the issues in a macro perspective, Pradeep Prajapathi argues, “It would be too early to comment on the net benefit or losses emanating from the SEZ policy. A lot of research as regards different aspects of the SEZ policy is required before one can draw some hard core conclusions. With the studies in the field having just begun, a wide ground is open for researchers to choose a particular area to work upon and also to provide some meaningful insight in the policy making.”

If only the editor had supplemented the academic contributions with an account of the recommendations of the Parliamentary Standing Committee (July 2007) that studied the SEZs, the decisions of the Empowered Group of Ministers (April 2007) and the initiatives of the Ministry of Commerce to get the Land Acquisition Act amended and the rehabilitation policy revised, the book would have gained in substance. As it is, the publication is useful as a book of reference.

This Debate can also be viewed at: