SEZs and land acquisition

FACTSHEET FOR AN UNCONSTITUTIONAL ECONOMIC POLICY

WHAT IS AN SEZ?
A Special Economic Zone (SEZ) is an especially
demarcated area of land, owned and operated by a
private company, which is deemed to be foreign
territory for the purpose of trade, duties and tariffs. SEZs
will enjoy exemptions from customs duties, income tax,
sales tax, service tax. After the passing of the SEZ Act
by the Parliament in June 2005, the law came into effect
in February 2006, though some states, like Gujarat, had
passed provincial SEZ legislation in 2004 itself.

Farmers’ protesting against SEZ in West Bengal

(Arunangsu Roy Chowdhury, The Hindu)
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WHY SEZS? HOW MANY SEZS?
The stated purpose of creating SEZs across India is “the • 237 SEZs in 19 states (occupying 86,107 hectares) have
promotion of exports”. The Commerce and Industries been approved by the Central government.
Minister Shri Kamal Nath claims that exports will ultimately
grow five times, GDP will rise 2% and that 30 lakh jobs will • 63 of these SEZs have already been notified.
be generated by SEZs across India. It is also claimed by the
• 23 SEZs are operational, 18 in IT sector.
government that SEZs will attract global manufacturing
through foreign direct investment (FDI), enable transfer of • Ultimately 500 SEZs.
modern technology and will also create incentives for
infrastructure. • Total amount of land to be acquired across India: 150,000
hectares (the area of National Capital Region). This
land – predominantly agricultural and typically multi-
cropped – is capable of producing close to 1 million tons
of foodgrains. If SEZs are seen to be successful in the
future and more cultivated land is acquired, they will
endanger the food security of the country.

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WHAT HAS BEEN THE EXPERIENCE WITH SEZS SO FAR?
There are less than 400 SEZs around the world at the moment. In India the government is planning that many in one country
alone.

China India
NUMBER 7 Ultimately 400-500
WHEN STARTED 1980 Mostly after 1991
DEMOCRATIC DECISION-MAKING? Lot of discussion and debate preceded setting No discussion. Parliament passed the law easily
up of SEZs
SIZE Very large (Shenzhen: 32,700 hectares) Small (3 – 14,000 hectares)
OWNERSHIP State Private corporations
ON WHAT KIND OF LAND Mostly coastal wasteland Mostly fertile cultivated land
EXPORTS Very good (Shenzhen: Net exports 2006: $35 billion) Poor so far (In 1998, a waiver of $1.67 billion on customs
duties was given to earn $1.04 billion in foreign exchange)
EMPLOYMENT Substantial number of low-paid jobs Very limited so far: 100,650 in all the SEZs till March 2005
TAX REVENUE COLLECTIONS Only selective tax incentives provided Across-the-board tax holiday given to companies
OVERALL ECONOMIC SUCCESS Shenzhen very successful, but at least 2 SEZs Largely unsuccessful so far
have failed
EASE OF LAND ACQUISITION Land battles in some areas still Bloody, bitter resistance

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DISPLACEMENT AND LOSS OF LIVELIHOODS
Estimates show that close to 114,000 farming households Adivasis and 25% Dalits) have lost their land since
(each household on an average comprising five members) 1950 on account of displacement due to large
and an additional 82,000 farm worker families who are development projects. At least 75% of them still await
dependent upon these farms for their livelihoods, will be rehabilitation.
displaced. In other words, at least 10 lakh (1,000,000)
people who primarily depend upon agriculture for their Almost 80% of the agricultural population owns only about
survival will face eviction. Experts calculate that the total 17% of the total agriculture land, making them near landless
loss of income to the farming and the farm worker families farmers. Far more families and communities depend on a
is at least Rs. 212 crores a year. This does not include other piece of land (for work, grazing) than those who simply
income lost (for instance of artisans) due to the demise of own it. However, compensation is being discussed only
local rural economies. for those who hold titles to land. No compensation has
been planned for those who don’t.
The government promises ‘humane’ displacement followed
by relief and rehabilitation. However, the historical record
does not offer any room for hope on this count: an
estimated 40 million people (of which nearly 40% are

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WILL SEZS CREATE JOBS?
The growth of employment in the entire organized sector displaced to make room for SEZs. Kamal Nath’s claim that
since the inception of the reforms in 1991 has been negligible. SEZs will create 30 lakh jobs within a few years is fraught
The total employment in the organized sector is still less with fantasy: those many jobs have not been created in total
than 3 crores. Even in IT and ITES, the boom areas of the since the inception of the reforms in 1991! The government
economy, employment is less than 0.15 crores. (60% SEZs does not provide information on jobs lost, only on jobs
are for IT.) The Indian labor force is estimated at 45-55 created.
crores. Thanks to growing automation, modern
manufacturing grows joblessly around the world. (In India Furthermore, if the experience of existing SEZs in places
automobile production has grown rapidly, while employing like Noida (or Shenzhen, China) is anything to go by, the
less labor than before.) With more automation, organized working conditions – poor wages, non-existent benefits,
services also require limited supplies of labor. SEZs will long working hours, occupational hazards, discrimination
attract modern industry and services in order to and so on – under which people will be employed will
succeed. To that extent they are unlikely to generate inevitably violate human rights apart from keeping the benefits
too many jobs. Moreover, the few jobs that will be generated of growth away from the poor.
will be for highly skilled labor, usually not available in the
countryside – from where working people are being

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THE NEW CORPORATE CITY-STATE?
Many of the SEZs, like the MahaMumbai SEZ (to be private monopolies running local governments (for
built by Reliance Industries) will be like a mid-sized city, a sizeable cluster of the urban population) without
over 100 sq km in area (the size of Chandigarh). There being elected is questionable. All the non-economic
will be no elected local government. A government- laws of the land under the IPC and the CrPC would be
appointed ‘Development Commissioner’ will govern the applicable to SEZs. However, internal security will be the
SEZ with the main aim of facilitating economic growth. responsibility of the developer. Would the SEZs turn
SEZs have been a declared “public utilities” under the ultimately into sovereign city-states – treasure islands of
Industrial Disputes Act, making collective bargaining and prosperity in a sea of poverty and misery – unaccountable
strikes illegal. Infrastructure, like power, roads and water to the vast majority of citizens in the neighborhood?
supply has been guaranteed to investors and developers,
not to people of the region. Several lakh people may be
living/working inside the SEZ. In some cases the developer
may have the right to tax the population in order to provide
essential services. The Constitutional tenability of

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LOSS OF PUBLIC REVENUE
Thanks to exemptions from customs duties, income tax, sales
tax, excise duties and service tax (even on luxury hotel Furthermore, given the concessions on import duties (not
facilities, shopping malls, health clubs and recreation centres) merely for the investors who will produce exportable items
given to SEZs, the Finance ministry estimates a loss of but also for the developer, who will not), there are likely to
Rs.1,60,000 crore till 2010 in revenue. (The Ministry has be foreign exchange losses (rather than gains). For the five
also asked for capping the number of SEZs at 100. Finance year period ending 1996-97 the foreign exchange outgo on
Minister P. Chidambaram wrote to Cabinet colleagues imports made by units in SEZs and the customs duty forgone
saying: “SEZs per se will distort land, capital, and labour amounted to Rs.16461.58 crore against which exports of
cost, which will encourage relocation or shifting of industries only Rs.13563.87 crore were reported.
in clever ways that can’t be stopped. This will be further
aggravated by the proliferation of a large number of SEZs Moreover, these zones are exempt from sales tax, octroi,
in and around metros.”) The foregone tax revenue every mandi tax etc on the supply of the goods from the Domestic
year is five times the annual allocation for the National Tariff Area (rest of India).
Rural Employment Guarantee Scheme and is enough
to feed each year 55 million people who go to bed
hungry every day.

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SEZS OR REZS (REAL ESTATE ZONES)?
Are SEZs a gigantic real estate scam?
What are SEZs likely to become in a few years’ time? least cash in on the land value. Conglomerates like Reliance
According to a clause in the SEZ Act (Section 5(2)), as already own upwards of 100,000 acres of land in the
much as 75% of the area under large SEZs (above 1000 countryside.
hectares) can be used for non-industrial purposes. What
will the remainder of the land be used for? Furthermore, the government has enabled foreign direct
investment (FDI) in real estate as of January, 2007, leaving
This lacuna in the law is likely to become a loophole for the door wide open to massive amounts of international
the accumulation of land banks by private developers and speculative investment in property. Far from giving “land
property dealers for the purposes of real estate speculation. to the tiller”, as the original idea of land reform had
(This explains why so many of them have been buying promised, the present tendency of the Indian governments
areas for SEZs.) In fact, it may well be the case that the is to remove all ceiling on the ownership and use of land –
rationale for the above clause in the SEZ Act is the serving thereby the interests of big business. It is
uncertainty surrounding the economic attractiveness (and noteworthy that there is no legal upper limit on the size of
ultimate viability) of SEZs. If adequate productive land area under an SEZ.
investment is not forthcoming, the SEZ developer can at

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SEZS: LEGAL VIOLATIONS
The following are the main legal violations because of the SEZ Act, 2005:

• It violates the letter and spirit of the Indian Constitution. • Violates Panchayat Raj Act (1996) for local self-
government
• It infringes the fundamental rights of the citizen
guaranteed in Part III of the Constitution. • Violates laws granting rights and control to Adivasi
communities over their land
• Relaxation/inapplicability of many labor laws (including
under the Industrial Disputes Act, Contract Labor Act, • Violates many international conventions on human
Factories Act, Minimum Wages Act, Trade Union Act) rights
• Environment (Protection) Act is inapplicable to SEZs.
No environmental clearance needed.

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RESISTANCE MOVEMENTS IN DEFENCE OF RURAL LIVES AND LIVELIHOOD
The political landscape of India in the last 20 years presents
“a million mutinies”. In every region and state, small and
large people’s movements have emerged to fight back the
appropriation of their natural resources, livelihood and
survival by their own governments and large national and
international corporations. What we present here is only a
snapshot of these rebellions.

In the Southern Region

• Struggle against Coca-Cola in Plachimada, Kerala -
holding Coca-Cola accountable for water shortages and
pollution in the area: the community forced the Coca-
Cola bottling plant to shut down in March 2004.
Spearheaded by Coca-Cola Virudha Samara Samiti.
Farmers’ rally against Reliance SEZ in NaviMumbai (Frontline)
• Muthanga Forest Land Struggle, Waynad, Kerala- Led

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 by Adivasi Gothra Sabha (AGS) and its leader C K .Janu against SEZ in Raigad, against land acquisition by
for Tribal land rights. Indiabulls
• Farmers protest against land acquisitions for Bangalore- • Fishermen’s struggle against the proposed gigantic port
Mysore Highway, Karnataka. at Umbergaon
• People’s struggle against mining of Krishna River by the • Anti-Coca-Cola agitation in Kaladera, Rajasthan by Jan
Reliance Group. Sangharsh Samiti.
• Narmada Bacho Andolan for over 20 years has
Western and Central India
opposed big dams, displacement of people and brought
• Dalit struggle for Gairan (grazing) land in Marathawada issue of rehabilitation, justice and ills of mega projects
region, Maharashtra, under the Jameen Adhikar into the mainstream.
Andolan.
• Against Privatization of Shivnath river in Chattisgarh,
• Struggle against Reliance Gas lines in Sindhudurg district, National Alliance of People’s Movements, the All India
Maharashtra. Youth Federation, the Nadi Ghati Sangharsha Samiti
• Farmers protest against SEZ in Raigad, against land and the Chhattisgarh Mukti Morcha have been uniting
acquisition by Reliance in Greater Mumbai. people living along the river to oppose the privatization .
23.6 km length of Shivnath River has been sold to the
• Farmers (26 Gaon Bachao Sangharsh Samiti) protest Radius Water Company.

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Eastern Region • Struggle against the Tipiamukh Multipurpose Hydel
• Struggles in Kashipur, Gopalpur, Kalinganagar (Orissa) Project in Manipur.
against displacement. Northern Region
• Struggle in Singur and Nandigram (West Bengal) against • Anti Coca-Cola struggle in Mehdiganj, near Varanasi in
SEZs and displacement. Uttar Pradesh.
• Adivasi struggle in Jadugoda against uranium mining and • Struggle against privatization of water, Delhi,
displacement.
• Farmers protest against Reliance SEZ in Jhajjar, Haryana
• People’s movement against the construction of the to
Koel-Karo Hydro- Power Project (80 kms from Ranchi • Farmers Struggle against land acquisition for Trident SEZ
under the Koel-Karo Jan Sanghathana, that has stalled in Barnala Punjab.
the implementation of the project for over three decades

North-East Region
• Struggle against Pahladia dam in Assam and the
privatization of water resources. Prepared by
Citizens’Research Collective, N 14A Saket,
• Peoples movement in Doyang and Tongani, Assam against New Delhi – 110019
forcibile eviction from forests. Email: sez.crc@gmail.com

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