A concession called SEZ, all for foreign exchange

Special Economic Zones barter away democracy

Published: Tuesday 31 October 2006

A concession called SEZ, all for foreign exchange

-- Since the 1990s, India has had an economic regime that has placed a premium on privatising enterprise. Liberalisation and globalisation are keywords of this regime. The frenetic rush to globalise is in large measure motivated by the desire to earn foreign exchange at any cost. In recent times, special economic zones (sez) have become a key instrument to actualise this desire.

In 2000, the Union government announced its intention to create such zones: industries operating in sezs were to be given several concessions. The only condition was that items manufactured here should be exported. The sez Act came into force in 2005 and sez rules were formulated in 2006.

Prima facie the idea behind sezs seems beautiful. After all, the issue at hand is that of earning precious foreign change. But this attractive logic hides dubious intentions.

The concessions The chief secretary of a state heads the sez authority. The authority is basically a facilitating agency that issues licences, permits and no-objection certificates to industries.

All sales and transactions taking place in sezs are exempt from the taxes, duties or fees required from other industries. This tax holiday will be effective for nearly 10 years.

There are other concessions. sez s are deemed as industrial townships under Article 243 of the Indian Constitution. This is dangerous clause, because the zones are not under the jurisdiction of municipal corporations, nagar panchayats, village panchayats or any other local authority.

Power to the builder

sez development committees have been constituted to administer these zones. The developers of the sezs or their representatives will head these bodies; state government representation will be restricted to two officers. The body will carry out municipal functions like infrastructure development, land allocation, vaccination programmes, and issuing birth, marriage and death certificates and creating amenities for social welfare. The basic point here is that the developer (owner) of sez will manage this zone. And that's not all. Foreign developers can also establish a s ez. The development committee will also decide how much tax should be collected for various services, and what manner. All this means that residents of sezs will have no say in the administration of the zones.

Forget democracy The sez Act overrides all existing acts, including that pertaining to local-government. When towns under sezs fall in the haands aof a few people with their own rules of administration, imagine the ensuing tyranny.

sezs will dilute all existing environmental laws of the country.

The government can sell barren, pasture and reserved forest land at minor cost to set up sezs with aim of earning foreign exchange. The sez developer can then sell of this land without paying stamp duty and government taxes. That means that s ez development committees can buy barren, pasture lands at a very low price and then sell them at a very high price. All this runs against the principles of local government.

The development committee of the sez is above all. There is nothing on how to challenge this provision of the Act. In our view, this is a new form of the East India Company establishment.

It is high time to evaluate benefits of sezs against the tax relief accorded to it by the state and central government. It's also time we measure the benefits of these zones against the harm done to those who will lose their lands and pasture. How much harm will we do to the environment by giving reserved forests and areas under the coastal regulation zone to sezs? How much will the rupee gain against it? Can we allow foreign profit at the cost of pasturelands and forestlands? Is it morally right to earn foreign exchange at the cost of human rights? What would happen of the rich forest that is sold? Finally, would this development sustain when we become victims of nature's anger?

It is high time one does a thorough ecological and economic analysis.

Mahesh Pandya and Hiral Mehta are environmental engineers with Paryavaran Mitra, Ahmedabad. Contact them on paryavaranmitra@yahoo.com

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