Annotated SEZ Tales

April 16, 2007	(1 votes, average: 5 out of 5)  Loading ...
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Trouble-free in Tamil Nadu

Luckily, Tamil Nadu escaped criticism as far as the development of SEZs is concerned. The state has five operational (three manufacturing and two IT) SEZs. Eleven have obtained final approvals, while 22 have received in-principle approvals.

The companies to scramble on to Tamil Nadu’s SEZ bandwagon include the prominent names such as Nokia for handset production, Flextronics for electronics manufacturing services, and Mahindra World City. Others who put in their applications for facilities in the second half of 2006 were bogged down by the embargo on fresh SEZ approvals, which the central government lifted on April 5.

The Right Approach!!!

• Several big projects have come up on land acquired by the State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT), the nodal agency for infrastructure development schemes. This land is rented out to investors or companies on the periphery of Chennai and smaller cities like Coimbatore, Trichy, Madurai and Tirunelveli. These are mostly dry-lands acquired by the government about a decade ago.
• The project in which the government land was not involved, the government did not interfere in land acquisition deals.
• Farmers haven’t done too badly out of recent acquisitions in pockets like Sriperumbudur, where Nokia has its plant. The per-acre cost of land here is Rs 90 lakh to Rs 1 crore (comparable to prices in the Mumbai’s suburbs).
• Tamil Nadu has also been successful in its SEZ policy because, in stark contrast to king-sized units elsewhere, SEZs here are spread on 200 or 250-acre plots (approximately 100 hectares). The total land area for a single SEZ in Tamil Nadu does not exceed 500 acres.

Overall, the SEZ message appears to have percolated well here. There is a wide appreciation of the benefits of SEZs in terms of development of rural and semi-urban areas and their contribution to employment generation and the ripple effect on the economy of the state.

Smooth Sailing in Gujarat

Gujarat is busy developing its 33 approved SEZs with virtually no opposition from farmers (barring some minor protests against Reliance’s SEZ and a small protest in Por near Vadodara).

For instance, work on the 2,600-odd hectare Mundra SEZ, which was notified last year, has progressed at a rapid pace — roads and water, power, telecom, gas, drainage and sewage connections are already nearing completion.

Chief Minister Narendra Modi has chosen to make SEZs the cornerstone of his government’s economic development plan.

Things that were taken Care of:

• Like Tamil Nadu, the state government does not intervene between the SEZ developers and the farmers. Farmers were free to sell their land if they get a good deal and could refuse to sell if they don’t.
• Under the Gujarat SEZ Act an SEZ developer can deal directly with farmers and pay compensation under the Land Acquisition Act. The other way is to buy land belonging to Gujarat Industrial Development Board (GIDC) or wastelands belonging to the government.
• An evolved business culture has also made it easier to sell the SEZ concept here. In Gujarat, non-agricultural land is available in plenty and the local population is supportive of economic activities since it is a business community.

Landlocked in Karnataka

Karnataka probably best exemplifies the criticism that SEZs can foster land-grabs and real estate plays. The state has 27 approved, 17 in-principle approved and 10 notified SEZs that will cover around 5,000 acres (2,000 hectares).

Of these SEZs, five are operational. Information technology forms the bulk of the SEZs, followed by biotechnology, textiles, automotive and food processing.

Small Careful Steps:

• Land is acquired by the Karnataka Industrial Area Development Board (KIADB) and then handed over to the SEZ developer.
• Many analysts have suggested that domestic IT companies will simply relocate their operations to SEZs to avail of tax breaks once their tax-exempt status expires in 2009.
• Developers who have acquired land on their own and then applied for SEZ status have often faced delays in notifying their land because of this ambiguity.

The lack of a practical policy for compensation and rehabilitation has also opened the door for politically powerful groups, not necessarily with corporate interests, to build land banks using SEZs as a proxy.

Meanwhile, the state is working on alternative modes of employment as a suitable rehabilitation measure. However, it is yet to define an adequate alternative source of livelihood, keeping in mind that if employment in SEZs is to be considered, the nature of employment would be skilled.

Chhattisgarh’s Small Scale

As one of the most backward states in India, Chhatisgarh sees SEZs as a source of economic transformation. But, having suffered popular protests over land acquisition for non-SEZ industrial projects for the Tatas and the Ruias, the state has limited its SEZ ambitions.

Chhattisgarh has two SEZ proposals — one in IT (20 hectares) and another in gems and jewellery (30 hectares). The first is pending central government clearance and the latter has in-principle clearance.

Additional chief secretary (industries) P Joy Oommen said work on both would start within two months of receiving all clearances. Oomen maintained that land acquisition problems here are minimal because the SEZs will come up as part of the expansion project for the new capital city.

However, acquisition for the new capital project is already showing signs of problems with farmers and NGOs raising doubts about compensation and benefits. The state government has a rehabilitation and compensation package that minister of state for industries Rajesh Munat claimed is “the best and most attractive”.

Farmers receive up to Rs 5 lakh per acre, Munat said, adding that the amount is fixed as per the cost of land in the area and its utility. Former minister and senior Congress legislator Satyanarayan Sharma has demanded Rs 25 lakh as compensation for farmers.

Many villages identified for the capital project come under Sharma’s Assembly constituency, Mandir Hasaud. Munat, however, claimed that land prices had gone up because the land mafia had cornered land and pushed up prices. “It is the mafia that is worried about compensation, not the farmers,” he said.

Workers and dispossessed farmers are less than enthusiastic about the concept, however. A group of workers at a steel plant in Mandir Hasaud said the SEZs will employer fewer workers and require higher skills that they may not possess.

Submitted by Saumya

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