Land Acquisition for SEZ

3/12/2015 LandAcquisitionforSEZ

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LandAcquisitionForSezsAreEnginesOfGrowthLosingSteam

WhatIsAnSez?ASpecialEconomicZoneSEZisanespeciallydemarcatedareaofland,ownedandoperatedbyacompany,whichisdeemedtobeforeignterritoryforthepurposeoftrade,dutiesandtariffs.TheyareregionsdesignedforeconomicdevelopmentorientedtowardsFDIandexportsfosteredbysocialpolicyincentivesMootedinMarch2000,themainideatosetupaSpecialEconomicZonewastoboostexportsandtohelptheindustriesrespondtothechangingmarketscenarioinaflexiblemanner.

TheSEZsareanewandamodifiedversionofanEPZ.ThefirstEPZ,developedinKandalain1965aimedatgivingaboosttoindustriesandexports.Thisledtocreationofsurplusjobsandenhancementofexports.Furtherin2000,thegovernmentreplacedtheoldEPZswithSEZs.Themaindifferencebetweenthetwoisthattheformerisanindustrial

enclave while the latter is an integrated township with developedinfrastructure.

OneofthemainreasonsforthedevelopmentofaSEZwastoemulateChina,where therewerenumerousSEZsdoingextremelywell.Tostartwith,TheSEZatShenzhenattracted $30Billion.AnothersuccessfulonewasatPudong,nearShanghai.AsChinausedSEZstoboostitseconomy,itattracted$45billioneveryyearinFDIascomparedtoIndiawhichattractedonly$2billionpriortothesettingupofSEZs.ThisfavorablepositionofChina,wasoneofthefactorswhichinducedIndiatosetupaSEZinitsownterritory.

HistoryOfSezs:The New Economic Spaces or Special Economic Zones in India came into effect with the passing of the SpecialEconomicZonesSEZAct2005.Thehistoryofsuchzones in Indiapredates to thesettingupofExportPromotingZones. India set up its first Export Processing Zone EPZ in 1965 in Kandla followed bySantacruz EPZ in 1973.TheseEPZsdidnotenjoyfiscalandcustomincentivesliketheSEZsandFDIrulesandregulationswerealsostrict.TheTandonCommitteeReport in1981argued thatFreeTradeZoneswouldgenerateexport if theyareexemptedfromvariouscontrolsandregulationsinplace.Followingthisrecommendation,fourEPZscameupin1984atNoidaUttar Pradesh, Falta West Bengal, Cochin Kerala and Chennai Tamil Nadu. Another EPZ was set up inVishakhapatnam in 1989Shalti Research Group 2008. Post liberalization in 1991, the EXIM Policy 19972002introduced a new scheme from 1 April 2000 to revamp and restructure the production sites for export orientedservicesintheformofSpecialEconomicZones.After fiveyears,onMay2005theParliamentpassedtheSEZAct,which received Presidential assent on the 23rd of June, 2005. After extensive consultations, the SEZ Act, 2005,supportedbySEZRules,came intoeffecton10thFebruary,2006,providing fordrasticsimplificationofproceduresandforsinglewindowclearanceonmattersrelatingtocentralaswellasstategovernments.ThemainobjectivesofTheSEZActare:

aGenerationofadditionaleconomicactivitybPromotionofexportsofgoodsandservicescPromotionofinvestmentfromdomesticandforeignsourcesdCreationofemploymentopportunitieseDevelopmentofinfrastructurefacilities

ClassificationOfSpecialEconomicZones:SpecialEconomicZonesareclassifiedintothefollowingtypes:

aSpecialEconomicZoneformultiproduct:Itisaspecialeconomiczonewhereunitsmaybesetupformanufactureoftwoormoregoodsinasectorgoodsfallingintwoormoresectorsfortradingandwarehousingrenderingoftwoormoreservicesinasectorrenderingofservicesfallingintwoormoresectors.

b Special economic Zone for specific sector: It is a special economic zone meant exclusively for one or moreproductsinasectororoneormoreservicesinasector.

c Special Economic Zone in a port or airport: It is a special economic zone in an existing port or airport formanufacturing of goods in two or more goods in a sector goods falling in two or more sectors for trading andwarehousingrenderingofservices.

Therefore classification of special economic zones helps to regulate the production and it leads to differentiationamongthegoodsproducedfromdifferentSEZs

AdvantagesOfASez:ThemainpurposeofdevelopingaSEZistocreateanenvironmentforthepromotionofexports.TheSEZpolicyoffersvarious fiscal and regulatory incentives to the developers in the zone. According to experts, it is believed that theexports will ultimately grow five times and more than 30 lakh jobs will be generated by SEZs across India. Thegovernment also claims that the SEZs will attract global manufacturing through FDI, enable transfer of moderntechnologyandwillalsocreateincentivesforinfrastructure.Amongitsinnumerousadvantages,oneofthemainisthat:

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3/12/2015 LandAcquisitionforSEZ

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#CyberLaw#LokAdalat,legalAid&PIL#Forms#Trademarks#Womanissues#MedicoLegal#Consumerlaws#Criminallaws#SupremeCourtJudgments

EverydeveloperandentrepreneurshallbeexemptedfromthefollowingunderTheSEZAct2005

aExemptionfromexcisedutyonthegoods.bIncometaxexemptionforaperiodoftenyearsinthefirst15yearsofoperation.cExemptionfromservicetaxunderchapterVofthefinanceAct1994.dExemptionfromcentralsalestaxforthegoodsusedfordevelopmentoftheSEZ.eExemptionfromtheSecuritiesTransactionTax

Apartfromthedevelopersitalsopreservescertainincentivesfortheenterprisesalso

a100%FDIpermittedtothemanufacturingsector.bRequirementsofnoimportlicense.cExternalmaturityborrowingsthroughrecognizedbanks.dExemptionfromlicensingregulations

Therefore,SEZsthroughitsvariousadvantageshelpboosttheeconomythroughcreationofjobsanddevelopmentofinfrastructure.

ThePresentScenario:TheSEZpolicyhasbecomeoneof themostvehementlydebated issues in the recentyears. Inmanyareasof thecountry, ithas lead toprotestsbypoliticians,scholars ,mediaandcivil society.Despiteall theadvantages theSEZpolicyhasbestowedupon,ithasstillnotbeenaccepted,leadingtopublicpressureonthegovernmenttomodifytheAct.For instance, InKarnataka,SEZsare plannedat Tadri inUttaraKannada,Padubidri inUdupi, andBaikampady inDakshinaKannada.PadubidriwaswhereCogentrixwas tosetup itspowerplant.TheBargeMountedPowerPlantBMPPandtheexpansionofTadriporthavebeen,andcontinuetobe,severelycriticisedbythelocalpeopleforthenegativesocial,economicandenvironmentalimpactstheycanhave.

TadriissituatedonthebanksofthefertileandproductiveAghanashiniestuaryandthevillagersfearthefalloutofsuch`development'ontheirricefields,saltpans,fisheriesandmangrovediversitywillbedisastrous.Tadri, infact,hadashipbreakingunit in theearly1990s.Thiswasshutdownunderpublicpressure,ongroundsofecologicaldamage,andisreflectiveofwhatthepeopleofthisareaconsideredmoreimportant.

TheshareofSEZswasamere5%intheyear200405.Furthermore,theyaccountedforonly1%ofthefactorysectoremploymentand0.32%ofthefactoryinvestmentthatyear.ItisalsosaidthattheSEZpolicywouldcausearevenuelossofRs9,39,000millionoverthenextfouryearswhichcomestoabout6.7%ofthecentralgovernmentsreceiptsof200506.

Therewillbelossofagriculturallandwhichcanhaveseriousimplicationonfoodsecurity.ThecompanieswillsimplyrelocatetoSEZstousethetaxbenefitsbeingofferedandlittlenetactivitywillbegenerated.

LandAcquisitionAGreyArea:SEZs and Land Acquisition are interconnected: Large amount of land is required for developing the SEZs. It isestimatedthatthetotallandwhichwillbeacquiredfromthefarmersis1,50,000hectares,capableofproducingabout1million tonesofagriculturalproduce. It isalsoestimated thatmore than10 lakhpeoplewhoaredependentuponagriculturallandswillbeevictedfromtheirlands.ThefarmingfamilieswillhavetofacelossofaroundRs.212croreseachyearintotalincome,whichwillalsoleadtoputtingthefoodsecurityofIndiaatrisk.SEZsandLandAcquisitioninIndiahavenowresultedindissent,uproar,andoppositionfromthefarmers,fortheirlivelihoodhasbeenputatstake.Forindustrialdevelopment,useofagriculturallandisnotpermissible.Historyshowsthatmostofthelandacquiredbythe government has been sold for commercial purposes atmarket rate. The entire policy is a scandal, leading tosuicides among farmers on a regular basis. The growing issue of theSpecial Economic Zones has led to a lot ofresistancefromtheruralpeoplewhichthegovernmenthastermedunreasonableandunnecessary.Insomeareasasin the outskirts of Mumbai, people have been handed with land acquisition notices by the government. In short,allowing SEZs to function means land acquisition and conversion of land use with no benefits to the affectedpopulationandalossoftheirlivelihoods.

Citinganexample,RecentlyduetolandacquisitioninAtchutapuraminVishakapatnam,thefarmershavedeclaredwaragainstthesettingupofSEZsontheirland.Theyaccusethatthelandcompensationmoneygivenbythestategovernmentisverylessascomparedtothecostoftheland.

Anotherexample,istheagitationinNandigram,WestBengal,wherethefarmersprotestedagainstsettingupofSEZontheirland.

TheBaikampadySEZhasalsobeendisputedasaresultofthestatementmadebytheUnionMinisterofCommerceandIndustrysayingthat10%ofthelandscanbedoublecropped

Therefore,TheSEZpolicyhasbecomealandgrabpolicy.Peoplehavealreadyexpressednegativeviewsaboutthepolicythroughagitationsandprotestsanditishightimethegovernmentlooksandrethinkstheentirepolicy.

EnvironmentalIssueWheneverthereisdevelopment,environmentisusuallyoneofthemostimportantconcerns.Industriesuseupalotofnatural resources forproduction,whichsubsequently leads toair,waterandnoisepollution.All thishasanegativeimpactontheenvironmentasthere isdeforestation,destructionofhabitatofanimalsandthefloraandfaunaof theregion is adversely affected. Therefore to protect the ecology from the whims and fancies of the profit seekingindustries,rigidlawshavetobemadeandeffectiveimplementationoftheselawsisrequired.

ThemostimportantissueisoftheImpactAssessmentProceduresi.e.theproceduretobefollowedforlookingintothe impactof thedevelopmentofSEZson theenvironment.Someof theprojects comeunder thepurviewof theSchedule1oftheNotification.Theseprojectswillhavetocomplywiththeconditionsoforganizingapublichearingand allowing local people to voice their objections and suggestions about the project. Projects not falling in thisscheduleareassessedbytheStategovernment,andtheclearanceprocessdoesnotmandateapublichearing.TheunitswhichareclassifiedasnonpollutingindustriesdonotneedaNOCfromthepollutioncontrolboard.Althoughthedevelopmentcommissionerhas thepowers tohavea randomcheck, the industriesare free to follow theirownmethodsofmaintainingenvironmentalstandards.

Itisexpectedfromthegovernmentthattheconflictbetweenenvironmentanddevelopmentberesolvedproperlyandthe environmental regulations be proactive in nature and not to be a barrier on the path of countrys economicdevelopment.

LegalDevelopmentsRegardingSezs:TocountertheadverseaffectsoftheSEZspeopleapartfromprotesting,have,knockedthedoorsofthejudiciaryto

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3/12/2015 LandAcquisitionforSEZ

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strikedownthepolicyaswellastheActbyfilingwritpetitionsandPublicinterestlitigationsinthevarioushighcourtsandTheSupremeCourtofIndia.

AdvocateManoharLalSharmafiledaPILintheSupremeCourtcontendingthatvasttracksoffertilelandhavebeentakenbythegovernment.HePrayedtothecourtstograntaninterimorderandtodirectthelandstobegivenbacktothefarmers.

In another writ petition filed, the petitioner sought to quash the MOU filed between Reliance Industries and theGovernmentofPunjabforsettingupanSEZonthegroundsofviolatingthelandallotmentpolicy.

Another example was a writ petition regarding the compensation given to the farmers being questioned and theSupremecourtgrantinglibertytothefarmerstochallengetheadequacyofthecompensationprovided.

In anotherwrit petition filed, TheentireSEZpolicy of theGovernmentwas challengedon the grounds that itwillcausefinanciallossesanditmayleadtothecollapseoftheeconomy.Butthecourtrejecteditonthegroundthatitisapolicymatterbutalsoleftaremarkthatthecourtcaninterfereinthepolicymattersinindividualcaseswhenthepartyconcernedispersonallyaffected.

AllthesecasesprovethefactthatthepeoplehavenotacceptedtheSEZpolicyofthegovernmentanditisimperativeonthegovernmentsparttorethinkandrelookintotheentirepolicysothatthereisdevelopmentwithoutcompromisingtheinterestsofthefarmersandwithoutcausinganydamagetheenvironment.

SustainableDevelopment:The term Sustainable Development stresses the balance between the interests of economic growth andenvironmentalprotectionemphasizingtheimportanceofintergenerationaltransfers.

While putting in the context of IndianSEZs, three aspects of sustainable development is taken into consideration:Economy,SocietyandEnvironment.Asummationof these threeaspectsshows that thereshouldbedevelopmentwhichdoesnotresultininequalitiesandoverexploitationofnaturalresources.Iftheseaspectsaretakencareof,thentheSEZscangeneratesustainablevalue. Inotherwords, theyshouldbeable tobenefit thesociety in tremendousquantum.

AnotherfactorwhichcanbeusedtoobtainthegoalofSustainabledevelopmentis:

CorporateSocialResponsibility:Theconceptofcorporatesocialresponsibilityarisesfromthefactthatallcorporatecompanieshaveadutytowardsalltheirstakeholdersinallaspectsoftheirbusinessoperations.Themotiveandinterestsofcompaniesengaginginsocialresponsibilitiesistoenhancetheirimagebothdomesticallyandinternationally.Itmustbetakenintoconsiderationtorespecttheenvironmentandnottodeprivetheindigenouspeopleoftheirlandandtheirrighttolivelihood.

Conclusion:ThegovernmentistoutingSEZsasthefutureislandsofexcellence.Butatwhatcostwillitbeachieved?Thatisthemootquestion.Asthousandsofacresofagricultural landareconverted intoconcrete jungles,howwill itaffect foodsecurity?Willthefarmerswhoarereadytogiveofftheirlandgetafairdeal?Mostofthemfeartheywillgetpeanutscompared towhat thedeveloperswillmake.Will thisattitudeof thegovernmentand thecompaniescontinuewhenenvironmentaldegradationstartsintheracetomakeafastbuck?

The enthusiasm that the government has in setting up the SEZs underline an ugly fact that even after five longdecades of independence, we still do not have the kind of decent infrastructure in the country that should havenormallybeenthecase.Servicesshouldhavebeenavailabletoall,butitcouldnotbecreatedandsonow,therewillbespecialareasdemarcatedforspecialpeople.Theotherswillcontinuetolivewithoutpower,water,roadsandgreenareas.Islandsofprosperitywhere therichareecologicallysubsidizedareokay,while the lessermortals liveon thefringes.********************#Deardoffsglossaryofinternationaleconomics#EXIMPolicy2000ofthegovernment#ExportProcessingZones#SpecialEconomicZonesLawyersCollectiveVol21.Page8#AradhnaAggarwalSpecialeconomiczonesrevisitingthepolicydebate#SpecialeconomiczoneAboonordisaster.ByRameshMenon#ShaltiResearchGroup.2009.SEZinWestBengal:Growth,TrajectoryImpact.Camp:Kolkata#Section5oftheSpecialEconomicZone2005#Section2oftheSpecialEconomicZoneRules.Clausetsubclauseza,zb,zc#MinistryoftradeandcommerceGovernmentofIndia#Section26oftheSpecialeconomiczoneAct,2005#SpecialEconomicZonesMinistryofExternalAffairs,India#EPZs/SEZsandproductdiversificationacasestudyofindia,ongoingstudyfundedbytheworldbank#SpecialEconomicZonesrevisitingthepolicydebatebyAradhnaAggarwal#SpecialEconomicZoneorlandgrabhttp://psdblog.worldbank.org/psdblog/2006/10/special_economi.html#THEHINDUAtchutapuramryotsfeelletdown,October262006#DionneBunshaRuralfrontline,October202006#Environmentalimpactassessmentnotification1994#ScheduleIVoftheenvironmentalimpactassessmentnotification,1994# PIL filed in SC regarding land acquisition for SEZs, retrieved from www.indlawnews.com, published on 6thNovember2006#WritpetitionschallengingrelianceSEZs,retrievedfromwww.indlawnews.com,publishedon26thSeptember2006# SC grants farmers liberty to challenge state on SEZs, retrieved fromwww.indlawnews.com , published on 13thNovemeber2006.#SCrefusestoentertainPILchallengingGovtpolicyonSEZs,retrievedfromwww.indlawnews.com,publishedon6thNovember2006.#DefinitionofSustainableDevelopmentTheconciseoxforddictionaryofpolitics

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