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Updated: January 19, 2010 11:30 IST

SEZs: problems and concerns

V. K. SRINIVASAN
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This collection of 33 articles by academics drawn mostly from the southern States and a few from northern and eastern States, seeks to review “the characteristics of SEZs [Special Economic Zones], and their influences on economic growth, export performances, foreign direct investment and employment” and the “debatable issues like working conditions and labour relations within the zone.”

While the SEZs are intended to stimulate production for export and to facilitate foreign direct investment (FDI) and transfer of technology, the volume focusses more on employment generation, economic growth, and regional development. Its editor, P. Arunachalam, points out that while the flow of FDI into India has shown a significant increase since 2003-04, it is still less than what flows into China and that sector-wise, manufacturing industries and services have been major beneficiaries of the FDI. Referring to the problems the SEZs have run into in respect of land acquisition and rehabilitation of the displaced persons, he says the government, while taking decisions on the SEZs, should “incorporate concerns expressed by political and social scientists.”

Employment generation

The question of employment generation has been dealt with in great detail by Ch. Panduranga Reddy and others and the analysis has been supported by relevant data about the size and category of employment generated nationally, with a break-up of the figures region-wise and State-wise. They point out that the bulk of the employment has been in the IT-ITES sector in Tamil Nadu, Karnataka, Andhra Pradesh, and Punjab. In Maharashtra and Gujarat, it has been predominantly multi-products and services. The eastern region has been lagging in this respect. Amarjyothi Mahanta argues that the scope for the displaced farmers being given jobs by the SEZs themselves is limited because they do not possess the required skills.

Analysing the inter-State and inter-sector disparities, Rajinder Kumar highlights the fact that more than a two-thirds of the notified SEZs are located in five States — Andhra Pradesh, Tamil Nadu, Maharashtra, Karnataka, and Gujarat — which account for more than 90 per cent of the investment made and 83 per cent of the employment generated. The sectoral break-up (related to the SEZs set up till September 2008) reveals that 67 per cent of them are in IT/ITES, 5.3 per cent in textiles, apparel and footwear, and 3.4 per cent in Biotech. Tamil Nadu and Gujarat accounted for 80 per cent of the total SEZ exports. He argues that the SEZs are largely driven by the private sector, which has little concern for a balanced regional and sectoral development. In his article, Samarjit Das contends that the “controversy over cost-benefit issues and regional disparities may continue for some more days as legal aspects appear to be complex requiring time and, maybe, judicial intervention.”

Function of SEZs

Rajeev Puri and Hashima Kakkar quotes figures to show that the value of exports from the SEZs increased from Rs.8,552 crore in 2000-01 to Rs.1.25 lakh crore in 2008-09, with their share in overall exports rising from 4.16 per cent to 16.30 per cent. They argue that, though the SEZs have contributed to the increase in India’s exports, their “success is not so significant.”

There are other contributions of varying length focussing on issues related to the setting up and operation of the SEZs. To cite a few, the articles on the relevance of labour laws by Swetha Tanwar; on the impact on rural population in Tamil Nadu by Ramanadhaswamy and V. Amuthavalluvan; and on the farmers’ agitations against Mahamumbai SEZs by R.B. Patil and P.M. Mane, besides a critical analysis of Navi Mumbai SEZs by Daksha Dave. While at the national level, the enthusiasm for the SEZs has waned, partly as a consequence of global meltdown, there is still need for a dispassionate assessment of their contribution to Indian economy. This publication makes definite moves in that direction.

The volume could have enhanced its readability if the contributions dealing with the macro aspects at the national level and those on individual SEZs and State-specific themes had been arranged in convenient sections. Also, a repetitive presentation of the features of the SEZ Act and rules as also of the basic performance data that are already in public domain could have been avoided.

SPECIAL ECONOMIC ZONES IN INDIA — China’s Way of Development: Edited by P. Arunachalam; Serials Publication, 4830/24, Ansari Road, New Delhi-110002. Rs. 1500.

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