SEZ: Special Economic Zone. Two sides of coin

SEZ (Special economic zone) is a particular geographical area inside counter, state allocate for industry and trade purpose. This area has economic laws that are more liberal than a country’s typical economic laws.

These zones are designated duty-free enclaves, and are deemed foreign territories for the purpose of trade operations, duties and tariffs.

Purpose of the SEZ:

– Promotion of exports of goods and services.
– Promotion of investment from domestic and foreign sources.
– Creation of employment. (20 lack more jobs by end of 2009)
– Development of infrastructure facilities.
– Generation of additional economic activity.

We (India) need to think on, how and which land to use for Industries (SEZ). Need Fine balance between Agriculture and Industry as both are main wheels of countries economy.

Disadvantages: Dark side of SEZ

1. Land Grabbing at very low prices.
2. If SEZ built on agricultural land the farmers will loose their livelihood as they are not skilled laborers it would to tough to relocate them to other jobs. Already Farmers are having very bad days in India, one of the leading agriculture countries.
3. Since the companies that operate under SEZ enjoy a lot of tax holidays it would create a burden on the finance ministry as tax collected would be less.
4. Huge downward impact on Tax: GDP ratio & the common man have to pay the price of it.

Some of obvious questions will rise in peoples mind as now in my mind:

If the SEZ s is meant to bring in all inclusive growth then they should pay taxes & make a positive contribution to the growth of the economy.

Why the land grabbing is from fertile land (farm land/ cultivable land)?

Land of West Bengal is basically very good for Agriculture but then also west Bengal government allowing for SEZ’s on Nandigram and Singur like lands.(Now days these are very hot topics.) West Bengal acquisition is that the government is acquiring fertile agricultural land which is the main source of income. The farmers are having a hard time in India.

Still India has lots of barren land.

We (India) need to think on, how and which land to use for Industries. Need Fine balance between Agriculture and Industry as both are main wheels of countries economy.

Why Land Grabbing at very low prices?

Power units can be established in SEZ s. The power units can sell power to DTA by just paying duties on consumables therefore SEZ units can be a big threat to domestic power producing companies because of all the other advantages showered on them.

Minimum Land Requirement for Development of SEZs

Multi Product SEZs – 1000 Hectares (2500 Acres)

Sector Specific SEZs – 100 Hectares (250 Acres)

(Or) IN A Port (or) Airport

Gem & Jewellery: 10 Hectares with 50,000 sq m built up processing area.

Biotechnology, Non-conventional energy, Including Solar energy Equipments /Cells: 10 Hectares with40, 000sqm built up processing area.

IT/ITES SEZS: 10 Hectares with One Lakh sqm built up processing area

Trading & warehousing zones: – 40 Hectares with One Lakh sqm built up area

For IT/ITES SEZs: 24x7x365 – Uninterrupted power supply at stable frequency reliable connectivity for uninterrupted & secure data transmission central air-conditioning a ready to use, furnished plug&pay facility

Minimum processing area for multi product SEZs – 35%

Minimum processing area for sector specific SEZs- 50%

Sources:

http://www.apit.gov.in/sezm.html

http://in.answers.yahoo.com/question/index?qid=20070116022619AAoq1YX

http://www.indiantaxsolutions.com/main.php?t=28011984&d=1152598537

http://sezindia.nic.in/HTMLS/about.htm