Sanjay Sangvai writes about the enormous subsidies given to industries as part of special economic zones and analyses the impact of these zones that are allowed to function outside environmental and labour laws of the country.

The farmers in the obscure Pen tehsil in Raigad district Maharashtra are preparing for the long battle against the gigantic and powerful company – the Reliance. On June 22, a few Mumbai-based Marathi newspapers carried the news of the demonstrations of hundreds of farmers against the land acquisition by the state government for the Reliance company for a 10,120 hectare Special Economic Zone (SEZ). There was police firing on the rally as some miscreants indulged in stone throwing and damaging the property, which it was later found that, was not done by the protesting farmers.  

"The Reliance company managed to create disturbance in the peaceful meeting of hundereds of farmers and our process of presenting objections to the Land Acquisition notices to the officials. The company is nervous about the growing resistance by the farmers for usurping their productive land and therefore trying to use the police to crush the movement" told Arun Shivkar, of Pen Panchkroshi Sheti Bachao Samiti (Pen area Committee for Save the farmland).

'' And as we know the reality of this company and the SEZ, the farmers will drive the company out and take on the state government also for siding with the capitalists instead of caring for the farmers" fumed Ganesh Thakur  from the Samiti. Out of 10,120 hectares land is earmarked for acquisition, 5720 ha. is irrigated from Hetavane dam, and large tracts belong to the salt pans or wetlands, mangrove very essentials for carrying capacity and sustainability of this area.   

The villagers now know fully well they are pitted against the formidable adversary – the giant Reliance, which has just obtained 25,000 hectares land for its own SEZ in Haryana, already took the governments in Uttar Pradesh, Gujarat and Maharashtra and even the so called the Left wing government of W. Bengal. It is spreading its wings in textiles, power, contract farming, medicinal herbs, sugar industries and retail stores. They realize that the Company has enormous sway over the political, bureaucratic establishment and the media. This company has been given the largest SEZ in the 42 villages in Pen-Panvel-Uran area, in the name of the activities like manufacturing, trading, services, processing, logistics, repackaging, warehousing etc.

This is one of the 24 approved SEZs in the state, both by the private parties (13) and the Maharashtra Industrial Development Corporation (MIDC, 11). There are other 17 SEZs that are to be given approval (11 private and 7 MIDC). These SEZs are part of the more than 140 SEZs that are earmarked in almost all the parts of the country. According to the Union government's handout, the SEZ is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purpose of trade operations, duties and tariffs. In 2000 the Government of India formulated the SEZ policy and in 2005 the SEZ Act was made. It came into force from February 10, 2006. With this one stroke, the corporate powers have cornered exemptions from almost every tax, while getting the services of water supply, electricity, usurping the natural resources, distorting the constitutional sovereignty of the people.  

Waiving Taxes

The Maharashtra government formulated the SEZ policy in October 2001, to "promote the establishment of large, self contained areas supported by the world class infrastructure oriented towards export promotion". Any private, public or joint company and even the foreign company can set up the SEZ, which would consist of the industrial operations, service and trade. Both the policies emphatically declare to create the 'hassle-free environment' for such operations, that is,  exemption from all sorts of taxes viz: stamp duty and registration fees, cess or levies including import-export duties, customs duties, sales tax, excise, octroi, service tax,  mandi and turnover taxes. They can import of procure from domestic sources duty free all their requirements from capital good to raw materials, spares, packing materials, office equipments, without any license or specific approval. They can procure/ import goods duty free to set up the units.  

Most important concession is the income tax benefit under 80 1A to developers for any block of 10 years in 15 years, exemption for income on investment in infrastructure capital fund and the from electricity duty for 15 years in C, D, D+ areas and no-industry districts in Maharashtra and for 10 years in other areas. They are allowed re-investment of ploughed back profits and carry forward of losses. The units are allowed establish Independent Power Plants (IPPs), to produce, transfer and distribute the power, fix tariffs in their own zones without any license. The SEZ authority, the state government appointee is to 'ensure continuous and good quality' power supply and 'adequate water supply' to the SEZs.

These units can have 100% foreign direct investment (FDI) in the manufacturing. Off shore banking units are allowed in these areas and they are allowed 100% Income Tax exemption on profit for 3 years and 50% for next two years. Individual investment in SEZ too is exempt from the Income tax. External commercial borrowing up to $ 500 m. per year is allowed without any maturity restrictions. The SEZ units enjoy freedom    to bring in export proceeds without any time limit and have freedom to keep 100% of export proceeds in the EEFC account and to make overseas investment from it.

According to an internal assessment of the Union Finance Ministry in 2005, the government had to forgo about Rs. 90,000 crores in direct and indirect taxes over the next four years on account of the SEZs.

Autonomy for Whom?

The units in SEZ can sub-contract part of their production process abroad or even to the domestic tariff area. The developed is permitted to transfer infrastructure facilities for operation and maintenance.

The SEZs, except those product specific and port/airport based units, must have at least 1000 hectares of area to set up SEZ. They have to set up their processing units in the 35 % of the earmarked area and they have full freedom in allocation of space and built up area to approved SEZs on commercial basis. They are authorized to provide and maintain services like water, electricity, security, restaurants and recreation centers on commercial lines.

The SEZs are made free from the environmental and labour laws and they are exempted from public hearing under Environment Impact Assessment notification. On the contrary, SEZs are permitted to have "non-polluting industries like golf courses, desalinization plants, hotels and non-polluting services in the coastal regulation zone (CRZ). All the environmental clearance powers, particularly the clearances required by the Maharashtra Pollution Control Board, are vested in the hands of the Development Commissioner, appointed for the administrative supervision and solve the problem for the SEZs.    

The SEZs have no responsibility to provide employment to the people in and around the area. The reliance had clarified that there would be no scope for the employment for the local people, as most of the jobs will be skilled ones. However, any of the labour laws and regulations will not be applicable to   SEZs.  All the powers of the Labour Commissioner shall be delegated to the Development Commissioner of the particular SEZ and a single point mechanism in SEZs will be provided to give all clearances and permissions pertaining to industrial safety and other regulations. The practice of 'hire and fire' will be made easier and nobody will be allowed to conduct inspections without the prior permission of the Development Commissioner of that SEZ.  The Maharashtra policy aims to further exclude many services from the ambit of the Contract Labour (regulation and Abolition) Act. And " All industrial units and other establishments will be declared as 'Public Utility Services' under the provisions of Industrial Disputes Act!!  

The Maharashtra policy declares the SEZs as Industrial Townships to enable the SEZs to function as self-governing, autonomous municipal bodies. Union government policy bluntly tells that," Government controls the operation and maintenance function of the Government controlled SEZs. In the rest, operation and maintenance is privatized".       

Serious Issues

Even in the neo-liberal and government corridors,  the setting up of SEZs make no sense, as there are already many schemes for promotion of exports like the Export Processing Zones, Export Oriented Units Scheme, Export Area Intensive Area Sub-Plan, Infrastructure Development Scheme for 93 no-industry districts. They will loose their attraction altogether once new SEZs come into being.   The 47 Software Technology Parks would suffer a setback; they would become unviable as many companies would like to shift to the new SEZs.  

More important is the issue of the large tracts of land – at least 1000 hectares or even 80 hectares to be given to the companies. According to senior trade unionist Gajanan Khatu,  "These SEZs would be privatized and autonomous townships. Instead of mere SEZs, they are Special Real Estate Zones. These SEZs can be used for anything from trading, entertainment, hotels, and housing projects." All the large builders like City Parks, K. Rahejas, Hiranandani Builders, DLF, Marathon realty, Pan-India Paryatan, Dewan Investments are given hundreds of hectares.

The SEZs will have their own security, operation and maintenance rules and all environmental and labour clearances vested with the Development Commissioner of that SEZ. "It is nothing but creating autonomous private regions; the local self governments will have no authority over them", pointed Rifat Khan of National Center of Advocacy Studies (NCAS).

According to Dr. Mukund Ghare, Director of AFARM, Pune, an organization for sustainable land and water management, "when there is a crying need to distribute the scarce water equitably between urban and rural sectors and between the rich and poor, there is an apprehension as to how much water the SEZs will use? Who will own the water? How it will be used, when there is no environmental law applicable to the SEZ? This is nothing but an attempt to privatize water".

"It is appalling and illegal to permit the tourism, beautification, hotel, ports up to 12 nautical miles (22 kms) in the sea. There is a conspiracy to dilute the CRZ, regularize the past violations and invite the large megatrawlers of the transnational companies. " explained N.D. Koli, the Maharashtra leader of the National Fisherpeople Federation (NFF).        

"It is a government sponsored land grab by the rich and powerful. Already serious land related issues of Land Reforms or restoring the land rights of dali,or eksali lands in Konkan or on Adivasi lands in other forest-land area. And here the government has been allotting large tracts of lands, mostly by acquiring through Land Acquisition Act and passing it on to the private parties", charged Surekha Dalvi, a senior lawyer and land-rights activist.

"When the government has been cutting the subsidies for the farmers, workers and middle classes, when it cannot assign a fraction of funds for rural employment guarantee scheme, the public distribution system and government procurement of food grains are being dismantled, it is becoming clear the ' beloved' class of the power holders" denounced Ulka Mahajan, the national convener of the National Alliance People's Movements (NAPM). " The people will not take it lying low. They would unite wage a relentless struggle to defeat the forces that are out to snatch   their livelihood and resources," she warned.

Building Resistance

" There is no question of increased compensation for the land – we just do not want to give our land to the Reliance," that was the spirit of the meeting held on June 24-25, hosted by the Samiti and the NCAS, at Bardawadi near Pen. The meeting, attended by various organizations in Konkan region along with the representatives of NAPM, People's Political Front (PPF), and Shoshit Jan Andolan resolved to intensify and widen the struggle against the SEZ, by involving the affected people in other parts of Maharashtra and India.. A detailed campaign against the Reliance's money power and the SEZs as a whole was planned.

The people's movements from various parts of the country under the aegis of the NAPM, in the recently held Bangalore convention, have decided to take up the issue of the SEZ and mobilize the nationwide resistance to the creation of the SEZ. The organizations made it clear that the issue at the stake was not only the lands and rights of the affected farmers and other villagers, but the larger canvas of the way the political economy of the nation is being usurped by the corporate interests with the connivance of the political and bureaucratic elite. They resolved to protect the natural resources of the communities – land, water, forest, sea-coast; oppose the violation of the laws and regulations and the sovereignty of the people.

If the struggle in Raigad gains momentum, it would be a next sign-post, like Plachimada, of the fierce resistance by the people to any encroachment on their rights, resources and sovereignty and any threat to the Constitutional democracy in the country. The struggle in Raigad will decide to a large extent the future trajectory of the larger struggle.    

Sanjay Sangvai can be contacted at sanjsangATgmailDOTcom