India Inc takes cue from Sonia on SEZs

Sonia Gandhi's publicly-aired concern over the acquisition of fertile farmland for special economic zones (SEZs) has evoked a prompt response from corporate India, which does not want to delay showing its farmer-friendly face.

On the anvil are several initiatives ranging from providing jobs to local villagers to spending money on educational projects in districts where the SEZs are coming up.

The overwhelming feeling in India Inc is that the SEZs will face rough weather unless they take local people into confidence. "They have to be made people's projects," said the chairman of a consumer durables company that is setting up nine SEZs across the country.

Reliance Industries, for example, learnt it the hard way a few months ago when farmers in the remote Pen tehsil in Raigad district staged demonstrations against land acquisition by the state government for the company's 10,000 hectare SEZ project.

The police had to fire as the demonstrations started turning violent. The main grouse of the farmers in the area's 42 villages was that over half of the land being acquired was fertile and essential for the local people.

Reliance now says it is willing to compensate farmers generously. "We are ready to consider giving part of the compensation to the farmers in the form of equity in the company or reserve some land for farmers in the SEZ. We are also open to any other alternative formula proposed by the state government," said senior executives at Mumbai SEZ Pvt Ltd, the company that will set up the project.

The company is also ready to help villagers with their civic infrastructure needs like school buildings, health centres and roads.

Some SEZ developers have also proposed to pay 70 per cent of the cost of land in cash to farmers and the balance as shares of the company that is developing the SEZ.

Upgrade of Industrial Training Institutes (ITIs), which are in dire need of funds and industry linkages, seems to be the most popular course of action being adopted by the companies.

Bharat Forge, for example, is setting up an SEZ at Khed in Pune district and has promised to modernise the ITI there.

Like Reliance, automobile major Mahindra & Mahindra has agreed to provide vocational training to youth from the area, so that they can find jobs in the units that will come up in the SEZs. While the Jaipur SEZ will provide direct and indirect employment to around 2.5 lakh people, the one in Pune will absorb over 75,000 people.

Its joint venture partner in the SEZ, the Maharashtra Industrial Development Corporation, has said it will encourage formation of limited companies by farmers to pool individual land entitlements and run a business enterprise (industrial /housing).

The steps the company could be considering included a proper compensation package for the land to be acquired as well as counselling on how to use the cash received as compensation on sale of land for various investment opportunities, said Arun Nanda, executive director of M&M.

As far as possible, double-crop land and villages around that area will be avoided during acquisition.

Several companies, however, privately say concerns over farmers' problems are needless because the government has made it clear that not more than 10 per cent of the total area required for setting up a SEZ should be double-crop land, while the balance 90 per cent must be single crop, waste and barren land.

Gandhi's concerns have also forced some companies to adopt a wait-and-watch policy.

Baba Kalyani, Bharat Forge chairman, said the company had not started acquiring land so far and would wait for policy clarity on the issue, due to different opinions being expressed at both the political and government levels.

"It is too early to decide anything yet. Right now, the government's own policy is in a state of flux," said Saurabh Chawla, executive vice-president, finance, DLF, which is setting up an SEZ in Amritsar.

Land acquisition woes have, however, eluded some companies like the Godrej group and Essar. Adi Godrej, Godrej group chairman, said the company was planning an SEZ project on its own land, so there was no problem on this front.

Essar Steel Managing Director Prashant Ruia said land for the group's engineering sector-specific project at Hazira was already in the company's possession.

Besides, the group has been taking plenty of initiatives to take care of the concerns of the local people.