Objective re-appraisal of SEZ policy needed

EXIM MATTERS

Last week, I had written that amendments to the legal provisions allowing de-notification of Special Economic Zones (SEZ) would discourage investors. Some readers have written supporting the view. Some others have written expressing serious misgivings. Looks like the controversy regarding SEZ will not die down easily.

One reader has asked: "What is the problem in Goa government admitting that it has made a mistake in granting the approval and saying that it is merely rectifying the mistake? Why should Goans, for generations to come, live with the mistake of one government?"

Another readers says: "Don't scare us with prospects of investors going away. The Enron deal was cancelled and at that time same arguments were put forth. Look what is happening now. Investment is pouring into the power sector. If there is money to be made, the investors will come. They won't remember old stories for long."

"Goans know better than you as to what is good for them." "Put people first". "All SEZ is land grab". "Why grab land from poor and marginal farmers and thrust SEZ down the throats of people against their wishes? "" and all in the name of development!!", "Corporate social responsibility" envisages living in harmony with the community." These are some of the gems from the readers.

I have no quarrel with some of the points put forth. Fertile farm land need not be forcibly grabbed from poor or marginal farmers. That is for the state governments to ensure. That is why the SEZ laws mandate concurrence of state governments for setting up the SEZ. If people feel aggrieved that the State Government has made a wrong decision, it is for them to protest. Once investments are made, any withdrawal of approvals would mean litigations and compensations.

It is not very correct to assume that land is required only for setting up SEZs. All manufacturing units need land. It is industry that can absorb surplus labour and generate enough employment. Proper balance is needed between imperatives of economic growth and employment on the one hand and the concerns of environment and equitable distribution of benefits of economic growth on the other.

Let us not forget that even urbanisation does take away lot of fertile land. What is New Delhi today? It was fertile agricultural land belonging to many small farmers not too long ago. Dwellings have to come up somewhere. They cannot always move to barren lands. So is the case with industry that needs not only land but also suitable manpower to run the industry "" manpower that can be retained with good enough social infrastructure.

In the past, I have written many times that we should have few large multi-product SEZs, which will offer hassle-free environment, world class infrastructure, lower interest rates and logistics support to attract investments that will generate jobs and help us compete with the best in the world rather than have too many small SEZs. I have also written that allowing captive SEZs for big business houses encourages diversion of investment. However, the commerce minister has taken a view that the land use patterns in India are such that we cannot replicate the Chinese model of only large SEZs.

The Commerce Secretary has pointed out that the SEZ laws do not permit de-notification of SEZs that have become legal entities. That is a statement of fact. The laws will require to be amended. My point is that any policy of 'I will grant approval today and withdraw it tomorrow' will lead to uncertainty. It will create doubts in the minds of investors. I stand by that view and add that if such approvals are subject to whims of politics, it will breed vested interests and corruption.

In my last week's column, I had called for a halt to further SEZ approvals. We have enough approvals and perhaps, it is time to see whether they really deliver on promises or end up as mere land grab, as some enlightened readers apprehend. A timely pause will enable a more objective re-appraisal of SEZ policy.

email: tncr@sify.com