A

PROJECT REPORT

ON

SPECIAL ECONOMIC ZONE (MANAGERIAL COMMUNICATION)

Submitted to: - Prof. Mittal Dattani Prof. Kavita Saxena

Submitted by:- Dhruvin Shah (MBA-IB) [8]

Center for management studies, Ganpat university, Ahmedabad.

Academic year:- 2011-2012

Acknowledgement

The successful completion of this project report would not have been possible without co-operation and support of my professors and my institute.

We are heartily thankful to the director of our institute Dr. MAHENDRA SHARMA, and center coordinator Prof. Ujal Mehta for providing us an opportunity to make a project report in Managerial communication..

We are also thankful to Prof. Mittal Dattani and Prof. Kavita Saxsena for providing us full guidance, co-operation and valuable suggestions throughout the project of special economic zone

Shah Dhruvin MBA(IB) Roll no-7

Declaration

We, hereby declare that the project titled, Special economic zone. is original to the best of our knowledge and has not been published elsewhere. This is for the purpose of fulfillment of Ganpat University requirements for the part of the study of the degree of the Masters of Business Administration.

Preface Proper learning is born out experience and observation. We know that there is no alternative to challenge the self-experience of learning anything with questions and answer, by such type of practical study only. The student can get the perfect knowledge and idea of the subject. Here I had done project report on the special economic zone. In this I go through the detail study on SEZ which start from the history to its impact.

My major study is on the impact of SEZ on the Indian economy. I also narrate the advantages & disadvantages of the SEZ on countrys economy.

The basic objective is to know the SEZs and its policy in detail. To know the guidelines for investment and distribution of special economic zone in india.

As a part of my syllabus in MBA, I require to undertake a project in order to fulfill the practical knowledge about managerial communication. I am supposed to prepare the project report on special economic zone.

Shah Dhruvin MBA(IB) Roll no-7

1. Introduction

India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000. This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations. SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes. To instill confidence in investors and signal the Government's commitment to a stable SEZ policy regime and with a view to impart stability to the SEZ regime thereby generating greater economic activity and employment through the establishment of SEZs, a comprehensive draft SEZ Bill prepared after extensive discussions with the stakeholders. A number of meetings were held in various parts of the country both by the Minister for Commerce and Industry as well as senior officials for this purpose. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules. After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. The main objectives of the

SEZ Act are: (a) generation of additional economic activity (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; (e) development of infrastructure facilities; It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities.

The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and creation of related infrastructure. A Single Window SEZ approval mechanism has been provided through a 19 member inter-ministerial SEZ Board of Approval (BoA). The applications duly recommended by the respective State Governments/UT Administration are considered by this BoA periodically. All decisions of the Board of approvals are with consensus.

The SEZ Rules provide for different minimum land requirement for different class of SEZs. Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing area where the supporting infrastructure is to be created.

The SEZ Rules provide for:

" Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs;

Single window clearance for setting up of an SEZ; Single window clearance for setting up a unit in a Special Economic Zone; Single Window clearance on matters relating to Central as well as State Governments; Simplified compliance procedures and documentation with an emphasis on self certification

2. Approval mechanism
The developer submits the proposal for establishment of SEZ to the concerned State Government. The State Government has to forward the proposal with its recommendation within 45 days from the date of receipt of such proposal to the Board of Approval. The applicant also has the option to submit the proposal directly to the Board of Approval. The Board of Approval has been constituted by the Central Government in exercise of the powers conferred under the SEZ Act. All the decisions are taken in the Board of Approval by consensus.: Approval mechanism for the establishment of an SEZ for a private developer

Approval mechanism for the establishment of an SEZ for the Central and state government as a developer

Hierarchy of agencies regarding the establishment of SEZs and their function

The Board of Approval has 19 Members. Its constitution is as follows (1) Secretary, Department of Commerce (2) Member, CBEC (3) Member, IT, CBDT (4) Joint Secretary (Banking Division), Department of Economic Affairs, Ministry of Finance (5) Joint Secretary (SEZ), Department of Commerce (6) Joint Secretary, DIPP (7) Joint Secretary, Ministry of Science and Technology Member Member Member Chairman Member Member

(8) Joint Secretary, Ministry of Small Scale Industries and Agro and RuralMember Industries (9) Joint Secretary, Ministry of Home Affairs (10)Joint Secretary, Ministry of Defence (11)Joint Secretary, Ministry of Environment and Forests (12)Joint Secretary, Ministry of Law and Justice (13)Joint Secretary, Ministry of Overseas Indian Affairs (14)Joint Secretary, Ministry of Urban Development (15)A nominee of the State Government concerned (16)Director General of Foreign Trade or his nominee (17)Development Commissioner concerned Member Member Member Member Member Member Member Member Member

(18)A professor in the Indian Institute of Management or the Indian Institute ofMember Foreign Trade (19)Director or Deputy Sectary, Ministry of Commerce and Industry,Member Department of Commerce Secretary

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Administrative set up The functioning of the SEZs is governed by a three tier administrative set up. The Board of Approval is the apex body and is headed by the Secretary, Department of Commerce. The Approval Committee at the Zone level deals with approval of units in the SEZs and other related issues. Each Zone is headed by a Development Commissioner, who is ex-officio chairperson of the Approval Committee.

Once an SEZ has been approved by the Board of Approval and Central Government has notified the area of the SEZ, units are allowed to be set up in the SEZ. All the proposals for setting up of units in the SEZ are approved at the Zone level by the Approval Committee consisting of Development Commissioner, Customs Authorities and representatives of State Government. All post approval clearances including grant of importer-exporter code number, change in the name of the company or implementing agency, broad banding diversification, etc. are given at the Zone level by the Development Commissioner. The performance of the SEZ units are periodically monitored by the Approval Committee and units are liable for penal action under the provision of Foreign Trade (Development and Regulation) Act, in case of violation of the conditions of the approval.

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3. The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units

100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Exemption from minimum alternate tax under section 115JB of the Income Tax Act. External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.

Exemption from Central Sales Tax. Exemption from Service Tax. Single window clearance for Central and State level approvals. Exemption from State sales tax and other levies as extended by the respective State Governments.

The major incentives and facilities available to SEZ developers include:

Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.

Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act.

Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act. Exemption from dividend distribution tax under Section 115O of the Income Tax Act. Exemption from Central Sales Tax (CST). Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).

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4. ADVANTAGES OF SEZs 4.1 Technology Upgrading Effects :SEZs attract export-oriented FDI and promote other

forms of collaboration between local firms and MNCs. For instance, SEZs facilitate the insertion of domestic SMEs (small and medium enterprises) into global value chains by offering them an enabling investment climate. Global standards, low-cost competition, and advances in technology raise challenges for the SEZ units competing in global value chains. This stimulates learning and innovation which are crucial aspects of human development. Two distinct types of value chains are identified: those that are producer-driven and others that are buyer-driven. The former type characterizes those value chains in which multinational enterprises (MNEs) outsource the production of components and play the central role in controlling the system. They provide technology to the networked producers. This arrangement is common in capital- and technology-intensive industries such as automobiles, computers and electronics. In contrast, the latter type refers to primarily low-tech labour intensive industries in which large retailers, branded marketers, and trading companies play the pivotal role in setting up decentralized production networks in a variety of exporting companies, typically located in the Third World. In this case MNEs are marketers of products only; networked producers need to arrange for raw materials and technology themselves. Participation in these chains allows producers to upgrade themselves technologically on continuous basis. For instance, many local firms become responsible for original equipment manufacturing (OEM) wherein they source raw materials locally and manufacture products to the specifications of foreign buyers. But having established a range of technological skills through learning, these firms transfer into original brand name manufacturing (OBM). Learning and knowledge created in SEZs is eventually transmitted to domestic firms supplying to the SEZ firms through backward linkages when the companies within the SEZ buy inputs from the host country. Direct transaction of technology and indirect spill-overs through various channels such as copying, reverse engineering, and movement of workers and managers between foreign and domestic companies also facilitate transmission of knowledge to the rest of the economy. Further, trade bodies, manufacturers associations and export marketing bodies which provide a useful platform to interact and to foster closer rapport among members act as valuable forums for information sharing and spillovers. Thus, SEZs are not enclaves/foreign territories that are functioning in isolation, as many believe.

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The above analysis suggests that SEZs impact on human development through three broad channels: employment generation, skill (human capital) formation and technology upgradation. Each of them exerts two types of effects: direct and indirect. For instance, employment is generated directly when zone units and administration hire labour. The demand for complementary goods and services generates indirect employment. Similarly, the skill formation effect operates directly when workers are given specific training by the firms or when they acquire skills by working in the zone units. The indirect channel becomes operative when the spillovers take place through movement of workers to domestic areas. Finally, foreign collaborations are a direct source of new technology, managerial, and marketing networks in the zones. But they also narrow the technology gap between the foreign and domestic firms indirectly by promoting spill-overs within the zone and then outside the zone. Direct impact in each case may be empirically analysed but indirect effects, which operate through backward and forward linkages are difficult to measure. They can only be assessed by analysing the extent of such linkages. This paper focuses primarily on the direct effects of SEZs.

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4.2 Direct employment generation In 1966, the only operating zone in India was the Kandla SEZ. Total employment in the zone amounted to 70 workers. The number of SEZs increased to 8 by 1998. As a result, the level of employment also increased significantly to around 95,000 by 1999. Thereafter the level of employment declined marginally. But after the introduction of the SEZ Bill 2004, SEZ activities showed improvement. A major thrust was given by the government to SEZs in 2006 when the SEZ Act was enforced in February. Since then there has been rapid expansion in the SEZ sector. Total employment in the SEZ sector jumped to over 178,000 in November 2006 from 158,000 in March 2006.

Despite an impressive increase in employment in SEZs, their share in manufacturing employment remains modest, as of now (Table 3). Since their establishment in 1966 and until 1998 Indian SEZs contributed less than 1 per cent of total manufacturing employment. Since 1999, their share in total manufacturing sector has been slightly above 1 per cent. One may therefore argue that employment creation in SEZs relative to the rest of the economy is marginal in India.

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4.3 Female employment: Women dominate the workforce in EPZs in most developing countries. For instance, in

Philippines the share of women workers in total EPZ workforce was 74 per cent in 1980. It remained the same in 1994. In Korea, it was 70 per cent in 1990. In Mexico, it was as high as 77.4 per cent in 1981; it declined to 60 per cent by 1993. In Dominican Republic, it was 60 per cent in 1995. In Bangladesh and Sri Lanka, it has been above 70 per cent.

4.4 Skill Formation: During initial phases, SEZs are dominated by labor-intensive industries such as clothing,

footwear, and electronic component assembly. These industries use simple low-cost technology and require a low-skilled workforce. Workers are thus trapped in low skill jobs. It is however argued that SEZs still help in creating skill base by introducing workers to the rigors of industrial discipline, punctuality, quality control and meeting deadlines. While supporting this argument for the Dominican Republic, Wilmore (1997) claims that the majority of labour working in these zones had entered the labour market for the first time and all positions were held by the nationals. As a consequence, zones became instrumental in equipping them with skills and experience. Matthews and Kolinsky (2001) however argued that prior experience is considered a primary criterion for recruiting labour in the zones and thus zones are benefited by the labours experience. It is not labour that gets such benefits from zones.

4.5 Urban management SEZs management is delegated to the Development Commissioners and the participation of local as well as State Government will be marginal. Key challenges in the SEZs programme thus will be decentralisation and delegation of powers to local and State Governments and ensuring their participation in the management of the entities. These are essential actions needed for long term success of SEZs.

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Distribution of SEZs:-

The distribution of SEZs which have area more than 50 hectares shows that out of 160 SEZs nearly 113 or 70 per cent accounts for the SEZs having area less than 200 hectares. More than 85 per cent of SEZs having area of more than 1000 hectares are developed in multi-product sector while nearly 63 per cent of total approved SEZs are developed in IT/ITeS sector. Medium & Large SEZs Sector wise Distribution

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Source:- sez,india.NIC Exports from the functioning SEZs during the last three years are as under: Year 2003-2004 2004-2005 2005-2006 2006-20007 2007-2008 2008-2009 2009-2010 Value (Rs. Crore) 13,854 18,314 22 840 34,615 66,638 99,689 2,20,711.39 Growth Rate ( over previous year ) 39% 32% 25% 52% 93% 50% 121.40% Source:- sez,india.NIC

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5.HOW beneficial is SEZ policy? China and Indias GDP has had a phenomenal growth outperforming worlds average growth rates and other lower and middle income countries during the past whole decade and more. While China has had an annualized growth rate of above 10 percent, India has not had its growth story that terrific. China has always been a role model for India in many activities and adopting industry promotion policies such as formation of Special Economic Zones (SEZs) is one of them. While the same policy has brought tremendous benefits for China and turned out to be a successful policy, the implementation and implication of the same in India has always been in doldrums and questioned.

The SEZ scheme introduced by the government of India in April 2000 thus has its genesis in the Export Processing Zone (EPZ) scheme, which was introduced way back in 1965 and under the new scheme all the existing EPZs were converted into SEZs. Though SEZ policy still has confound itself in controversies and criticism, there are still some aspects which needs some attention.

SEZ policy has directly benefited economy is fallowing ways:

1. Employment Generation: The employment effect of SEZs operates through three channels : one, SEZs generate direct employment for skilled and unskilled labour ; two, they also generate indirect employment; and three, they generate employment for women workers.

2. Skill Formation: Formation of SEZs and new job requirements increase firm level activity whereby the labour force acquires skills from within the firm through training and learning by doing on the job

3. Attract investors: SEZs offer a highly conducive investment climate to attract FDI by making up for infrastructural deficiencies and procedural complexities that characterize developing countries.

4. Technology Upgrading: SEZs attract export-oriented FDI and promote other forms of
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collaboration between local firms and MNCs. Global standards, low-cost competition, and advances in technology raise challenges for the SEZ units competing in global value chains.

5. Exports: EPZ exports registered an impressive growth rate over the period 1966 to 2002. EPZ exports increased in India from less than Rs.1 million in 1966 to over Rs. 97727 million in 2002.

6. Manufacturing Sector: Share of manufacturing industry in the exports grew from negligible percentage in 1970 to above 6 percent in 2005. (Sources: Ministry of Commerce, Economic Survey, ASI)

However, with all these benefits, the policy has also been seen in some black light.

1. Some argue that the high proportion of female employment implies that the creation of SEZs does not reduce the local unemployment rate.

2. There are several reports of exploitation of women in SEZs. It is found that women are paid less than men for similar jobs and are subjected to sexual harassment and violence.

3. Also, SEZ policy has been plagued by irresponsible planning and an inadequate land acquisition law that has lead to massive protest and local resistance in building up SEZs, which has hampered Indias growth opportunities.

SEZ Ground Realities: Is SEZ policy delivering?

SEZ policy has no doubt given a boost t the Indian Economy but comparison of implementing SEZs in India to its successful implementation in other countries can bring out some holes in Indias SEZ Policy.

The total Land available in India is 2973190 sq. km of which 1620388 sq. km(54.5%) belongs to the agriculture land while remaining to non-agriculture based. Total area for the proposed SEZ (FA+IP) is 1925 sq. km. which would not be more than 0.063%
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of the total land area and not be more than 0.116% of the total Agriculture land in India. Indias exports from the SEZs are 5 % of its total with Indias share in world exports stand at 1 percent. On the contrary, Chinas exports from SEZs have been 23 % while that of Indonesia and Thailand is even more than 50 percent. Also, China exports are at 8 % of the total worlds exports. Thus if this data is considered, almost 2 % of the world exports come from Chinas only 6 SEZs. As compared to India, 0.05 % of worlds export comes from Indias over 400 SEZs. HOW DOES IT SOUND??? Clearly the SEZ projects may have some sinister designs hidden under the carpet.

The reasons for this disparity can be attributed to many reasons, some of which have been cited as below: 1. Improper SEZ policy 2. Irresponsible planning for locating SEZ 3. Ineffective Land Acquisition Policies 4. Improper Rehabilitation Policy

5.1. Improper SEZ Policy: Though India has emulate path of export led economy of China, the implementation has no matched the standards. In China, a very effective and appropriate policy is followed before an SEZ is established. The land identified is usually waste land, though there has been some resistance by people at selected places. Also, these SEZs having huge areas have there own power houses, roads, rail systems, and other infrastructure facilities thereby bringing the economies of scale in an effective manner.

On the other hand, there is no policy in place for setting up of SEZs in India. To start with, there is no discussion in the parliament on the size, place, type and location of SEZs. Also, the SEZs size are too small as compared to its counterpart in China, with some even as low as 3 hectares of land. Also, the type of industry is a problem area for SEZs in India. Almost 180 of the 260 notified
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SEZ locations till June 2008, belong to the IT/ ITES Sector. These includes industries such as IT, BPOs and KPOs. These are service industries which can even work fine in an area outside SEZ. SEZ should be a place where a large area is provided by well knit roads, rails, uninterrupted power supply to achieve economies of scale. Manufacturing industries are the units who need these kind of facilities badly in order to achieve large scales and reduce costs.

5.2. Irresponsible planning for locating SEZ Location for establishment of SEZ is also an area of concern which has hold this policy from firing. Going with the example in previous point, even if Service sector is to be promoted, it can be done by allocating a single SEZ to services in a given area. For example, 39 of the 56 SEZs in Andhra Pradesh belong to services sector. Also, each of these SEZs are established in a small area ranging from few Hectares to 30 hectares. Instead of dispersed SEZs, these could have been clubbed at a single place forming a large SEZ catering to only service sector in Andhra Pradesh.

5.3. Ineffective Land Acquisition Policies The land acquisitions policy followed by the government is aegis old and outdated. At present, land is acquired as per ruled laid down in Land Acquisition Act (1894) which calls for amendments and reforms in the ACT. Currently, government can acquire 100 % of the lad without any clear-cut and transparent mechanism for price determination. It is in light of this acquisition policy that battles and violence in places such as Nandigram and Singur in west Bengal took place.

5.4. Improper Rehabilitation Policy The unconvincing and non transparent policies for rehabilitation is also a bone of contention for issues such as Nandigram. With unclear laws, role of state as middleman Brokering social justice is suspected. Also, government only safeguards land owners interests, if al all it does. However, it doesnt consider the landless laborers into account while taking such actions.

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Steps Needed

There are many steps required to make SEZs effective and efficient. The most important is to rectify the SEZ policy as a whole including selection of Industries and Location for setting up a SEZs. Let the SEZ developer buy the land directly o i.e. no intervention of govt. as mediator o eg. Reliance group in Maharashtra Decide acquiring price on the basis of current rates in the area o Reliance paid Rs.45-75 lakh per hectare as opposed to Rs.2 lakh per hectare proposed by Govt. o Government paid above Rs 1 crore a hectare as compensation for acquiring land for building airport near Mohali, Punjab Give share of acquired land in the developed area to the owners Landless laborers should also be provided employment Limit states role to acquiring condemned waste land for better tax revenue generation Provide employment to affected population

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6. Environmental concerns The SEZ Act 2005 does not require Environmental Impact Assessment as part of the

application for new units. This is because SEZs are only permitted to contain non-polluting industries and facilities. The companies do not require any public hearing where affected communities can interact with the companies and share their concern. Enormous power has been given to Development Commissioners for granting environ-mental clearance for SEZs. They are able to bypass the State Pollution Control Boards as they work directly under government control. There is no space for filing any petition if the people are affected. Moreover, state governments have also created complementary conditions for SEZs in coastal Zones also by developing new Coastal Regulation Zone Act. One particular area of concern in relation to SEZs is the extra water demands these will and are placing on already strained and contested water resources.

To mention two examples, on the POSCO SEZ, the water requirement, as given on the POSCO Steel website, is 286 million litres per day. This will be procured from Jobra barrage on Mahanadi River in Cuttack district in Orissa, and ultimately from the upstream Hirakud dam. There is already agitation against reservation of water from Hirakud dam for industrial use. Another case is Mangalore SEZ. In a letter in June 2006 to the Prime Minister Manmohan Singh, the convener of the SEZ Impact Assessment Committee, an affiliate of the NGO Forum of Mangalore, quoted the Mangalore SEZ Limited as having estimated the water need at 136 million litres of water a day. This is despite the fact Mangalore city is facing water crisis even without the SEZ. Therefore, SEZs do not only take scarce fertile farmland out of production, but may also take scarce water resources away from competing uses.

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7 Nationwide resistance to SEZs There has been resistance to SEZs all over India - Mansa district in Punjab, Jhajjar in Haryana, Kakinada in Andhra Pradesh, Nandagudi in Karnataka, Baikampady in Mangalore, Nandigram in West Bengal, Raigad in Maharashtra, just to name a few. A timeline of popular resistance to SEZs would begin in 2007 with Nandigram, where the West Bengal governments attempt to hand over fertile cultivated land to Indonesias Salem group was ultimately thwarted. On March 14th, 2007, over 2000 villagers including women and children in the front tried to stop the police from entering the village. Police fired brutally killing nearly 14 people. The scale of the action left the state stunned. This movement against land acquisition was being led by All India Trina Mool Congress which felt that the estimated deaths were not less than 50. The disturbances in Nandigram were followed by similar protests and clashes in Singur where the state government acquired 997 acres for Tata Motors for the production of the Nano car. The project faced massive opposition from displaced landless agricultural workers as well as farmers. Eventually, the High Court of Kolkata declared the way the State of Bengal had used the Land Acquisition Act was illegal (Business Standard, 2007), and Tata Motors decided to withdraw from the project (The Financial Express, 2008). Nonetheless, the land is still in the hands of the company and has not yet been returned to its former owners.

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8. The Special Economic Zones (SEZ) and agricultural lands Perhaps the most obnoxious aspect of the new SEZs provisions was that it enabled corporates to grab large tracts of land from farmers. The speed at which agricultural lands were being lost, led to a series of agitations by small farmers. Sukla Sen points out that the trigger for all these protests, apart from the too obvious and ominous threats to the very existence of a large number of people, is the tremendous outrage at the brazen abuse of the Land Acquisition Act the gross subversion of the original purpose of eminent domain, which was intended to apply to projects of public importance and not to help generate private profits. The Supreme Court of India recently dealt elaborately with the meaning of public purpose, the extent of sovereign power to take over private property. The highest court ruled that, If the project taken as a whole is an attempt in the direction of bringing in foreign exchange, generating employment opportunities and securing economic benefits to the state and public at large, it will serve public purpose . In short, what the apex court has said is that private land can be compulsorily acquired and given to industry if this benefits people at large. Thus the judgement gives a new interpretation to Section 3(f) of the Land Acquisition Act which specifically says that public purpose does not include acquisition of land for companies. While this will no doubt clear the road for more forceful and unjust land acquisitions, it will also have an impact on the changes that are being considered in the revision of the Land Acquisition Act of 1894. Case studies in Hyderabad-Secunderabad have shown how the villages and local people have been displaced due to hi-tech spaces which are characterized by social and spatial segregation. These enclaves - for example the Infosys campus or the Indian School of Business, that are major points of contention - enjoy very high levels of amenities whereas there are 17 villages in Cyberabad area, where civic amenities such as water and education are just not available. A special mention needs to be made of the Dalit (untouchable) colony that existed next to Infosys for nearly 25-30 years. They had proper ration cards and all that they needed was a right to their few square yards of land whereas Infosys wanted this land for the second phase of its expansion. They were shifted to a place almost 15-18 kms away, with absolutely no facilities. Their entire livelihoods have been ruined because they do not get any work there. They have to

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travel all the way using two-three modes of transportation back to these hi-tech areas to get some work engaging in either construction work or domestic labour. 9.Costs Quantifiable: 1. SEZ development cost : Not incurred by the government 2. Revenue loss (Tax and other investment incentives) 3. Operational costs Other welfare costs : Non quantifiable Resource transfer from the domestic sector to SEZs with no net addition to economic activities (relocation and substitution effect) Land Acquisition without adequate compensation Impoverishment of farmers Loss of agricultural land Misuse of land for real estate Regional disparities Unequal treatment

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CONCLUSION

SEZ has dual effect on Indian economy they are beneficial to the Indian economy and also there are negative effect like its damaging the agricultural land during the country. Ultimately the tax contribution of different industry will be reducing due to SEZ policy. There are many resistances for SEZ in India. People have opposed SEZ proposal at many places in India . The employment rate is increasing and poverty among people is decreasing the standard of living of rural people will go high with the help of SEZ policy. Development of rural and urban area is being done by SEZs. EOI development is increasing and country earning more foreign currency. There are chances of misuse of land under the SEZ policy. But ultimately the SEZ policy and development of special economic zone will lead country for more growth.

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BIBLIOGRAPHY

Aradhna aggarwal.(2007, may). Impact of special economic zone on employment, poverty and human development. Retrieved November 16, 2011, from http://ideas.repec.org/p/ind/icrier/194.html

Har amol singh. (2011, August 2). Has sez policy delivered in India? Retrieved November 17, 2011, from http://www.competitionquest.com/post.php?post=61

Jona Aravind Dohrmann. (2008, January). Special economic zone in India. Retrieved November 17, 2011, from http://www.competitionquest.com/post.php?post=61

Ministry of commerce. (2010 April, ). SEZ India. Retrieved November 17, 2011, from http://www.sezindia.nic.in/about-ep.asp

Suresh Babu M. (2009, February). SEZs in India: some issues. Retrieved November 17, 2011, from http://www.hss.iitm.ac.in/courses/sureshbabu/SEZ.pdf

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