IRACST – International Journal of Commerce, Business and Management (IJCBM), ISSN: 2319–2828

Vol. 4, No.1, February 2015

Impact of Special Economic Zone in India

DR. JAYARAM BUDHO MORE,

Associate Professor & Head,
Department of Commerce,
Sant Muktabai Arts & Commerce College,
Muktainagar, Dist. Jalgaon. (M. S.) (India)

Abstract: development of regional equilibrium.

Special Economic Zone is the most
discussed and disputed topic in India.
For the economic development and to
encourage export of various things and
to take place in globalization all the
countries are contributing themselves
and trying for it consciously and SEZ
is one of the parts of this. All over the
opposition to SEZ, but for financial
development, export growth, increase
employment of the country, SEZ is
essential. Government has passed
special SEZ Act and implementation is
doing. It is necessary to see the SEZ in
positive view. SEZ projects should be
started in backward area for
SEZ have been acquired land from the
farmers, government should be done
rehabilitation and included them as
shareholders of the SEZ projects as
well as the family members of the
farmers should be reserved some
vacancies of employment.
Employment should be provided to the
local workers, for existence of SSI to
prepare list of articles of SSI, to
limitations of maximum land acquired
for SEZ etc. options should be
considered by Government then
farmers are helping to SEZ and
economic development is done
through SEZ.

Key words: - SEZ, Origin of SEZ, SEZ in India, SEZ Problems & options.

I. INTRODUCTION:
Special Economic Zone is the most discussed and disputed topic in India. For the
economic development and to encourage export of various things and to take place in
globalization all the countries are contributing themselves and trying for it consciously and SEZ
is one of the parts of this.

Special Economic Zone means to give special facilities to the entrepreneur. In SEZ
special facilities are provided to the industrialist, who starts their business in this sector. Special
facilities for taxes, visa will require in this zone.

“SEZ is a specifically delineated duty free enclave and shall be foreign territory for the
purposes of trade operation and duties and tariffs.”

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In SEZ all import duty, taxes and other taxes are given concession and supplying
industrial service and other trade activities, treated as foreign country In SEZ special cities are
developed, it has its own airport and port, roads etc included.

II. OBJECTIVES AND METHODOLOGY OF THE STUDY:

The objectives of the study are to overview the effect of special Economy Zone and
suggest options to solve the problems. The whole paper is based on descriptive research,
comparative study and analytical logic developed through the understandings from various
research papers, reports, books, journals, newspapers and online data bases.

III. OBJECTIVES OF SEZ:-

The objectives related with India given as under

1. To develop infrastructure facilities in the country.
2. To increase employment through SEZ.
3. To reduce imbalance in financial development
4. To improve international trade and get foreign currency with the help of SEZ.
5. To develop the country through the development of industrial and economical
growth.
6. To attract the foreign investment
7. To give the facilities to the internal trade and business with the help of the SEZ.

IV. ORIGIN OF SEZ

In 1896 in England at Manchester city was started special economy zone as industrial
park. After some years at Hong Kong, the free Trade Zone was started. In America there are
more than 140 Free Trade Zone doing work. In 1956 first Export Process Zone was started in the
Ireland. After 1956, in Asia were started Export Process Zones in Malaysia, Singapore, China,
Indonesia etc. In 1986, 176 Export Process Zones were established in 47 countries. In 2003
there were 3000 zones developed. Today Export Process Zones are converted into Special
Economic Zones.

In China from 1980 started Special Economic Zones. Today the China is introduced as
industrialist in the world. In China five SEZ projects have been started along with 15 Free Trade
Zones, 49 Financial Development Zones and 53 High Technical Knowledge Zones. In China all
these zones has provided well infrastructure facilities.

After 1990 for export process zone was implemented all over the countries in the world.
Small countries than India are activating the SEZ. E.g. Sri Lanka, Jordon, South Korea etc. The
SEZ has activated in these countries and started industrial export in large scale.

For promote, the formation of SEZ in the China, give entry the foreign investment. At a
time all infrastructure facilities i.e. roads, water supply, electricity supply etc. are not possible.
So China was started five Special Economic Zones and provided international facilities in large

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Vol. 4, No.1, February 2015

scale as well as removes critical sections from laws, red-tape in administration and protected the
foreign investors. So industrial sectors are increased in large scale. Today SEZ in China has
accepted challenges in the globalization.

VI . SEZ IN INDIA:-

From 1951, India has accepted mix economy for development of financial and industrial
through the five years plans. For promoting foreign trade and increases export, India has started
first Free Trade Zone at Candela in 1965. Then in 1974 it expanded at Cochin, Mumbai,
Chennai, Vishakha Pattanam and Surat.

The progress and expansion of SEZ in China, Korea, Singapore, Malaysia and America
has considered by Government of India and accepted the concept of SEZ in March, 2000. Then
protection of exporters and demand of traders has been considered by Indian government.
Parliament bill of SEZ has sanctioned on 23rd June, 2005 by the central government. SEZ Act
has been applicable to all over India. SEZs are recognized under financial development and
export promotion. As per SEZ Act, SEZ means specially created territory of free taxes and fees
.In these sector industries are established for producing articles and supplying services.

As per Special Economy Zone Act, 2005 and 2006, the definition of SEZ was included
articles production, supplying services, free trade and free ware housing.

Three types of SEZ is as under

a) SEZ for multi-products
b) SEZ for special sector
c) SEZ for port or airport

To declare by government, which type of SEZ has permitted out of above types of three?

Some of the economist and politician are explain SEZ as a way of economical
development, but some of them oppose the SEZ. The well known economist Mr. Raghunath
Rajan said that the tax free facilities given to the SEZ, so give up revenue of the country. The
social worker Mrs. Medha Patkar says that the SEZ is only for self interest section. Mr.
Vishwanath Pratapsing said that the government is helping the companies to take over the land
from the farmers.

The supporters of SEZ say that the SEZ has promoted and accelerated the development of
economy, to increases infrastructure facilities, employment and export. For entrepreneurs
included in SEZ have provided international grade services and amenities, in fractural facilities
as well as financial promotion schemes, so they have obtained new life.

This industrial sector is developed with trade centre, educational institutions, residences
facilities as well as hospital, play grounds and entertainment centers are included. In new
Mumbai SEZs are going to develop for increasing investment included electricity generation
centers, transports facilities etc. so these SEZs are attraction to domestic and foreign investors.

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VII . EFFECTS OF SEZ:-

Due to SEZ industrial sector, export, employment, infrastructural facilities are increasing.
But following problems will created by SEZ

1. Farmers will be landless: - In India, near about 70% of the population depend on farming.
It is main source of their income. Because of SEZ many farmers become landless for
taking lands from the farmers. Many amenities are giving to the farmers and they are ready
to give their land to the SEZ and farmers will be landless. Then landless farmers, there is
not available for income, some farmers are committing suicide.

2. Increase unemployment: - Due to SEZ, the employment will rise. But in SEZ’s
entrepreneurs and companies have invested more capital in the business and used capital
oriented techniques. Increase the unemployment. The farmers who lost their source of
income and they do not get job in SEZ.

3. The existence of small scale industries is in risk: - Small scale industries create
employment and it has more importance in the countries like Japan. The industries in SEZ
are giving many facilities. So they are producing in the low production cost and sale their
production in fewer prices than small scale industries. The existence of small scale is in
risk.

4. To neglect agricultural sector: - Due to SEZ, agriculture sector area will be reduced and
production will also be reduced. Available agricultural production will not be sufficient to
increase population. For this purpose agricultural grain will import.

5. To lost revenue of government for tax free facilities:- The government and Reserve
Bank will be giving tax free facilities to the entrepreneurs, Rs. 1,75,487 cores revenue is
lost of the government. The remedies are not suggested about tax free facilities of SEZ
entrepreneurs. Last to take care about this burden will not bear by the people of the
country.

6. Capitalism will take birth: - The industrialist of the SEZ is providing various facilities;
some of the industrialist will be take benefit. They will sales their product in fewer prices
and creating monopoly.

7. No rules about the construction: - In SEZ there is no rules explained about construction.
Roads, open space, construction area etc are not declared in detail.

8. To increase financial disequilibrium:-The government is transferring their responsibility

in industrial sector to the SEZ holders. Due to SEZ rich will become rich and poor will
become poor. The gap of rich and poor will be increasing. For this reason, social
dissatisfaction will occur.

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9. Imbalance in environment: - Large scale industries will establish in the SEZ. From these
industries will mix unusable chemicals in the water and air and water and air pollution will
be increased. The sound of big machinery in SEZ is creating sound pollution and
environment will be imbalance.

10. No protection of the workers: - The workers in the industries of SEZ, the worker laws
will not be considered. For these reasons the industrialist will be doing increase working
hours, close the work, lock-out, decrease the workers etc. and workers has no protection for
their work. They will be unsatisfied about the work.

11. The industries in the SEZ was held maximum land are not given clear in the Special
Economy Zone Act

VIII . REMEDIES OR OPTIONS:-

SEZ is more important for raised export, employment and financial development of the
country. For equal development of the state, all-round development of the country, the SEZ
is essential. To solve the problems of the SEZ, some changes are necessary. For solve the
problems of SEZ, following options should be considered.

1. To acquire non agricultural land for the SEZ: - The non agricultural land should be
acquired for SEZ.

2. Employment for the local workers: - Employment should be provided to the local
workers in the projects of SEZ and bond them.

3. Limitation on maximum land holding: - For SEZ maximum land holding should not
be given in the SEZ Act. The provision should be made how much land should be acquired
for the project of SEZ.

4. To save the Small Scale Industries: - Due to small scale industries create employment
in large scale. If due to SEZ small scale industries will be closed, unemployment will
increases. So list of the articles of small scale industries should be prepared, that will saved
small scale industries.

5. To protect workers’ rights: - For protection of the workers right, workers laws and acts
should be applied in the SEZ projects.

6. To minimize land acquisition for the SEZ: - Land acquisition for the SEZ may be
minimized. Now for SEZ minimum 25000 acres land is acquired. And there is no limit for
maximum land acquisition. It is suggested that 100 to 1000 hectors land may be acquired
for SEZ project.

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7. To Save Environment: - In SEZ many types of industries should be created pollution in

water, air and sound. For protect pollution, the projects of SEZ will established 10 to 15 km
from the cities and villages.

8. To fix price of the land: - Land should be acquired for the SEZ, maximum price be
given to the farmers. For the fixation of the price of land should come together farmers,
government and SEZ holders.

9. Do not injustice on the farmers: - The government should be taken care about the
farmers whose land acquire.

10. Acquisition of the land on lease: - The land for SEZ should be given permission to
SEZ holders, to take land on lease. The price of the land acquired for SEZ should be
considered future price of land.

11. Shares to be given to landholders: - Land holders should be given shares and
employment in SEZ. Projects.

IX. CONCLUSION:-

All over the opposition to SEZ, but for financial development, export growth, increase
employment of the country, SEZ is essential. Government has passed special SEZ Act and
implementation is doing. It is necessary to see the SEZ in positive view. SEZ projects
should be started in backward area for development of regional equilibrium. SEZ have
been acquired land from the farmers, government should be done rehabilitation and
included them as shareholders of the SEZ projects as well as the family members of the
farmers should be reserved some vacancies of employment. Employment should be
provided to the local workers, for existence of SSI to prepare list of articles of SSI, to
limitations of maximum land acquired for SEZ etc. options should be considered by
Government then farmers are helping to SEZ and economic development is done through
SEZ.

References: -

Majumder S (2003), “SEZs: Go the Chinese Way”, The Business Line, The Hindu Group
of Publications, Mumbai, India.
Mr. Madhavanand- Special Economic Zones (SEZs) in India
.
Seethalakshmi, S.,( 2009.) Special Economic Zones in Andhra Pradesh: Policy Claims
and People’s Experiences. Hyderabad:

Goswami, B. (2007). Special Economic Zones: Lessons from China. Retrieved May 30,
2013, from http://www.inmotionmagazine.com/opin/bg_sez_china.html
Srinivasan, V. K., and P. S. Sundaram. 2008. SEZs: International Scenario and Indian

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Vol. 4, No.1, February 2015

Government of India, Ministry of Commerce and Industries, n.d. Special Economic

Zones in India, http://sezindia.nic.in/ (accessed 1 February 2011).

Guha, S.B. (2008), “Space Relations of Capital and Significance of New Economics
Enclaves: SEZs in India,” Economic and Political Weekly, Vol. 43, No. 47, November
22, pp. 51-59.

Gupta, K.R. (2008), Special Economic Zones: Issues, Laws and Procedures, Published by
Atlantic Publications & Distributors (P) Ltd., New Delhi.
P. Pakdeenurit, N. Suthikarnnarunai Member, IAENG, and W. Rattanawong- Special
Economic Zone: Facts, Roles, and Opportunities of Investment

Majumdar, M. (2007), “Approaching Special Economic Zone– The Database, dimensions

and Determinates,” Man & Development, Vol. XXIX, No. 4, Dec., pp. 1-24.

www.sezindia.nic.in

NEWSPAPERS
1. The Times of India- Need for Sensible Policy- 13th Oct.2006.
2. Lokmat (Marathi)
3. Loksatta (Marathi)
4. Economic times

JOURNALS
1. The Indian Journal of Commerce –Dec.2005
2. Business India
5. ZENITH International Journal of Business Economics & Management Research Vol.2
Issue 2, February 2012, ISSN 2249 8826
MAGAZINES
1. Yojana –June 2007
2. Yojana – November, 2007
3. Yojana – October, 2007
4. Yojana –August, 2008
5. Udyojak

AUTHOR’S PROFILE
Dr. Jayaram Budho More is Associate Professor and Head of commerce department in
Sant Muktabai Arts and commerce Cllege, Muktainagar.Dist Jalgaon.. He has 32 years
teaching experience to U.G. classes and 7 years to P.G. classes. Ph.D. and M.Phil Guide and
,B.O.S member in North Maharashtra university Jalgaon (M.S.) (india).

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