SEZs in India: A critical study of the approval policies

Abstract

This report summarizes our research work over the past ten weeks in trying to critically analyze the SEZ policies in practice in India. In this context, we have traced the evolution of such regulations in India, significant among them being the SEZ Act of 2005 and the SEZ Rules of 2006. The salient features of these regulations have been highlighted, with emphasis on land requirements for SEZs. There exists a formidable 3-tier administrative framework for setting up and monitoring SEZs in India. The initial application from a developer is followed by an in-principle approval, which is later sealed with the formal notification after the requisite land had been acquired by the Developer. We have tried to understand the implementation issues by studying a few sample SEZs viz, Nokia in Chennai, Mundra in Gujarat which are included as short case studies in this document. In the second phase of the project, we have ventured to place the different Indian states on an index - based continuum. The primary factors used in constructing this index are the business-frendliness, environmental awareness, institutional transparency and social sustainability as expressed in the respective state SEZ policies and acts. This has, to a certain extent, given an overview of the systems in place in different states. Though the real picture turns out to be quite different from that predicted by the indices, it has helped us analyze the other factors that might be causing this difference. One major factor could be the history of industrial development in the state. The interviews that we conducted with various personnel involved with SEZs in different roles have helped us answer with quite a degree of confidence, several questions that we started off with. Among these, issues regarding the size and location of the SEZs, the role to be played by t he Government in facilitating and supporting the entire process, identification of the gaps in the SEZ policy, warrant mention. While we have not got perfect answers to these questions, there are surely directions towards larger responsibilities for the State Govts. The issue of land acquisition has been explored in quite some detail, with an exclusive section outlining the problems encountered because of imperfections in our land laws. In the concluding section, we mention our broad inferences we were able to draw from our research and the way forward, with future research.