Political Economy of SEZ
in India
Ish Mishra
The
contradiction of praxis is the eternal contradiction of Capitalism with its
innate attribute of unceasing accumulation. It means opposite to what it says.
It appropriated political power and established itself with the slogans of Liberty, Equality and Fraternity but
its very existence depends on the contrary principles, as its prominent organic
intellectual Adam Smith has aptly defined the historical progress (of
capitalism) in terms of the “inadvertent consequence” of “profit making
activities” by individuals, organized and harmonized by the “invisible” hands
of the market[1]. That
means that the growth of capitalism depends upon the principles contrary to its
declared ones as it is the matter of common historical sense that profit cannot
be maximized by democratic principles of equality, liberty and fraternity but
just opposite to that -- by maximum exploitation, manipulation and repression.
It began its journey with the declared mission of civilizing the world and dispossessed the peasantry in its own
land; plundered the riches and the resources of the rest of the world;
conducted programs of the people; grabbed their land and resources;
exterminated or enslaved them. The present leaders of capitalism invade other
countries for plundering their resources and perpetuating hegemony but would
name it the fight against an abstract enemy – “terrorism”. When the Indian
agents of global Capital[2]
declare to establish Special Economic
Zone (SEZ), it means Special Eviction
(of peasantry) Exploitation (of
workers)/Expropriation (of
agricultural land)/Exemption (to
capitalist from taxes) Zones, regulated
by, probably, the invisible hands of
the market. Adam Smith’s invisible hands,
were clearly visible to Karl Marx and Frederic Engels, the activist
intellectuals, who did not seek just to “interpret the world in various ways”
but to “change it”[3]. The SEZ kind of developments can be better
understood in the context of innate character of Capital to increasingly and
unceasingly accumulate and expand. The proposed SEZs are the latest, easiest and cheapest instrument of
accumulation and expansion. Marx and Engels wrote in the celebrated pamphlet,
the communist Manifesto:
“The need of constantly expanding market for
its products chases the bourgeoisie over the whole surface of the globe. It
must nestle everywhere, settle every where and establish connections
everywhere.”[4]
The nature of the modern State, i.e.
the bourgeois State from Renaissance Absolutism to present Global Corporatism,
which, according to Karl Marx, is “but a committee for managing the common
affairs of the whole bourgeoisie”[5],
has been changing according to the needs of capitalism. The latest phase of
global capital is driving governments of all hues including the so-called left,
to expropriate agricultural land, dispossess and displace peasants by using
brutal force. Land thus acquired from
the peasants for a meager compensation is offered to Corporate houses—The
Tatas, POSCOs, Salems, Ambanis and their ilk – at throw-away prices, a
reminiscent of Enclosure Movement in
England during the primitive phase of capital accumulation. As noted by
Marx:
The “glorious Revolution brought into power along
with William of Orange, the landlords and the capitalist, appropriators of
surplus-value. They inaugurated the new era by practicing on a colossal scale
thefts of state lands, thefts that had been hitherto managed most modestly.
These estates were given away, sold at a ridiculous figure, or even annexed to
private estates by direct seizure. ……[6]
Capital
accumulation by capitalists through expropriation of agricultural land
connivance with the governments for the development of real estate,
multi-commercial complexes etc. and outsourcing can be compared with Primitive
Capital Accumulation (PCA) in terms of extension capitalist rent, as described
by Marx, appropriated on the basis of resources that are not replicable[7]. One
of the logical corollaries of the expropriation of peasant land in Enclosure
movement was creation of “free” wage labor necessary for the development of
capitalism. By now the capitalism has already created a huge reserve army of work
force. The neo-liberal land grab drive swells its ranks. A perusal of the
provisions, terms and conditions of SEZ as enshrined in The Special Economic Zones
Act[8] makes it quite clear that these Zones would be like a foreign enclave in
our country -- the islands of prosperity in the ocean of poverty. One will need
a passport or special identity cards to enter these enclaves and will need to
pay export duty to buy goods from there. Many laws of the land will be partly
or wholly inapplicable in these zones. The SEZs are territories demarcated by
state governments with the concurrence of the central government. The
enterprises located in these enclaves are exempted from the customs and excise
duties, income and other taxes. They are also entitled to other privileges like
free or subsidized water supply and subsidized electricity supply. The trade
union rights of the workers in these zones shall be suspended.[9]
This raises the pertinent question why are governments – in the states and at
the center-- bent upon pursuing a policy that not only dispossess the peasantry
but also causes losses to the exchequer? The official answer to this has been
ever since 1991, when the then government embarked upon the course of
globalization, ‘there is no alternative’ – the TINA syndrome. This answer is
not acceptable as only dead communities have no alternative; the live
communities are never bereft of alternatives.
Imperialism
is not a policy matter of or aberration in capitalist development but innate into
it, only the form changes. The history of Capitalism that began with primitive accumulation by expropriation
of agricultural land, proletarianization of peasantry and colonial plunder, has
taken a full turn and once again it has resorted to expropriation of
agricultural land for industrial/commercial/real estate/SEZ purposes with the
help of the governments that follow the dictates of global capital, displaces
the peasants from their land. In the neo-liberal phase of capitalism, SEZs are
the cheapest and surest tool of imperialism.
European
Renaissance witnessed the emergence of a new species of hero – the risk-free hero
of finance. This new hero, in less than 150 years became the hero and moved
from periphery to centre. The 17th century liberal, John Locke
declared categorically that governance is a serious matter; it can be entrusted
with only those who have already proved their worth by amassing sufficient
wealth.[10]
Their demand for freedom and equality for the bourgeoisie was interpreted as
universal equality and liberty and which eventually led to universal franchise
and territorial-national universal citizenship and establishment of
representative democracies, dictatorship of proletariat and their reversal into
capitalism.
The
issue of the Special Economic Zone (SEZ) as the new mantra of India’s future rise
as a potential economic power became
the focus of discussions in political and intellectual circles, particularly
after the incidents of forced eviction of peasants and subsequent peasant
movements against the acquisition of agricultural land in Nandigram. The
Nandigram that witnessed the death of dozens of protesters and injury to
hundreds in police firing on 14th March 2007 on the orders of the
Marxist Chief Minister, Buddha Deb Bhattacharya, became the focal pint of
anti-SEZ discourse all over the country. The Nandigram and Kalinganagar[11], have
become the hall-mark and the reference point for such anti-land grab movements.
Eventually the intensity of opposition forced the government to roll back and withdraw
the orders of land acquisition[12].
History never repeats itself. As Heraclitus, a
philosopher of Greek antiquity had rightly said that every thing in the world
is in continuous state of change and flux and that the only constant is the
change itself. History does not repeat itself, it only echoes. The creation of
“foreign territories” within the country under the SEZ Act 2005 echoes the
creation of fortified enclaves by various – French, Dutch and English East
India Companies -- in the costal regions of the country. It appears that
history has taken a full circle. But infinite waves have soared up and down since
then in the Bay of Bengal. Capitalism and its innate attribute, imperialism has
made multiple advances. In the present phase of the imperialist globalization,
there is no need of any Lord Clive, all the Sujauddaulas have turned into Mir
Zafars[13].
The people of India are aware of the imperialist designs and are determined not
to allow the Global Capital and its local agents to take away their rights to
land and livelihood, as is clear from various anti displacement movements
against forcible land acquisition.
.
This
paper seeks to look into the political economy of SEZ as a technique of the
latest stage of the imperialist capitalism” and to analyze the role of the
governments in following the dictates of the corporate led Globalization from
the perspective of radical Political Economy.
The
Prelude
in 1965 the first Export Processing
Zone (EPZ) was started at Kandla, Gujarat . So
far there are only 14 EPZs in India Indore
(Madhya Pradesh), Manikanchan – Salt
Lake
The setting
In 2004 general elections parties and
faces in the government changed but not the policies. Montek Singh Ahluwalia[15]
has been a common agent of influencing India’s Political Economy in favor of
imperialist globalization during the regimes of various hues and cries since
1991. The Commerce Minister Kamalnath announced to start almost 650 Special
Economic Zones (SEZs) by 2007 with a target to touch a record 1,000 in few
years and a bill for SEZs -- Special Economic Zone (SEZ) Act, 2005[16]--
was moved in the Parliament in early 2005. It was passed unanimously in both the
houses of parliament within two days and got signed by the president in a few
days. It was expected that such a bill which is going to affect the future of
agriculture and of those dependent upon it for their livelihood, the whole
rural sector, land use, employment generation, urbanization and the pace of its
expansion and other aspects of the social fabric, would be properly deliberated
and debated. However, the fact that both the houses passed it within two days
of its introduction shows the “convergence” of interests among all the
parliamentary parties on the issue and has compelled democracy-loving,
sensitive Indians to introspect upon this perturbing and alarming matter as it
undermines not only the constitutional rights of the people but also the
sovereignty of the nation.
SEZ:
The Objectives and Implications
As noted above, the idea of the SEZ
was first mooted by the NDA government in 2000 for the stated objectives of
integrated infrastructure for production and exports; approval mechanism; a
package of incentives; concessions and tax exemption to attract foreign and
domestic investments. (See Box 2). The policy of SEZ is stated in the Foreign
Trade Policy, incentives and other facilities offered to SEZ developers and
units are being notified through government rules and circulars[17]. A circular of the Ministry of Commerce and
Industry describes the objectives of creating SEZ as:
The scheme shall aim
at development of integrated world class infrastructure for exports including
carrying out manufacture of goods, rendering of services or in connection
therewith and would include industrial, commercial and social infrastructure.
The components of SEZ shall include roads, airports, ports, transport system,
generation and distribution of power, telecom, hospitals, hotels, educational
institutions, leisure and entertainment units, residential/industrial
commercial complexes, water supply sanitation and sewerage system and other
facilities required for the development of the Zone.[18]
It is clear from the above circular
that the SEZs are not for only promotion of industry and manufacture but also would
contain hotels, IT parks, leisure and entertainment units and the vague “social
infrastructure” that may include residential complexes, swimming pools and
health spas. Clause 2(r) of the Act defines “manufacture” to be allowed and
encouraged in SEZs as follows:
Manufacture means to
make, produce, fabricate, assemble, process or bring into existence by hand or
machine, a new product having a distinct name, character or use and shall
include processes such as refrigeration, cutting, polishing, blending, repair,
remaking, re-engineering and includes agriculture, aquaculture, animal
husbandry, floriculture, horticulture, pisciculture, poultry, sericulture,
viticulture and mining.[19]
The definition includes everything
that is not exactly manufacture – from agriculture to mining. Chapter 5 of the
Act contains provisions for single window clearance of applications for SEZ
units in order to make procedures easy for the global capital. The title of the
next chapter is ‘Special Fiscal Provisions for SEZs’. Clause 26 lists the
exemptions and concessions to the developers and units to be set up in SEZs[20]. (See
boxes 1
The provisions of
this Act shall have effect notwithstanding anything inconsistent therewith
contained in any other law for time being in force or any instrument having
effect by virtue of any other than this Act.[22]
Clause 53 declares a SEZ to be virtually
a foreign territory inside the political boundaries of India:
A SEZ shall, on and
from the appointed day, be deemed to be territory outside the custom territory of India
Section 3 of
the guidelines for the SEZ developers prescribes the minimum area 91000 hectares
but there is no limit for the maximum area. This gives the developers ample
scope for using SEZ for the real estate purposes as only a minimum of 25% of
the area needs to be used for setting up industrial units. It is interesting to
learn the extent of commitments state governments have to make while forwarding
applications to the Department of Commerce, Government of India:[24]
·
The
area notified for SEZ is free from environmental prohibitions;
·
Water
electricity and other services will be provided as required ;
·
Full
exemption on electricity duty and tax on the sale electricity for self
generated and purchased power;
·
To
allow generation, transmission and distribution of power within SEZ;
·
Exemption
from state ales tax, octroi, mandi tax, turn over tax, duty, cess, levies on
supply of goods from DTA to SEZ units;
·
For
units in the Zone, power under Industrial Dispute Act and other related Acts
would be delegated to Development Commissioner;
·
The
zone will be declared a public utility
service under Industrial Dispute Act;
For the
reasons best known to Mr. Man Mohan Singh, Kamal Nath or the Powers that be,
the guidelines treat all the SEZs to be public
utility similar to railways and power services, indispensable for daily life!!
What is
happening under this project is the biggest land grab since 1947. The draconian
Land
Acquisition Act, 1894 has been made more draconian for the
expropriation of peasant land. At present for the already sanctioned SEZs a
total of 125,000 hectares of prime agricultural land are being acquired. The
next phase involves almost same area. In Punjab where almost entire area is
irrigated and under double crop or more, the land is being acquired despite the
growing resistance against the displacement in violation of the provisions of the
SEZ Act itself. In Himachal Pradesh about 35,000 hectares in Kangra Valley Delhi
It is not
the concessions alone or the license to hire and fire labor at will that
attract global capital to an SEZ but the covert means of land grab. The biggest
destination of global capital is speculation in stock and money markets, the
second most favored destination is the real estate and infrastructure
development: apartments, shopping malls, hotels, etc. All this requires lots of
land, the resource which is limited and can not be manufactured. But owners of
global capital know that opposition will be greater if they say that the
peasants and adivasis are going to be evicted for purposes like Entertainment
Park. Most of SEZs are coming up not near the sea but near the big cities.
Some Features of SEZs in
|
·
SEZ
for gems & jewelry, IT-ITES-BPOs and bio-technology would require a
minimum 10 hectare of built-up area. (Later notifications said that the
land-area may be reduced to 40,000 square meter or 4 hectare in special
cases). Multi-product SEZs must have an area of 1,000 hectare, while
multi-services and sector specific SEZs should have a minimum area of 100
hectare. (1 hectare = 2.5 acres, approximately).
|
·
Only
in
|
·
The
processing area in SEZs would be mere 35%`! In the remaining 65% housing
projects, hotels, restaurants, hospitals, amusement centers, multiplexes,
malls, playgrounds, golf courses can be built!
|
·
SEZ
will be a duty-free enclave and considered foreign territory within the
state. If you buy goods from an SEZ, you have to pay import duties. Example: Reliance industries set up a new
refinery in
|
·
Generally,
the government will provide land to private companies that develop SEZs.
Thus, SEZ developers will have access to precious land at throwaway prices
(with the help of government muscle), cleansed of all title and litigation
issues.
|
·
There
will be no elected local government/civic authorities. A development
commissioner will govern it.
|
·
So
lucrative are the tax-holidays & other concessions offers in these SEZs
that there are strong possibilities of older units to relocate in the SEZs to
avail the bonanza. Even Rahul Bajaj one of the leading industrialists has
publicly expressed such apprehensions.
|
·
There
are 6,500 companies located in 47 Software Technology Parks (STPs) all over
|
·
In
these SEZs all the units/enterprises will be declared as ‘public utilities’
where existing labor laws do not act. Among other drawbacks, SEZs will not be
subject to any town planning or supervision by the municipality, thus
negating the 75th Amendment of the Constitution which ensures people’s
participation in local government.
|
·
What
is most worrying in the SEZ Act is Section 49, which empowers the government
to exempt any or all SEZs from the operation of any central law through a
notification. It puts SEZs, theoretically at least, outside the pale of the
Constitution.
|
·
After
all, the world over, SEZs are set up precisely so that they can avoid the rigidity of domestic laws and rely
on smoother functioning without bureaucratic hassles. The rub here is that
the SEZs are being developed by the private sector.
|
·
And,
there is also the Godzilla factor — the sheer size of some SEZs. Although
these are small by global standards, some have the making of a mega
enterprise. Reliance Industries’ twin
block in Mumbai is scheduled to cover 14,000 hectares or 140 sq. km. This may
be just a third of
|
·
The
question, therefore, is what happens when large SEZs eventually become
townships whose population could run into millions. There is, to start with,
the constitutional tenability of private monopolies running local government
for sizable cluster of the urban population without being elected. Would the
SEZs thus, turn into sovereign states like the British East India Company in
18th-19th centuries, accountable to none? Or, would
there be some checks and balances?
|
·
What
the law lays down is an SEZ Development Authority (SDA) headed by the
developer’s representative and run by a development commissioner (DC)
appointed by the state government — a super bureaucrat vested with enormous
powers. Since SEZs are being designated industrial townships by the status,
the DC would work independently with no municipality or the third rung of
governance to oversee his functioning.
|
·
All
functions undertaken by the civic authorities and some of those provided by
the state government (water supply, tax collection, law and order) would
devolve on the SDA. Several states have laid down detailed norms for the SDA.
From providing birth and death certificates, maintaining cremation/burial
grounds (all municipal functions listed in 12th Schedule of the Constitution)
to laying out public streets, building bridges and culverts, and fighting
epidemics, everything lies in SDA’s jurisdiction. The Act does not spell out
provisions of penalties for dereliction of duties. Unlike Municipalities
|
·
Unlike
municipality, the developer is not obliged to provide services to all the
inhabitants in “his territory” and there is no mechanism for the redressal of
their rights to basic amenities. In fact given the profit centered
development, it is doubtful whether the corporate developers would be able to
or interested in providing such services?
|
·
|
|
The Chinese Experience:
The
government spokespersons, cite the example of China, in defense of SEZ policy
through Goebelsian tactics. So far in China
only six SEZs are set up—Shenzhen, Shantou , Xiamen , Zhuhai, Hainan
and Pudong. These are all built in public sector and mostly in waste lands.
Though underreported, that too did not go unopposed. These export centered
Special Economic Zones were established by brutally suppressing the peasants’
protracted massive resistance with more intensity than the suppression of students’
movement for socialist freedom in 1989. Chinese students’ movement, which
coincided with the bi-centenary of the French Revolution in chronological
terms, though subject matter of a separate discussion, was essentially a
resurgence of the “hundred flowers” principle of the Cultural Revolution[32]. Major
protests and opposition against the working conditions in these SEZs are still
taking place.[33]
China began
the process of attracting foreign capital in the 1980s by implementing a
series of measures and policies with the sole purpose of achieving rapid
economic growth at any cost and consequently paid heavy price in terms of
interest of the Chinese people in general and the cause of socialism for human
emancipation in particular. The mindless pursuit of growth has lowered the
efficiency and effectiveness of economic policies, besides the huge resource wastage
and devastating environmental and ecological implications.
The
Chinese experience offers a valuable lesson for India China China Guangdong (south), Sichuan ,
Hebei (north), and Henan Guangdong
Indian
parliamentary parties have gone many steps ahead of their colonial predecessors
in using the draconian colonial Land Acquisition Act 1894, in the sense that
even they did not acquire the agricultural land for private capitalists in the
name of ‘public utility”. Manmohan Singh
ha been time and again reiterating its firm determination to go ahead with the
SEZ plans at any cost. Seeing his sense
of history with gratitude to colonialism for “civilizing” India into a “nation”
as revealed by him while being awarded with an honorary doctorate at Oxford
University’s University and his World Bank affinity, it is not unexpected.
Opposition to SEZ
The SEZ Act
is being opposed tooth-and-nail by peoples’ movements all over the country as
well as left and democratic intellectuals, activists and the radical left
parties all over the country and abroad as it envisages a “nation within the nation”, threatens the Sovereignty of the nation,
potentially would create mass unemployment, and endangers people’s livelihoods and nation’s food
security. I would not go into the details of the anti-SEZ movements, protests
and discussions going on all over the country that is subject matter of a
separate discussion. Heroic struggle of the Nandigram peasants and its brutal
suppression by a government is well known.
So the
message is laud and clear. Mushrooming of SEZs will not deliver the desired
goal of “export promotion” but would make a heavy dent on the India’s exchequer
and people’s democratic rights as Indian citizen. The ruling class parties of India
On June 22,2007, a few Mumbai-based
Marathi newspapers carried the news of the demonstrations of hundreds of
farmers against the land acquisition by the state government for the Reliance
Company for a 10,120 hectare Special Economic Zone (SEZ). The farmers in the
obscure Pen tehsil in Raigad district Maharashtra took a strong protest rally
of almost 4000 farmers against Reliance SEZ on 21st that was
subjected to brutal police lathi charge. The agitation continues under the
leadership of Pen Panchkroshi Sheti Bachao Samiti (Pen area Committee
for save the farmland). The villagers now know fully well they are pitted
against the formidable adversary – the giant Reliance, which has just obtained
25,000 hectares land for its own SEZ in Haryana, already took the governments
in Uttar Pradesh Gujarat and Maharashtra. It is spreading its wings in
textiles, power, contract farming, medicinal herbs, sugar industries and retail
stores. They realize that the Company has enormous sway over the political,
bureaucratic establishment and the media. This company has been given the
largest SEZ in the 45 villages in Pen-Panvel-Uran area, in the name of the
activities like manufacturing, trading, services, processing, logistics,
repackaging, warehousing etc.
The people's movements from various
parts of the country under the aegis of the NAPM have decided to mobilize the
nationwide resistance to the creation of the SEZ. The organizations made it
clear that the issue at the stake was not only the lands and rights of the
affected farmers and other villagers, but the larger canvas of the way the
political economy of the nation is being usurped by the corporate interests
with the connivance of the political and bureaucratic elite. Similar protests
and opposition to SEZ are building every where in the country. The victory of
Nandigram movement, though short term and temporary needing consolidation, has
become inspiration for the anti-displacement movements in India.
So the message
is laud and clear. Mushrooming of SEZs will not deliver the desired goal of
“export promotion” but would make a heavy dent on the India’s ex-chequer and
people’s democratic rights as Indian citizen. The ruling class parties of India
instead of looking into the pro-people models of development without or with
minimum displacement are acting as the agents of the imperialist globalization.
The SEZ Act is a short circuit into people’s rights. Millions displaced people
shall be turned into destitute and these “foreign territories” will be cheap
and effective tools of corporate led imperialist globalization.
[1] Adam Smith, Wealth of nations (1776), quoted in D.P. O’Brien, The Classical Economists, Oxford
University Press, 1975. pp.30-31
[2] global capital is not geocentric
either in terms of source or investment.
[3] Karl Marx, Theses on Feuerbach ,
Karl Marx and Frederick Engels, Selected Works (in one volume) , 1977, Moscow
[5] Ibid. p. 37
[6] Karl Marx Karl, Capital, Vol.1, Part VII, Ch. XXVI,
Marx and Frederick Engels, Selected
Works (in three volume),Volume
2, 1977, Moscow, Progress publishers, p.
108
[8]The
Special Economic Zones Act, 2005, The
Gazette of India, Ministry of Law and Justice (Legislative Department),
Government of India, New Delhi, 23rd June 2005.
[9] Ibid
[10] Quoted in Sdipta Kaviraj, Concept of Man in Political Theory, Social Scientist, No. 76, December
1979
[11] Ish N. Mishra, The Heat and Dust of a highway at Kalinganagar, Economic and Political Weekly (EPW), Mumbai,
10-16 March 2007.
[12] The Times of India. Kolkata, May 29,2007
[13] The East India Company, which had
initially sought permission of trading rights in India
from the Mogul Emperor, Shah Alam, subsequently got the Diwani Rights over Bengal .
Sujauddaula was Nawab of Bengal and Mir Zafar was his General who in the battle
at Plassy, that led to 200 years of British rule in India, was bought over by
the cunning Governor General of the Company, Lord Clive in the same manner as
the governments of various states are being
bought over by various giant corporates.
[14]
www.SEZ.nic.in
[15]
Montek Singh Ahluwalia continues to be n position of influencing
economic policies since 1991.
[16] The
Special Economic Zone Act 2005, op.cit.
[17]
Aradhna Agrawal, Special Economic
Zones: Revisiting the Policy debate, EPW,
28Oct.- 4 Nov. 2006.
[18]
Ibid.
[20] ibid
[21] ibid
[22] ibid
[23] ibid
[24] ibid
[25] The data has been collected by Red Star Team from various sources.
[26] The figures are based on SEZ Act and
news paper reports
[27] Business Line, 22January, 2006
[28] “Set up SEZ enterprises” SEZ www.google.com
[29] ibid
[30] Red
Star, op.cit.
[32] Manoranjan Mohanty, Students’ Movement for Socialist Freedom in
China, Third World Studies, Volume
1, No.1, July-September 1989.
[33] www.chinalabourwatch.org
[34] ibid
[36] www.chinalabourwatch.org
[37] Peoples’
Daily, Beijing
No comments:
Post a Comment