First Singur and then the Nandigram violence have hit the headlines of every national daily. Dailies reported that West Bengal police have shot dead farmers in Nandigram – the issue underlying the killings is the agitation by the farmers to stop the West Bengal government from forcibly taking over their sole livelihood “
The introduction of SEZ as an economic development booster can be traced back to 1929. The pioneer of the SEZ model “
Apart from the fight by the farmers against the SEZ, the inter-government regulatory authorities – the finance and the commerce ministry of India are in a tiff over the estimated loss of over Rs. 1,00,000 Crores by the finance ministry while the commerce ministry maintains that returns from SEZ shall be far more greater than the losses estimated.
What is this entire SEZ buzz? SEZ is an extension of the EPZ model. EPZ [Export promoting zones] were granted tax exemptions as a measure to promote exports. SEZ is a specifically delineated duty free enclave and shall be deemed to be a foreign territory for the purposes of trade operations, duties and tariffs.
For the furtherance of FDI, the SEZ policy was announced in April 2000. The policy was conceived to foster economic development through giving impetus to exports. The scope of incentives offered to SEZ was amplified.
In the background of a “for & against the SEZ implementation” anomaly, the Government to instill confidence in investors and signal the government’s commitment to a stable SEZ policy regime, a comprehensive SEZ Act 2005 was passed by the Parliament in May 2005. The Act came into force together with rules w.e.f. February 10th 2006.
The salient features of SEZ Act are
· Exemption from customs & excise duties.
· Supplies to SEZ are deemed as exports.
· Income tax exemptions
· Exemption from MAT
Exemption from CST etc.
Investments of the order of Rs. 1,00,000 Crore with employment potential of over 5,00,000 is expected from the new SEZ’s apart from indirect employment during the construction of SEZ’s.
60% of the population are dependent on agriculture and allied activities. But agriculture contributes only 20%. A case study on agriculture dependency at Faizabad displays that 5 families multiplied to 300 families over time cultivate on the same area of land as was done by 5 families. In sequel, the rural population is looking for employment opportunities in the urban areas. The share of manufacturing remains almost constant @ 16%-17%. In order to improve and to promote manufacturing as a source of employment, there is a need to improve investment climate, as the resources are limited. In this scenario, evidence suggests that zones [SEZ] can play a vital role in attracting investment and promoting exports thereby industrialization.
Experts opine that “SEZ’s can act as catalyst to industrial growth provided they are implemented effectively.
Effective implementation of a policy that aims at giving shock to the economy requires mobilization of public opinion. People often approach such an issue initially with strong, emotionally laden feelings and opinions. It must be shaped and formed so that important decisions are taken without creating instability in the society.
The government should take initiative so that the Singur and Nandigram like episodes do not occur. The government must slow down the process of giving approvals. This is important not only for social or political reasons but also due to economic realities.
Legal institutions related to land acquisition (including land acquisition modalities, compensation package and rehabilitation package) must be addressed.
In this manner, the objective of SEZ to be a boon for the development of the economy can be accomplished.”
CAclubindia
