Thursday, October 26, 2006

KIADB to acquire 1,200 acres for SEZ near Bangalore

Staff Reporter

Farmers protest against acquisition bid


The area is near the international airport at Devanahalli
State JD(U) president B. Somashekar says move is illegal

Bangalore: A large number of mostly Dalit and Other Backward Class
farmers with smallholdings of one or two acres in Bandikodigepalya,
Shingahalli, Arebinnamangala and Gollahalli, near the Bangalore
International Airport coming up at Devanahalli, may lose their land to
the Karnataka Industrial Areas Development Board (KIADB), which is
acquiring land for a special economic zone (SEZ). The 1,209 acres of
land targeted for acquisition is worth thousands of crores of rupees and
the farmers have resolved to protest against the acquisition.

The farmers, who gathered at Shingahalli under the banner of the local
Janata Dal (United) unit on Tuesday, expressed their anger at the notice
issued to acquire land in Arebinnamangala (483 acres), Shingahalli (355
acres), B.K. Palya (294 acres) and Gollahalli (75 acres) for the SEZ and
raised slogans demanding that the acquisition proceedings be withdrawn.

Addressing the farmers, the State JD(U) president B. Somashekar alleged
that the State Government was allowing the KIADB to acquire agricultural
land sanctioned to Dalits and others under the Karnataka Land Reforms
Act by the J.H. Patel government in which he was the Revenue Minister.
Acquiring such land and handing it over to information technology
biotechnology and other companies was in violation of both Union and
State Government rules. Moreover, the mandatory period of 15 years
before Dalits could sell land given to them by the Government was not
over, he said.

Low price

He said the Revenue Department had fixed the price of the land in
question at Rs. 200 a sq. ft. Therefore, one acre of agricultural land
was worth Rs. 88 lakh, but the KIADB was giving farmers a paltry sum of
Rs. 9.40 lakh an acre. How could the Government allow such a fraud, he
asked. Apart from this, the exchequer would lose around Rs. 17 lakh an
acre in terms of exemption from stamp duty, commercial tax, BDA charges,
electricity and conversion costs, he said.

The JD(U) leader alleged that entrepreneurs to whom the land would be
allotted in the SEZ would later make real-estate deals by re-allotting a
part of the land to others at exorbitant rates.

Already 25,000 acres of land had been acquired around Bangalore, and
another 25,000 acres was likely to be acquired for industrial townships,
which his party would not permit, he said. Farmers should be allowed to
enter into joint ventures with developers of SEZs instead of giving up
their land, he said.

Venkatesh, former chairman of the Shingahalli gram panchayat, D.S. Gowda
of B.K. Palya, B. Anjanappa of Kolipura, Narasimhaiah of Arebinnamangala
and R.N. Venkata Swamy of the Shingahalli Farmers Struggle Committee
alleged that some leaders of the Bharatiya Janata Party, the Congress
and the Janata Dal (S), including a minister and an MLA, had managed to
prevent land belonging to them and their relatives from being acquired.

Stir threatened

Mr. Somashekar alleged that the KIADB and the Bangalore Development
Authority had become real-estate agents. He urged the Government not to
acquire agricultural land, particularly in a 100-km radius around
Bangalore. He warned that party workers and farmers would court arrest
if the Government went ahead with the acquisition proceedings.

Rights forum wants SEZ Act scrapped

Our Bureau

Visakhapatnam , Oct. 23

The Human Rights Forum has urged the Union Government to scrap the
Special Economic Zone Act, 2005, as "it subverts the spirit of the
Constitution by depriving the rural artisans, farmers and fishermen of
their livelihood and creates real estate enclaves masquerading as
industrial zones."

Mr K. Balagopal, General Secretary of the Forum, and Mr V.S. Krishna,
Secretary, made the plea at a press conference here on Sunday evening
after touring the villages in Rambilli and Atchyuthapuram mandals in
Visakhapatnam district where 9,200 acres of land was acquired for the
first phase of a special economic zone.

The State Government is proposing to acquire 10,000 acres more in the
face of stiff resistance from farmers in the two mandals for the second
phase of the SEZ. Mr Balagopal said the Government said could allot
lands to industries in areas not particularly suited for agriculture.

But even in those areas only the bare minimum should be given. "If the
industrialist, or entrepreneur, wants more than what is allotted, he
should buy it from farmers or others at market rates, if they are
willing to part with those lands. It is not the job of the Government to
acquire huge tracts of land — 10,000 or 20,000 acres — and hand them
over to the industrialists on a platter. In the process, farmers, rural
artisans and fishermen are being pauperised. We, therefore, want the SEZ
Act scrapped," he said.

`Meaningless' acquisition

He said the whole debate over SEZs, and the opinion expressed by some
people that only barren or single-crop lands should be acquired, was
meaningless. "You cannot find 10,000 acres or 20,000 acres, of barren
land except in the Thar desert. There is enormous pressure on land and
it is silly to suggest that such huge tracts of land are lying
unutilised," he said.

Mr Krishna said the lands acquired for the first phase in the two
mandals could by no stretch of imagination be called barren or
single-crop lands. "All sorts of crops are being grown there and small
and marginal farmers are eking out their livelihood without any support
from the Government. In fact, it should be declared a special
agricultural zone and they should be encouraged. It is a crime to snatch
lands from them and hand them over to industrialists," he alleged.

He also took exception to the exemptions being given to the
entrepreneurs with regard to labour laws, environmental standards, and
tax laws. "What the Government hopes to achieve by giving so many
concessions is a mystery. Meanwhile, hundreds of farmers, fishermen and
artisans are being displaced for illusory gains," he added.

To seek SEZ allocations in Coimbatore, Tiruchi, Madurai

Khivraj Tech Park plans IT SEZ near Chennai
Abhinav Ramnarayan

Chennai , Oct. 23

Khivraj Tech Park Pvt Ltd, the real estate arm of Khivraj Motors, is
planning a 25-acre IT products specific SEZ (special economic zone) in
Navalur, Chennai, according to Mr Ajit Chordia, Chief Executive Officer,
Khivraj Tech Park.

This would be the company's second venture in this area, the first one
being Olympia Tech Park in Guindy, promoted jointly with Eveready
Industries India.

Some of the existing clients at Olympia have evinced interest in taking
up space at the new technology park as a part of their expansion plans,
he said, including one major telecom outsourcing company.

Some of the major clients at Olympia include AIG (American International
Group), an insurance products and services provider, and Mindtree, a
Bangalore-based software services provider.

Mr Chordia said that the company is hoping for SEZ status because of the
benefits to IT companies. "Since there is no certainty that STPI
(software technology parks of India) benefits would be extended beyond
2009, bigger companies such as Wipro and IBM are looking at SEZs," he said.

From the developers' perspective, the capital cost comes down by about
10 per cent in an SEZ, which is not a major benefit, he said. Developers
are entitled to benefits under the industrial park scheme, which is
still valid for the next two years, and would allow the company to enjoy
ten years of tax-free operations.

However, apart from the cost, the SEZ also allows for an assured title
deed, and reduces the possibility of land disputes.

The company would also set up a school or a hospital for the benefit of
the locals around the SEZ region.

Khivraj is also planning to expand to tier two cities in anticipation of
growth in those areas. It would send in applications for SEZ allocations
in Coimbatore, Tiruchi and Madurai.

Mr Chordia said that Coimbatore is emerging as a suitable alternative to
Chennai, whereas Tiruchi is a city for the future. "We believe Tiruchi
stands a good chance of becoming the next best destination after
Coimbatore, because of the number of good engineering and arts
colleges," he said, pointing out that a company such as ABN Amro has
been recruiting B.Com graduates irrespective of their background. This
could mean that the next logical step is to set up shop in those cities.

Also, Coimbatore is fast becoming as expensive as Chennai as far as real
estate costs go. Rental costs in Tiruchi would still give the company a
cost saving of about 40 per cent, he said.

Khivraj Tech Park plans IT SEZ near Chennai

Abhinav Ramnarayan

To seek SEZ allocations in Coimbatore, Tiruchi, Madurai

Chennai , Oct. 23

Khivraj Tech Park Pvt Ltd, the real estate arm of Khivraj Motors, is
planning a 25-acre IT products specific SEZ (special economic zone) in
Navalur, Chennai, according to Mr Ajit Chordia, Chief Executive Officer,
Khivraj Tech Park.

This would be the company's second venture in this area, the first one
being Olympia Tech Park in Guindy, promoted jointly with Eveready
Industries India.

Some of the existing clients at Olympia have evinced interest in taking
up space at the new technology park as a part of their expansion plans,
he said, including one major telecom outsourcing company.

Some of the major clients at Olympia include AIG (American International
Group), an insurance products and services provider, and Mindtree, a
Bangalore-based software services provider.

Mr Chordia said that the company is hoping for SEZ status because of the
benefits to IT companies. "Since there is no certainty that STPI
(software technology parks of India) benefits would be extended beyond
2009, bigger companies such as Wipro and IBM are looking at SEZs," he said.

From the developers' perspective, the capital cost comes down by about
10 per cent in an SEZ, which is not a major benefit, he said. Developers
are entitled to benefits under the industrial park scheme, which is
still valid for the next two years, and would allow the company to enjoy
ten years of tax-free operations.

However, apart from the cost, the SEZ also allows for an assured title
deed, and reduces the possibility of land disputes.

The company would also set up a school or a hospital for the benefit of
the locals around the SEZ region.

Khivraj is also planning to expand to tier two cities in anticipation of
growth in those areas. It would send in applications for SEZ allocations
in Coimbatore, Tiruchi and Madurai.

Mr Chordia said that Coimbatore is emerging as a suitable alternative to
Chennai, whereas Tiruchi is a city for the future. "We believe Tiruchi
stands a good chance of becoming the next best destination after
Coimbatore, because of the number of good engineering and arts
colleges," he said, pointing out that a company such as ABN Amro has
been recruiting B.Com graduates irrespective of their background. This
could mean that the next logical step is to set up shop in those cities.

Also, Coimbatore is fast becoming as expensive as Chennai as far as real
estate costs go. Rental costs in Tiruchi would still give the company a
cost saving of about 40 per cent, he said.

Government urged to reconsider SEZ proposal

Special Correspondent

There will be opposition if tax sops are extended to SEZs: CPI

Photo: S.R. Raghunathan

EXCHANGING IDEAS: Pattali Makkal Katchi founder S. Ramadoss, CPI(M)
Central Committee member T.K. Rengarajan, People's Union for Civil
Liberties president V. Suresh, Editor-in-Chief of The Hindu N. Ram, and
TNCC president M. Krishnasswamy, at a seminar on special economic zones
in Chennai on Wednesday.

CHENNAI: The State Government should pay greater attention to revive
"sick" small scale and other industrial units, including those in
industrial complexes established by the State Industries Promotion
Corporation of Tamil Nadu (SIPCOT), than form special economic zones
(SEZs), S. Ramadoss, founder of the Pattali Makkal Katchi, said here on

Addressing a seminar organised by the party's green wing, Pasumai
Thayagam, on the creation of SEZs, Mr. Ramadoss cited the example of the
SIPCOT complex in Hosur, where many units remained closed. People in
Krishnagiri district (under which the Hosur complex falls) moved to
Bangalore and other towns in Karnataka to sustain themselves. He
recalled that several concessions were once offered to units in
industrial complexes.

However, Mr. Ramadoss clarified that neither he nor his party was
against employment generation.

Referring to the State Government's scheme of extending the unemployment
allowance, Dr. Ramadoss said: "Doles can be given for a year or two. But
what should be done is that jobs should necessarily be given to all
those who are unemployed."

He regretted that the erstwhile North Arcot and Chengalpattu districts,
once known as major centres of rice production, had now become
"real-estate districts."

D. Pandian, State secretary of the Communist Party of India, debunked
the idea of SEZs. The objectives behind the Land Acquisition Act were
not fulfilled when land was acquired for the proposed SEZs. There would
be opposition to the establishment of SEZs if they were exempted from
tax laws, he warned.

As done in China, trade unions should be allowed to function in SEZs and
50 per cent of profit should be used for domestic investment, he suggested.

Justice for cultivators

N. Ram, Editor-in-Chief of The Hindu , called upon the Central
Government to be transparent and forthcoming in responding to concerns
and questions raised about the SEZs. He exhorted "every political party
and all thinking people" to ponder whether the scheme of SEZs was worth
the cost and whether it was worth what was being promised. He urged the
Government to answer the issue of justice to cultivators, agricultural
labourers, peasants, industrial workers and the jobless.

T.K. Rengarajan, Member of the Central Committee of the CPI (Marxist),
explained safeguards being followed by the CPI (M)-led Government in
West Bengal in implementing the SEZ concept. Only backward regions of
West Bengal had been chosen to establish the SEZs.

Farmers' interests

M. Krishnasswamy, Tamil Nadu Congress Committee president, said his
party would always safeguard the interests of farmers.

Expressing concern over the low nutrition levels in the State, V.
Suresh, president of the People's Union for Civil Liberties (Tamil Nadu
and Pondicherry), said the cropping pattern had changed in the last
decade with cereal production going down by 50 per cent.

M. Ramadass, MP from Pondicherry, wanted the Central Government to
clarify whether the proposed law on reservation in the private sector
would be applicable to SEZs as well.

G.K. Mani, PMK president, and Sowmya Anbumani, president of Pasumai
Thayagam, also spoke.

SEZ concept a conspiracy against poor: KPRS leader

Special Correspondent

`There is scope for misuse of land'


KPRS to launch a movement against SEZs
Like-minded organisations to seek amendment to SEZ Act

MANGALORE: General secretary of the Karnataka Prantha Raitha Sangha
(KPRS) G.C. Baiya Reddy said on Monday that the Special Economic Zone
(SEZ) concept was a conspiracy against the poor.

He told The Hindu here that it was not known how many acres of farmland
would be acquired for the proposed 200 SEZs in the country of which 21
would be in the State. Karnataka also followed the national trend of
losing 50 per cent of its cultivable land for many reasons - with the
main being construction purpose.


Mr. Reddy said there were arguments for and against SEZs. There was
scope for misuse of land under the SEZ Act by the licence-holder. The
land could never be re-claimed by the Government in case of misuse. To
insulate the SEZs against the Government intervention, the SEZ Act
stated that the licence-holder or promoter could utilise 25 per cent of
the land assigned to each SEZ and the rest could be used for any purpose
that the investor or the promoter deemed it fit.

Mr. Reddy said the Government had failed to see that SEZ was also a
livelihood issue for farmers. "You take away land from a farmer, he
becomes not just unemployed but also unemployable." The KPRS would
launch a State-wide awareness movement against SEZs. It would join hands
with likeminded organisations elsewhere in the country to protest
against handing over of cultivable land to SEZs.

He said some organisations in Uttar Pradesh, Maharashtra, Andhra
Pradesh, Bihar, Assam, Kerala, Tamil Nadu, and Madhya Pradesh were
concerned about farmers and the declining food security owing to the
loss of cultivable land.


Though Union Commerce Minister Kamal Nath had indicated that cultivable
land could not be "alienated" for SEZ purposes, it was still an oral
assurance and was not enough for stopping the State governments from
giving away cultivable land to SEZs. The like-minded organisations would
give a call to amend the SEZ Act, he said.

TDP for white paper on SEZs

Special Correspondent

Governments accused of acting as "real estate brokers"

HYDERABAD: Telugu Desam party has demanded a white paper on the
"indiscriminate" sanction of Special Economic Zones.

Addressing a press conference, TDP leaders R. Chandrasekhara Reddy and
S. Venugopala Chary accused the Centre and the State Governments of
acting as "real estate brokers" in pushing through the SEZs. Real estate
interests weighed heavily more than anything else in clearing these
SEZs, as land was being acquired at low rates from farmers and passed on
to groups close to ruling parties.

They said both the Governments seem to be least concerned about the
impact it would have on agriculture, especially in the context of India
importing wheat from other countries. "If they have any concern left for
agriculture, they would review the policy," they added. They appealed to
Prime Minister Manmohan Singh who is visiting the State on October 26,
to take a re-look at these sanctions, which they said were in violation
of the norms evolved at the meeting of the Congress Chief Ministers at
Nainital recently.

Big spending on infrastructure for SEZs deplored

Monday October 23 2006 13:01 IST
VISAKHAPATNAM: Human Rights Forum general secretary K Balagopal deplored
the Special Economic Zone policy of both the state and Centre for
spending huge sums on providing infrastructure facilities in the lands
allotted for SEZs even before the companies start coming.

Speaking to reporters here on Sunday, Balagopal said the government was
merely hoping that a large number of companies would set up units while
only a handful of companies have commenced operations in SEZs in the
country till now.

He asserted that there was no need to allot large tracts of land on the
presumption that companies would make beelines.

Balagopal said an HRF team comprising president B Ramulu, Vizag chapter
convener V S Krishna and himself had toured the villages facing
displacement due to the SEZ in Achutapuram and Rambilli mandals and
found that the farmers were not happy with the compensation being paid
by the government.

The government was ready to pay around Rs 2.95 lakh for the lands owned
by them. This amount would not be sufficient to buy even 1/5th of an
acre anywhere in the city.

Social infrastructure activities in SEZs yet to get govt nod ,

Posted online: Thursday, October 26, 2006 at 0000 hours IST

NEW DELHI, OCT 25: Even a month after the Board of Approval (BoA) for
Special Economic Zones (SEZs) came out with a list of authorised
activities regarding construction of social infrastructure in the
non-processing area of SEZs, the government is yet to officially notify
the activities.
Commerce ministry sources said the finance ministry was still studying
the list to give a final go-ahead. Due to the delay in notification,
several developers have been complaining about a lack of clarity.

32 SEZs have so far been notified and the developers will now be coming
to the BoA for approval of infrastructure activities.

After the list was released on September 21, the BoA held three more
meetings to give approvals to SEZ proposals. Another BoA meeting is due
on October 27. More developers will be approaching the BoA for clearance
of these activities, since the BoA has also given formal approval to 212
SEZs and in-principle approval to another 152.

• Finance ministry still studying the list of authorised activities in
the non-processing area of SEZs
• Developers will soon be approaching the BoA for clearance of
activities in non-processing areas
• SEZ land is divided into processing area (35% of the total area) and
the rest is non-processing area

CB Richard Ellis’ South Asia MD Anshuman Magazine said: “Several
developers are still confused about the policy. This is causing delay in
execution of projects.”

Unitech Ltd managing director Sanjay Chandra said: “There is
uncertainty. We have to plan fast for big investments and these delays
and changes in policies are causing difficulties”.

The finance ministry, however, is not under any timeframe to give
approval to the list. As per the SEZ Act , which says such a list has to
be authorised by the Centre, the notification is a technical
requirement. Once the list is notified, the BoA will use it for
“authorising operations which only would qualify for exemptions,
concessions and drawback”.

Some of the authorised activites eligible for the BoA nod for IT/ITES
SEZs and sector specific and multi-product SEZs are: roads, water
supply, effluent treatment plant, electrical substations, offices,
parking, swimming pool, recreational facilities, medical centre, bus
bays and Wi-Fi services.

But for sector-specific SEZs, in addition to the above, construction of
rail head is also an authorised activity. In multi-product SEZs,
building a port, airport/air cargo complex, banks and golf course are
also considered authorized activities. “It is appropriate that the list
is notified as early as possible as it will help the BoA in giving
clearance to these activities and also the developers in going ahead
with their projects faster,” an commerce ministry official said.

PMK warns the state against SEZs

Thursday October 26 2006 13:24 IST
CHENNAI: The Pattali Makkal Katchi (PMK), a key DMK ally, has warned the
State government against allowing SEZs that could deprive the
agricultural labourers of their livelihood.

The party was reacting to the reported plans of the DMK government to
set up quite a few Special Economic Zones (SEZs) in the State.

“Tamil Nadu cannot afford SEZs at the cost of farming,” cautioned PMK
founder Dr S Ramadoss at a seminar on ‘Impact of SEZs’.

In his concluding remarks at the seminar, organised by Pasumai Thayagam
here on Wednesday, he suggested to the government to set up SEZs in
SIPCOT industrial estates that have turned sick and not in agricultural

The satellite town near Chennai could have affected the livelihood in
144 villages, he opined and thanked the Chief Minister for acceding to
his demand and dropping the plan immediately.

Referring to the cases related to SIPCOT industrial complexes, a cluster
of sick units, Ramadoss criticised the owners for enjoying all tax
benefits for five years and declaring the units as “sick” when they had
to pay taxes.

The Government could take up such industrial complexes and form SEZs
there, he strongly suggested; the Small Scale Industries always catered
to the local populace, he added.

“Setting up SEZs in the name of foreign exchange is not at all
acceptable,” he stated categorically.

He also alleged that the much-publicised MNC shops near Sriperumpudhur
have not provided employment opportunities to the local people as expected.

Only a few were employed, that too at a lower grade, he added.

The PMK would conduct awareness programmes to sensitise the people and
the politicians on the SEZ issue, he said.

TNCC president M Krishnassamy assured that his party would always
support poor peasants and safeguard their interests.

D Pandian, state secretary, CPI, said SEZs could be permitted without
any special concessions provided the local community got adequate job

He was against the idea of letting the SEZs to function as ‘islands’
where no law of the land would be implemented.

T K Rangarajan, central committee member, CPM, wanted like-minded
parties and organisations to join hands on issues affecting the people
and work together for a social cause.

N Ram, Editor-in-Chief, The Hindu, warned that the policy would fizzle
out if the government did not find answers to the important questions
raised by various organisations.

PMK president G K Mani presided. Sowmya Anbumani, chairperson, Pasumai
Thayagam, welcomed. Chengalpattu MP A K Moorthy proposed vote of thanks.

Thursday, October 19, 2006

Centre, State urged to drop move on SEZ

DH News Service Gulbarga:

The State Vice-President of JD(U) Basvaraj Ingin, who is also the
Working President of Tur dal Growers Association, has appealed to both
the Centre as well as the State government to drop the move to set up
Special Economic Zones (SEZs) in various parts of the country as
precious agriculture land is being acquired for the purpose.

Speaking to reporters here on Tuesday, Mr Ingin said already the Centre
has accorded approval for 200 SEZs and applications for 600 more SEZs
are pending before it. “It is estimated that if approval is accorded for
all these SEZs, 15 crore people would be deprived of foodgrains due to
shortage ”, he added.

Mr Ingin regretted that the SEZs have been converted into real estate
centres. “We are not against industrialisation or any employment
generation activity. But why the precious agriculture land is being used
for the purpose? Moreover only 25 per cent of the land acquired would be
used for SEZs; the remaining is used for setting up quarters, swimming
pool etc. In the name of SEZ, real estate business is going on”, he

Mr Ingin also saw a conspiracy behind the move to acquire agriculture
land in the name of SEZs. He ridiculed the statement that one of the
family members of the farmers from whom land is acquired would be given
employment. “They want to convert us into refugees by depriving us of
our land. Instead of acquiring our land permanently for a pittance, they
should take it on lease from farmers and the profit earned should be
distributed to them”, he demanded.

No need for SEZs in reforms era: Bhagwati



The government and policy agents have tipped special economic zones
(SEZs) to be an important driver of growth and exports for the economy.
But Jagdish Bhagwati, professor of economics and law at Columbia
University, and a poster boy for globalisation and free trade, feels

“Give the current progress in reforms undertaken in earnest since 1991,
there is no need to establish SEZs,” said Mr Bhagwati. “It made sense to
have SEZs in the pre-reform era when policies of the country as a whole
could not be tweaked. That period warranted the setting aside of certain
exclusive economic zones with low trade barriers and other favourable
policies to enhance growth.”

The number of SEZs approved by the board of approval, commerce ministry,
shot up to 181 in the second-half of the current fiscal from 150 in
FY06. Units in an SEZ have to be net foreign exchange earners but are
not to be subjected to any pre-determined value-addition or minimum
export performance requirements. Big players like Reliance, Mahindras
and DLF are betting heavily on SEZs.

Liberalistation in agriculture is another area on which Mr Bhagwati has
strong views. “The presence of those with socialist leanings in the
incumbent coalition government precludes the possibility of
liberalisation of agriculture, which is a pity indeed.

In China, one of the things that pushed agriculture was the
decollectivisation, which makes agriculture more productive. We need to
examine that.” He drew a parallel with the industrial sector,
performance of which improved dramatically post-liberalisation.In
respect of global trade talks under the auspices of WTO, the professor
said there were four sets of countries that have to make concessions -
India, Brazil, EU and the US. While India and Brazil are expected to
make concessions in manufacturing and services, EU and US are being
urged to make concessions in the area of agriculture for WTO talks to
make headway. “However, the Congress Party will never make concessions
on the agriculture front as they believe that would impact 60% of
India’s population.

The US has to accept the fact that India was not going to move on
agriculture in any significant way,” he said, adding that “they would
have to trim down their ambitions and make concessions.”Mr Bhagwati is
optimistic in his outlook of the Indian economy, especially given the
acceleration witnessed over the past three years. “What you have to
worry about is whether this is a flash in the pan, reflecting excellent
world economic conditions or has something really taken root. The growth
being seen is also helping in reducing poverty.”

He has warned that the danger point at this juncture is that revenues
should not be wasted away and be used to build schools and provide
healthcare to the poor.

Mr Bhagwati has been the economic policy advisor to Arthur Dunkel,
director general of GATT (1991-93), special advisor to the UN on
globalisation, and external advisor to the WTO.

States must certify SEZs are not on farm land: Nath

PTI | New Delhi

Putting all uncertainties to rest over the farmers land being snatched
away for setting up special economic zones the Commerce Ministry has
decided that the land will have to be certified by the State Governments.

State governments will have to certify that Special Economic Zones are
not being set up on agricultural land, Commerce Minister Kamal Nath said.

Addressing the concerns of farmers at the Agriculture Summit, the
Commerce Minister said he has already written to all Chief Ministers to
ensure that prime agricultural land was not acquired for setting up SEZs.

"States will have to give certificate that SEZs are not on
well-irrigated farm land," he said.

Nath argued that the concerns raised over the past few weeks regarding
the acquisition of farm land was not limited to SEZs only.
"The question is not of SEZs, but of industrialisation. Industries
should come up on wasteland and not on good farm land so that it does
not affect our agriculture," he said.

Nath also said that Indian farmers should adopt modern technology to
increase productivity and tap the export market.The minister reiterated
that developed countries such as the US must reduce the huge subsidies
to their farmers so as to remove the distortions in world agriculture
trade. "Agriculture for us is not commerce, but livelihood. There will
be no compromise on food security," the Minister said.

Perambalur SEZ: Tidco invites bids

Our Bureau

Chennai , Oct. 18

Tamil Nadu Industrial Development Corporation Ltd (Tidco) has invited
bids to identify a private partner to promote a special economic zone in
Perambalur district.

It said that the Perambalur SEZ, approved in principle by the Commerce
Ministry, would be a multi-product one for industries in engineering,
auto components, textile and garments, leather products, pharmaceuticals
and food processing.

Land acquisition for the SEZ covering over 1,225 hectares is on and it
will be on the National Highway 45 about 20 km from Perambalur town. The
Chennai airport would be about 220 km, Tiruchi 75 km and the Cuddalore
port 100 km from the SEZ.

The private promoter will be the principal developer and majority
stakeholder in a special purpose company to implement the project. Tidco
will shortlist at the most six bidders or consortia and invite them to
submit proposals for developing the SEZ to select the final bidder.

To qualify for the bid which closes on November 8, the bidder must have
a net worth of at least Rs 500 crore as of December 2005, must have
executed a project of Rs 200 crore in infrastructure construction,
industrial park or SEZ or invested Rs 100 crore or more in the project.

ONGC seeks sops for Mangalore SEZ

Suggests modification in SEZ rules for the same purpose

Posted online: Thursday, October 19, 2006 at 0213 hours IST

MUMBAI, OCT 18: Oil & Natural Gas Corporation (ONGC) has sought slew of
sops for the upcoming special economic zone (SEZ) with an investment of
over Rs 45,000-crore at Mangalore, Karnataka. These concessions are
largely relating to sharing infrastructure for both domestic tariff area
(DTA) and SEZ, correlating import with corresponding export, execution
of bonds/undertakings of exports, central sales tax (CST) exemption and
input duty exemption to DTA supplier.
ONGC sources told FE, “ONGC and Mangalore Refinery and Petrochemicals
Ltd (MRPL) have submitted their suggestions to the Centre, the Karnataka
government and other agencies. We await responses from them.”

ONGC has argued that as per SEZ rules CST exemption is available against
submission of form I. ONGC wants form I be self generated by the SEZ
unit instead of collecting the form from the concerned sales tax division.

As per SEZ rules, DTA exporter is eligible for duty draw back on inputs,
which is a reimbursement. ONGC has recommended that instead of duty
drawback, the DTA exporter should be given exemption of duty.

However, some of the government departments opined that this was not
advisable as, input duty exemption could be vulnerable to misuse. On
execution of bonds/undertaking of exports through form-H, ONGC has
requested that provision relating to execution of bond may be dispensed

On correlating import with corresponding export, ONGC drove home point
that as per the SEZ rules, correlation is to be done and accounts for
correlation is to be maintained.

According to ONGC, inputs would be received from DTA and valuation
should be net of return streams that are given by SEZ to DTA.

ONGC sought the petroleum ministry's intervention if the issue is not
resolved at the level of Karnataka government and its agencies. ONGC
said there was no provision in SEZ rules for sharing of infrastructure
between SEZ and DTA. “As MRPL is already having infrastructure like
tankages and pipelines, ONGC proposed that the use of existing
infrastructure be considered on the basis of mixed bonding, as is
prevalent at present.”

Wednesday, October 18, 2006

SEZ for renewable energy devices in Tamil Nadu



CHENNAI: It will be another feather in the cap for Tamil Nadu if it
succeeds in its efforts to leverage on its numero uno position in the
generation of power from renewable energy sources.

India’s first-of-its kind special economic zone (SEZ) for manufacturing
and testing of non-conventional energy equipment is all set to come up
near Chennai. The project is expected to attract an investment of Rs
3,000 to Rs 4,000 crore over the next four years and will be spread over
1,000 acres.

“We hope to sign a memorandum of understanding by the month-end for
establishing the country’s first exclusive SEZ to manufacture
non-conventional energy equipment,” Tamil Nadu Energy Development Agency
(TEDA) chairman and managing director A Elangovan told ET here on Tuesday.

The state already has the distinction of being a leader in wind energy.
It’s installed capacity from renewable source, including hydro-power, as
on March 31, 2006, stood at 3,201 MW, accounting for 40% of the total
installed capacity in the country. This accounted for 22% of the TNEB’s
total grid capacity much above the all-India average of 5.5%.

Also, the boiler town, Trichy is emerging as a capital for the
manufacture of power equipment and fabrication works. Banking on these
strengths, TEDA has taken an initiative to act a nodal agency in
promoting the project.

The SEZ is expected to see the participation of as many as 50
stakeholders, mostly from overseas. The US will be the dominant player,
parking around Rs 900 crore in the first phase in the SEZ.

The SEZ will house industrial R&D units, laboratories such as CPRI,
testing units, educational and vocational training centres, besides an
area for vendors, he added.

Mr Elangovan said several universities will also be linked in the SEZ
project for technical tie-ups and players from Germany and West Bengal
will be present in the SEZ.

“The stakeholder from West Bengal produces energy transforming rice husk
into solar photovoltaic cells,” he added.
“With distributive energy set to play a major role in the future, we are
looking at matching local load requirements with locally available
energy resources,” he noted.

Apart from companies abroad, the project has also evinced interest from
state governments that are power-deficient. With Tamil Nadu being
surplus in power, this SEZ will provide a comprehensive infrastructure
for power at affordable costs, he added.

B'lore knowledge SEZ to raise $25 mn



BANGALORE: The 1,000-acre knowledge SEZ near Bangalore, Gandhi City for
Advanced R&D, is in early talks with global infrastructure funds like
the Singapore-based Jurong and Macquarie to raise $25 million by
divesting 5 to 10% stake.

Sources said the project was carrying a valuation of $500 million with
Avendus holding the mandate for raising funds. The project floated by a
group of technocrats led by Ivega founder Giri Devanur is expected to
spend $150 million in the first phase over the next three years.

The promoters are limiting the equity fund raising to $25 million as
they are likely to go in for debt financing of $100 million, and would
bring the remaining part of the cash for the first phase as seed capital
on their own or through associates.

“The idea is not to offload equity at the early stage, and wait for the
project to stabilize,” sources said.
However, sources declined to divulge names of the funds with whom
discussions were on. “‘We are talking to most of the infrastructure
funds from overseas and these are in early stage,” they added.

The project is expected to close the equity deal only after the State
clears the decks for land acquisition at Ramnagaram, which is about an
hour’s drive from Bangalore.

While Gandhi City has received the Centre’s clearance, the state
government deferred the decision to grant it regular clearance for want
of certain details. According to sources, the project will come up for
clearance at the next meeting slated for after a month.

Gandhi City is seen as a project that seeks to leverage Karnataka’s
quality manpower to emerge as a R&D hub for global players. The R&D SEZ
proposes to rope in leading pharmaceutical, automotive, aviation and
technology giants to put up their research and development units.

An incubator is also likely to be provided for scientists who lack
financial backing or infrastructure for research in their specific
areas. While Karnataka is witnessing a host of IT/ITeS projects, this is
the first such project to seek clearance under the SEZ scheme.

Plan to set up SEZ in Bidar

Special Correspondent

GULBARGA: Major and Medium Industries Minister Katta Subramanya Naidu on
Tuesday said the Government is planning to announce a Special Economic
Zone (SEZ) in Bidar, with the help of a consortium of private investors.


At an interactive session with industrialists and members of the
Hyderabad Karnataka Chamber of Commerce and Industry here, Mr. Naidu
said the Government would shortly consider the demand for a Special
Economic Zone in Gulbarga district.

The Minister also called upon entrepreneurs of the district to take the
full advantage of Government schemes and set up their industrial units.

SEZs: Bumpy road to economic prosperity?

Vipin Agarwal

Certainly, SEZs are not the only route to achieving superlative economic
growth. There are many risk factors relating to the business model and
their success in the Indian context.

When China wanted to experiment with economic liberalisation, it decided
to set up four special economic zones (SEZs), referred to as
"laboratories" for testing out the economic model, in 1979. China reaped
large benefits from the laboratories and attracted large chunks of
foreign direct investment (FDI).

India, despite having been much more advanced and liberal in its
economic outlook vis-à-vis China, is only now adopting the SEZ model.
The process of liberalisation in India began in 1991, and 15 years later
we are trying to emulate the experiments of growth on a larger scale.
Thankfully, the initiative to increase public expenditure for
infrastructural development resulted in turning the cycle of economy,
proving the merit of Keynesian model.

Experience with SEZs

Of the four laboratories set up in China, Shenzhen was successful. Korea
achieved success from Masan between 1974 and 1979, though the growth was
followed by a flattening curve.

Historically, SEZs have resulted in spurts of economic growth, which
then flatten out to normal levels with time, save some exceptions like
Shenzhen. In fact, experiments by Russia and North Korea have not
resulted in anything exciting in terms of propelling economic growth.

The Indian experience with the SEZs has fallen short of expectations.
The key to success lies in creating at least one Shenzhen and gaining
more insights from it .

Shenzhen's development story has spanned over two decades; today it is a
modern city of four million people (from a population base of 20,000)
with per capita income of $4000. The process of development passed
through periods of modest growth, and the continuous focus on revising
strategies to achieve the targets is one of the key reasons for its

The local administrative authority of Shenzhen promoted industries with
advanced technology and attracted the attention of well-known global
companies. Their constant focus on improving higher value addition
through investments into the region resulted in establishing sizeable
and significant capacities. For instance, today Shenzhen produces more
than 10 per cent of world production for certain category of products.
The local authorities continuously offered incentives, provided
facilities and improved the infrastructure to attract investors.

India has announced over 150 SEZs; the number may go up to 300. The
Finance Ministry has put the potential loss to revenue in excess of Rs
1,00,000 crore, whereas the Commerce Ministry projects the possibility
of increasing GDP to double digits through the SEZ route.

If one were to draw a comparison to the Modigliani and Miller model
illustrating the dividend neutrality to valuation of an organisation,
then the notional computations of non-realisation of revenue cash flows
from the trade/ventures of SEZ is more appropriate for academic
discussions than any real loss of cash flow to the country's fiscal

On the contrary, one Shenzhen can bring India FDI in excess of $20
billion with per capita income touching $5,000. This means India can
become debt-free, with surpluses on its balance of payments.

The risks

However, there are several risk factors associated with the proposed SEZ
initiative. They are: Number of SEZs announced is very high compared to
the international experience, probable ratio of success and the size of
investments to be committed in each SEZ.

In many cases, the credentials of the developers are not so good as to
enable economic financial closure, nor do they show pronounced
organisational capabilities of leading high-impact business entities.

The euphoria of SEZs has created disorder in the real-estate market and
this has been attracting speculative investor interest. This is where
the RBI has expressed serious concern.

The period of gestation in the development of infrastructure, attracting
industry and investments into the SEZ would take a minimum of five
years. This would expose the SEZs to cost and time overruns and
continuous revisions in the economics of the business plan.

SEZs are becoming vehicles for domestic industries to shift their export
segments and this could nullify the advantage of incremental growth in
country's exports.

The economics of SEZs may not hold great comparative advantages for an
investor vis-a-vis the domestic tariff area with due incentives for
exports. In Shenzhen, too, the land costs surged after a point of time,
forcing a number of industries to re-examine their strategies for
shifting base.

Key aspects

From the uniqueness of business advantage point of view, accessibility
to inexpensive human resources would be a key advantage for a global
player wanting to shift capacities to an Indian SEZ. However, in terms
of technology, except in IT, SEZs would have to depend on imports, like
Shenzhen, which, as a strategy, ensured high-value-added technologies
space in the SEZ. The regulatory guidelines have incidentally not
addressed any such aspect and this may lead to SEZs becoming logistics
hubs rather than real value-creators resulting in a incrementally higher
gross domestic product.

The role of local authorities managing the SEZ becomes one of the key
aspects for attaining success.

As per the SEZ Act, a public limited company would be floated to act as
the SEZ Authority for specified areas, with the Development Commissioner
as one of the members of the board. Although the constitution of SEZ
Authorities would be identical, the level of efficient functioning of
these bodies would become a crucial benchmark in the success or failure
of the SEZ.

Shenzhen has become a model to a number of economists and politicians.
The policy of SEZs will earn dividends if we are successful in creating
at least one Shenzhen. However, this requires focus and concentration of
energies. Certainly, SEZ is not the only route to achieving superlative
economic growth, as perceived by many sections of the society. There are
a number of risk factors associated with the business model and the
probable factors for success or failure of SEZs in India as well.

(The author is a Vice-President with Bharti Airtel. The views expressed
are personal.)

Tuesday, October 17, 2006

Multi-service SEZ coming to Gurgaon


NEW DELHI: After mutli-product SEZs, it is time to have multi-service
SEZs. Delhi-based real estate player Uppal Group has got the
government’s nod for setting up the country’s first multi-service SEZ at
Gurgaon with an outlay of over Rs 6,500-crore over a five-year period.

The 263-acre SEZ will house companies from sectors such as IT/ITeS,
biotech, robotics, warehouse, international trading, and R&D-related
services, Manish Uppal, managing director, Uppal Developers, told ET.

CPI for amendments in SEZ policy


KOLKATA: Taking a cue from the CPIM, the CPI on Tuesday asked the Centre
to amend its Special Economic Zone (SEZ) policy.

The CPIM all-India leadership has recently asked the Centre to amend the
SEZ policy by deleting some clauses that allegedly hurt the interest of
farmers and affect the country’s food security. Now it’s the CPI’s turn
to do as much.

“The Union government will suffer a staggering financial losses of Rs
1.75 lakh crore by offering benefits to industrialists who will be
involved in rolling out SEZs pan-India,” CPI central council member and
state party secretary Manju Kumar Majumder said on Tuesday.

Mr Majumder said the Centre had proposed to set up 300 SEZs in the
country and the Board of Approval (BoA) had already cleared 67 such SEZs
in various states.

“Several state governments will have to acquire about 1.34 lakh hectares
of land for construction of SEZs. We have no idea how much of the 1.34
lakh hectares is farmland or multi-crop land,” the CPI leader asserted.

“The Union government is trying to deprive farmers in the name of
setting up SEZs. The SEZ policy was meant to please industrialists at
the cost of the farmers interest. We believe the SEZ policy, if
implemented in its present form, will undermine the food security of our
country,” Mr Majumder said.

It is in this backdrop that CPI was urging the Centre to amend the SEZ
policy to secure the interests of farmers and maintain the country’s
food security. The CPI has also opposed the Centre’s decision to offer
tax incentives to industrialists involved in SEZ rollouts.

Asked whether his party would oppose the setting up of the eight SEZs in
West Bengal, Mr Majumder said: “We have no idea how many SEZs will come
up in this state. Neither the Left Front government nor the Centre has
told our our party about SEZs in West Bengal.”

Mr Majumdar said his party would decide on West Bengal SEZs once it had
specific information from the state government. Interestingly, Mr
Majumder’s CPI colleague and West Bengal minister for water resources
development, Nandagopal Bhattacharjee had told ET on Monday that the
party would not oppose the setting up of SEZs in West Bengal as they
believed the state government would not betray the farmers.

SEZs in AP set to create job boom

Omer Farooq | Hyderabad

Andhra Pradesh, which has secured the central Government's approval for
48 Special Economic Zones across various sectors of economy, hopes that
it would generate an employment boom in the industrial sector in the
State. The 48 SEZs approved so far include the highest number of 27 in
the Information Technology and ITES sector followed by six in Pharma and
four in multi products.

The list also includes one SEZ each in the sectors of semiconductor,
biotechnology, gems and jewelry, apparel, textile, footwear, paper and
service sector. According to official estimates all these SEZs are
likely to generate a whopping 4.7 lakh employment opportunities. The
IT/ITES related SEZs will have a minimum investment of Rs 250 crore and
the 27 SEZs in these sectors are likely to generate 2,70,000 jobs. These
SEZs will come up around Hyderabad and the neighboring districts to meet
the demand for the small and medium enterprises by providing quality and
affordable space. Similarly the gems and jewelry SEZs to come up in
Hyderabad will provide 50,000 jobs, the footwear and leather SEZs in
Nellore 30,000 jobs and apparel park in Visakhapatnam about 60,000 jobs.

People from lower middle class and weaker sections are likely to be the
major beneficiaries of the job boom in these sectors, the officials say.
The two multi product SEZs being developed for HPCL at Visakhapatnam and
ONGC at Kakinada are also expected to create 50,000 jobs when fully

Consultants make hay while sun shines on SEZs

Posted online: Tuesday, October 17, 2006 at 0000 hours IST

NEW DELHI, OCT 16: The special economic zone (SEZ) boom has forced major
consultancy firms to form a separate vertical to cater to SEZ
consultancy needs.
There was a mad rush from SEZ developers to such firms seeking advice on
getting approvals when there was a cap on the number of SEZs in the
country at 150.

But after the government lifted the cap, the firms are now providing
end-to-end solutions to SEZ developers.

From Ernst & Young to PWC and Feedback Ventures, several consultancy
firms are betting big time on the Rs 1 lakh crore investment expected to
go into SEZs by December 2007. Says Ernst and Young partner Ajit
Krishnan: “Many developers don’t have the organisational ability to
think big like Reliance. They also don’t have the competence to
micro-manage aspects like water, sewage and power.”

For consultancy firms, it is challenging to bring the right set of
expertise to such projects.

The major work is preparing the master-plan for SEZ projects by
including key aspects like cost-efficiency and value-creation. The firms
are also competing to woo the big names among the developers.

Besides, leading firms have been roped in by state governments to frame
fool-proof and non-controversial land policies. These firms also help
developers with the marketing pitch to lure big MNCs to set up shop in
SEZs, Krishnan says, adding that his firm has given advice to 81 SEZs
regarding obtaining approval and end-to-end consultancy to 15 SEZs.

PricewaterhouseCoopers Pvt Ltd executive director Vivek Mehra says: “We
have set up region-wise core groups as well as a national central core
group to solve all the possible problems of SEZ developers, including
the areas of finance, taxation, concept planning, designing of an SEZ
and future strategy. The developers have realized that the work does not
end with getting government clearance. The focus now is on
operationalising SEZs.”

“We have given advice to many SEZ developers including Nokia, DLF, Dewan
group and NIIT,” he said.

Monday, October 16, 2006

Zones Of Contention

The Union government is making a special effort to resolve internal
differences over modalities of establishing a slew of special economic
zones (SEZs).

It may be worth reflecting on why the subject has become so contentious
and how the controversy over the 'biggest land grab in modern Indian
history' could have been resolved relatively amicably, had there been
more foresight and political acumen.

The concept of a SEZ is hardly new; its earlier avatars were called free
trade zones or export processing zones. The idea of setting up an
insulated or a quarantined area, a country within a country, to promote
exports by providing superior infrastructural facilities and to attract
foreign investment by providing generous tax breaks, was first
implemented by Puerto Rico in 1947 and thereafter by Ireland in 1960.

Significantly, Asia's first FTZ came up in Kandla in 1965. China's
famous EPZs at Shenzen near Hong Kong and Pudong near Shanghai as well
as Jebel Ali in the UAE came up much later, during the 1980s.

After Kandla, although seven EPZs were established in different parts of
India, only a few were considered successful. A different version of the
current SEZ policy was announced in 2000 and a new law was passed by
Parliament last year. There was never really any major problem with the
broad contours of the policy.

The devil lay in the detail, in the fine print of the rules framed by
the ministry of commerce. The manner in which the rules were sought to
be implemented raised quite a few eyebrows.

As reports came in about how large corporate groups were being helped by
the local authorities in Haryana, Punjab and Maharashtra to acquire
fertile land at dirt-cheap prices (as low as one-tenth their market
prices), doubts were raised about whether provisions of land acquisition
laws were being abused for private greed. State governments were accused
of playing the role of real estate brokers.

Much of the opposition came from within the ranks of the ruling party.
Bhajan Lal's son and Congress MP from Bhiwani, Kuldeep Bishnoi, levelled
allegations about the agreement between the Bhupinder Singh Hooda
government and the Mukesh Ambani-led Reliance Industries group.

Thereafter, an unlikely combination of interested groups came
together.The BJP and Left opposed the establishment of SEZs on the
ground that prime agricultural land was being taken away from farmers at
ridiculously low rates.

IMF chief economist Raghuram Rajan argued that the tax concessions being
given to SEZs may result in existing ventures getting relocated, thereby
dislocating jobs instead of creating employment opportunities.

It was contended that the proposed SEZs would become islands of
affluence in a sea of deprivation, widening the already acute regional
disparities in the country, since most of the proposed SEZs were
clustered around existing industrial areas.

For Nath, a cruel cut came when RBI directed banks to extend loans for
SEZ projects at enhanced interest rates applicable to loans for
commercial real estate development.

Finance minister P Chidambaram's opposition to the SEZs was on account
of apprehended revenue losses. A study conducted by the National
Institute of Public Finance and Policy claimed that the new SEZs could
result in a loss of income tax, excise and customs duties to the tune of
Rs 1,70,000 crore over the next five years.

The commerce ministry countered these statistics by arguing that
economic activity generated by SEZs would more than compensate for
short-term revenue losses.

Udyog Bhavan claimed that investments worth $60 billion could flow into
SEZs over the next six years and that as many as 5,00,000 jobs could be
created in less than two years.

Even as these claims and counter-claims are being researched and
verified, Manmohan Singh stated that SEZs were here to stay.

What is now being acknowledged is that the commerce ministry should have
first fine-tuned its rules before granting in-principle approvals to
nearly 200 SEZs.

Since two-thirds of the proposed SEZs are small ones (of around 10
hectares) meant for IT ventures, there is a view that these should have
been excluded from the purview of the SEZ Act, with the government
extending the sunset clause exempting such units from payment of taxes
beyond March 2009.

In order to counter charges of promoting real estate speculation, the
commerce ministry had to specify that 35 per cent of the land in a SEZ
(and not 25 per cent) must be used as a "processing area".

Nath's letter to state governments urging them to set up SEZs only on
wasteland and non-agricultural land (with fertile land not exceeding 10
per cent of the total area) besides exhorting them not to intervene in
land purchases made by private developers from original owners, came
days before Sonia Gandhi told her party colleagues in Nainital that
farmers should not get a raw deal if their land is acquired for setting
up industries.

A host of questions have remained unans-wered. Are income tax
concessions for SEZ ventures compatible with WTO regulations, or could
these attract retaliatory measures? What happens to the structure of
local governance inside the SEZs?

Can labour laws and environmental regulations be relaxed inside SEZs? It
would have been far better if the government had clarified these
apprehensions before rushing headlong into setting up these special
world-class enclaves.

SEZ land acquisition controversy hots up

Santosh Patnaik

Farmers vow to resist it with all their might

VISAKHAPATNAM: Farmers who received notices to surrender their lands to
facilitate second phase of acquisition for Special Economic Zone (SEZ)
at Atchutapuram have declared a war against the move.

The district administration issued notification for acquisition of
2,109.72 acres - 416.11 acres in Gorapudi village, 327.11 acres in
Krishnampalem, 80.46 acres in L. Koduru, 757.96 acres in Z. Chintuva and
230.08 acres in Pudi, all in Ramiblli mandal and 298 acres in Tantadi in
Atchurapuram mandal - for the second phase.

First phase

Under the first phase, 9,200 acres was acquired. The land there has been
allotted to the Apparel Park Project being developed by Brandix of Sri
Lanka and second centre of the Bhabha Atomic Research Centre.

The administration has identified 10,000 acres for developing
infrastructure in the second phase for which notification was issued
some time ago for acquiring 2,109.72 acres.

"Come what may, we will not surrender our land. They are valuable and we
depend on them for our livelihood for several decades," SEZ Nirvasula
Sankshema Sangham secretary Budda Ranga Rao told The Hindu .

Offer rejected

Enquiries revealed that at the district-level negotiation committee
meeting held on September 26, the officials offered compensation ranging
from Rs.1.12 lakhs to Rs.1.60 lakhs per acre.

The representatives of the farmers rejected the offer outright.

Mr. Ranga Rao said the farmers had staged a dharna in front of the
Mandal Revenue Office at Atchurapuram and adopted a resolution not to
give up their lands whatever compensation the Government offered.

The land compensation package has been finalised, subject to approval at
various levels, on the basis of rate per acre approved by Joint
Collector at the rate of Rs. 80,000, plus 30 per cent solatium and 12
per cent additional market value from the date of draft notification,

Real estate boom

Santyasi Raju, another farmer, pointed out that due to real estate boom,
the prices have appreciated like anything. Realtors were offering them
somewhere between Rs. 20 lakhs and Rs. 40 lakhs per acre depending on
the location of their land. "Hence, we are ready for a bloodbath to
retain our lands," he declared.

During the first phase, a compensation of Rs. 2.95 lakhs was awarded.
After protracted discussions, the State Level Negotiation Committee
agreed to enhance the compensation amount to Rs. 2 lakhs originally.
Following intervention of Chief Minister, it was raised to Rs. 2.95
lakhs as per GO Ms. No. 439 issued on July 22, 2004.

CPI for stir against SEZ Act

Staff Reporter

Veliyam says CPI Ministers are doing a good job

KOLLAM: State secretary of the Communist Party of India Veliyam
Bhargavan said here on Sunday that the Special Economic Zone (SEZ) Act
would facilitate land grabbing by the Government.

Inaugurating the delegates' session of the 17th State conference of the
All India Youth Federation (AIYF), he said the Act would allow the
Government to take over farmlands and hand them over to "infrastructure
sharks." Mr. Bhargavan said lakhs of farmers faced the threat of being
evicted from their land.

He called for a strong agitation against the SEZ Act.

He said more than 40 crore persons in the country were classified as
Below Poverty Line, notwithstanding the claims of the Prime Minister of
economic growth through globalisation policies.

He said only a few had gained from this type of growth.

Criticises UDF rule

Mr. Bhargavan alleged that the law and order situation in the State
during the previous United Democratic Front Government rule had
deteriorated to such a level that the State had come under the grip of a
mafia culture. The Left Democratic Front Government was now engaged in
busting this mafia.

He said the CPI nominees in the LDF Cabinet were functioning appreciably
well. "They know their jobs."

The CPI leader said the AIYF had proved to be an organisation that did
not belie the expectations of the CPI leadership.

Chairman of the conference reception committee N. Anirudhan, MLA,
welcomed the gathering.

AIYF State president P.S. Supal, presided.

SEZs: How to land a good deal (Part I and II)

Make knowledge utilitarian

For the poor, utility is what counts most. Insisting that the poor must
have ten years of academic schooling, is like asking them to eat cake
when they do not have bread. The education system is designed for the
well-to-do by copying ideas from rich Western countries. This, says P.
V. INDIRESAN, ignores the need of employable skills.

A MIX of academic education and vocational training can be meaningful to
the poor.
The previous article (Controlling growth of disparity, September 4)
ended with the observation that eliminating rich-poor inequality is
impossible, not even desirable. That is so because disparity is an
important driving force for progress. Societies stagnate, even collapse
when people have few opportunities to go higher, to get richer. Attempts
at absolute equality (as in the Kibbutz in Israel) have all failed. That
raises the question: What level of income disparity combines best both
equity and progress? For instance, will curbing high wages of the IT
industry hurt the poor by taking away their due, or will it help them by
multiplying jobs?

Debatable comparisons

International comparisons of income disparity do not inspire much
confidence. If the latest World Development Report is to be believed,
Pakistan has the same Gini Index of 0.27 as Norway (one of the most
egalitarian countries). With a figure of 0.33, India is better than the UK.

Statistics of disparity are evidently unreliable. On the other hand,
there is no disputing two facts: In India, (a) earnings of the poor are
not enough to buy even food; (b) wages of the rich are not competitive
enough to prevent large-scale migration. Hence, we have a problem at
both ends.

There are many descriptions of poverty. I prefer to describe poverty as
shortage of Maslow Needs. The poor are concerned about the two lowest
Maslow Needs — the physical and the security needs. The upper
middle-class would be more concerned about higher needs (the status, the
autonomy and the self-actualisation needs). Lower needs depend on money;
higher ones depend less on money and more on healthy social/economic

Food, water, domestic fuel and clothing are basic physical needs. Only
regular income can meet those needs. Shelter, employable skills (plus
healthcare) are basic security needs. These three are lifelong assets.
Among all these factors, employable skills appear most crucial because
they guarantee income. If the skill is good enough, the income will be
enough to meet all physical and security needs too. Thus, the resolution
of the poverty problem starts with the provision of employable skills.

Big Brother Knows Best

Employable skills involve three factors: the person, the training
institution and the employer. In India, training institutions operate
autonomously in splendid isolation. They have little or no compulsion or
incentive to satisfy either the student or the employer. Currently, the
expert view is every student must have ten years of academic education.
The theory goes further: Education should not only be compulsory, even
its contents should be decided centrally. Students should have next to
no choice in what they learn, whether they like it or not, need it or not.

Sherlock Holmes had encyclopaedic knowledge on criminal matters. At the
same time, he did not know that the earth went round the sun. When Dr
Watson remonstrates about his ignorance, Holmes replies, "Now that you
have told me, I will endeavour to forget it because your information is
of no use to me."

`Eat cake' syndrome

Holmes had an extreme view about learning but was making an important
observation: Knowledge should be utilitarian. The rich can afford
esoteric knowledge but for the poor, utility is what counts most. When
we insist that our poor (who have not enough to eat) must have ten years
of academic schooling, we are echoing the idea that the poor should eat
cake if they do not have bread.

Our education system is designed for the well-to-do by the well-to-do
who are copying ideas from rich Western countries. They forget that the
needs of the poor in India are different from those of the rich
economies of the West; that our poor are in dire need of employable
skills. Rampant indiscipline in Western schools implies that there too
many students do not see value in the education they are getting.

If school education should result in employability, schools should
produce the kind of skills employers want. Schools may teach more but
only as a supplement and not as substitute for what employers want.

According to the prevailing ideal, children must do what educators
decide. In the case of the poor, the reality is otherwise: Poor children
do what employers (including parents) decide they should do. That is why
dropout rate among poor children is almost 100 per cent. That is why
child labour is widespread.

Let us have a compromise: Where parents cannot afford to educate
children, let educators decide what a child should do for half the time
only; let employers decide what it should do for the other half of the
time — on the condition that employers guarantee those children
employment at the end of the exercise.

A useful mix

In that case, employers indent students with specific skills, and
schools contract to provide them. Educators and the government top-up
such skills with whatever else they consider important, but the base is
what employers specify. Such a mix of academic education and vocational
training is meaningful to the poor. Such a mix alone will alleviate
poverty. However, employable skill is not enough by itself unless the
youngster can reach the employer. That requires connectivity between the
home and the market.

There is one more complication: In villages, employment generation
schemes generally fail. According to newspaper reports, even the latest
effort, the Rural Labour Employment Guarantee Scheme, is floundering. In
contrast, large cities absorb immigrant labour in thousands every week;
they do so without any help from the government. Large cities expand;
villages shrink. Therefore, if aspiring youth are connected to large
markets the employment problem will take care of itself. Without that
connectivity, like a flower in the wilderness, even the best employable
skill goes waste.

Then, poverty alleviation becomes a two-step process: One, schools
provide precisely the training employers seek. Two, houses of the poor
are connected to large markets, the larger the better.

Link up villages

The large market problem has two solutions: One, let villagers migrate
to large cities. Two, link together enough villages to form a large
market on their own. Currently, rural-urban migration is the preferred
solution. No one has considered seriously how villages can be linked to
generate large markets on their own. Few realise that it is cheaper,
two-three times cheaper, to create large markets in rural areas than to
enlarge cities.

There are two problems with rural-urban migration: One, cities provide
large markets but not homes; they offer slums instead. Two, the
purchasing power of money is much less in cities than in villages. The
latest craze, the Special Economic Zone, is frightfully expensive.
Worse, it devotes no thought on housing the poor, on employment for the

Considering the way SEZs are attracting tens of thousands of crores of
rupees, finance is not the problem. The problem is investors do not
think it worthwhile to invest in the poor. They do not bother about
housing the poor, or about educating poor children, or finding
employment for them. The organised sector market is not friendly to the

So far, the government has treated poverty alleviation as charity.
Charity does not create jobs. With the Eleventh Plan leaving 70 per cent
of the investment to private enterprise, the government cannot let
private enterprise abandon the poor.

On the other hand, private enterprise will cooperate only where it is
profitable. Hence, the government should make poverty alleviation a
profitable enterprise.

(To be concluded)

SEZs: How to land a good deal

If SEZ developers plan large, comprehensive settlements, of a thousand
hectare or more, on uncultivable or degraded land, and introduce quality
transport services, build hospitals, schools, and offer such other
services, they will be welcomed with open arms, says P. V. INDIRESAN.

The previous article ended with two observations: (a) Proposed Special
Economic Zones do not cultivate the poor. (b) They will not do so until
it becomes profitable to do so.

F. W. Taylor, the Time and Motion Study pioneer, measured how much time
he could save by using both hands to shave. He found that to be 1.2
minutes. However, that saving was offset by the more than two minutes he
had to spend patching up the nicks and cuts he suffered. Our business
plans are of the same kind: Businessmen calculate how large a Return on
Investment they get by concentrating on the well-to-do. They do not
calculate how much they lose by neglecting the poor, how much they
suffer from the violence that erupts thereby.

The true losses

For instance, the true losses incurred by the anti-Narmada agitation are
hundreds of times what it would have cost to rehabilitate displaced
families to their satisfaction. The true cost incurred in Orissa and
West Bengal because of political opposition by industrial groups and
others in Orissa are several times what it would have cost to
accommodate the poor. It appears that every time a high-wage job is
created in SEZs and other capital-intensive schemes, one Naxalite is
born. As a rule, the poor do not object to poverty but they become
bitter, even violent, when confronted with increasing disparity. SEZs
are planned the same way Taylor used both hands to save time. On the one
hand, State governments try to garner windfall profits by charging
astronomical prices for land. On the other, they accept losses by
extending tax concessions. State governments would have been wiser and
richer too had they done neither; acted neither as greedy middlemen, nor
as patrons of the rich. Likewise, promoters of SEZs would emerge richer
if they take over (and develop) even ten times more land than they do
now at reasonable prices than by paying the astronomical sums
governments are demanding.

At first sight, this proposition that SEZs acquire ten times more land
than they do now will appear strange, even absurd. It is pertinent to
ask what logic is there to attempt acquiring 10,000 acres when farmers
will not part with even a thousand acres. This counter-intuitive
proposition becomes clear when SEZs are organised not — as their name
implies — as pure economic enterprises but as comprehensive habitats.

Consider two alternatives: One, SEZs confine themselves to economic
needs of businesses.

Two, they leverage the business opportunity SEZs offer; cater to the
physical, psychological, social, political, environmental and cultural
demands of the increased population. In the former case, SEZs will look
like exploiters. In the latter case, they will look like angels. The way
SEZs are organised now, a few lucky farmers get a bonanza of unearned
profits; their neighbours get nothing.

The system increases disparity in two ways: Among long-standing
neighbours and between newcomers who capture high-wage employment
created by the SEZs and original inhabitants who get no jobs. Both ways,
the process is politically disruptive; both ways, unintended losses
mount. Both the critics and the supporters of the SEZs have overlooked
one fact: The country is getting urbanised and the process is
irreversible. Urban expansion is necessary too because agriculture
cannot create the kind of employment, pay the level of wages that modern
youth demand and deserve. Ultimately, the urban population will increase
by almost one billion. To house that many people, to accommodate the
enterprises that will employ them, to provide modern amenities that they
will demand, we will need to convert at least another five to ten
million hectares of rural space into urban settlements.

Whether we like it or not, this conversion of rural space into urban
habitats will happen. If we plan it systematically, it will happen
efficiently, painlessly and economically. If we let urban space grow
haphazard, we will end up with economic waste, environmental disaster
and political disruption. Both critics and supporters of SEZs have
overlooked also that the country has plenty of barren land to spare. It
is estimated that agriculture will not extend beyond 150-180 million
hectares and forests not beyond 70-80 million hectares. That still
leaves 50-70 million hectares of unusable land for urban expansion.
Unfortunately, all that unusable space is not available in large
contiguous chunks but dispersed all over.

Two-part plan

Traditionally, land developers look for contiguous space. Left to grow
in an unplanned manner, urban settlements expand as strips alongside
highways. Both processes are costly and inefficient.

The ideal is a two-part perspective plan for the next 50 years: One,
identify a minimum ten million hectares of uncultivable land that can be
converted into urban habitats with least disruption to agriculture. Two,
install transport links to connect bits and pieces of (otherwise
unusable) land into clusters of thousand hectares or more. Currently,
critics of SEZs are worried that the promoters will make unwarranted
speculative profits. Such profits emerge only when the supply of land is
limited. When the supply is well in excess of demand, there can be no
speculation. Our governments have been releasing land in driblets,
keeping supply always short of demand. That is standard economic recipe
for speculation. That is what happened when production of cars was
controlled, when telephones were in short supply. Liberate land for
urban habitats, there will be no speculation; urban land prices will
tumble the same way telephone prices have.

Critics will counter that telephones and land are not the same: People
will buy all sorts of telephones but they will insist on specific pieces
of land. That is true but only partially: People value urban land only,
but there are takers of such land anywhere provided the connected
population is large enough.

Linked clusters

Suppose we prepare a map of the entire uncultivable/degraded land of the
country. Suppose we install mass transport to link bits and pieces of
such land to form clusters of a thousand hectares or more. Such clusters
can accommodate large city-size populations — large enough to attract
financial and human capital.

If the total area of those planned clusters is several times the area
needed to accommodate the expected urban expansion of a billion, there
will be no scope for speculation. The trick is to plan large settlements
of a thousand hectare or more in one go, not start with small bits and
then try to expand. The trick is to plan for a comprehensive habitat
located (except when unavoidable) on uncultivable or degraded land. The
trick is to maintain supply of urban land several times higher than
current demand. The trick is to impose penal tax on expensive land to
induce investors to take up low-cost land.

Economical plan

That plan will be economical because urban expansion is confined to
low-value land. It will be politically acceptable too because only the
rich are taxed, and the rural poor will get new benefits they never
dreamt of.

Imagine a developer offering to take over only degraded land; introduce
quality transport services; take ten times the space needed for his
business and use the extra space (and the savings from the low-priced
land) to install hospitals, schools, and such other services; offer
affordable housing plots for all. I guarantee such developers will be
welcomed with open arms, and that they will profit more from the
expanded markets they realise thereby.


(The author is a former Director of IIT Madras. Response may be sent to:

(This is 185th in the Vision 2020 series. The previous article was
published on September 18.)

AP expects proposed SEZs to create 4.7 lakh new jobs

Our Bureau

48 SEZs approved in State, 27 of them for IT/ITES

The details
The Union Government has approved 48 SEZs for Andhra Pradesh with
IT/ITES having a lion's share of 27, followed by pharma with six SEZs.
The SEZs in IT and ITES were expected to bring in around Rs 250 crore of
investments with networth of Rs 50 crore.

Hyderabad , Oct. 15

The Andhra Pradesh Government expects the proposed 48 special economic
zones (SEZs) coming up in the State to create around 4.7-lakh new jobs,
apart from resulting in the overall development and industrialisation in
the State.

A press release from the Chief Minister's Office said the SEZs would
create a conducive environment for investment and exports, providing
quality infrastructure.

The fiscal benefits provided to both developers and units coming up in
SEZs would reduce operating costs.

The SEZs facilitate single-window clearances, quality infrastructure
services such as water, power, roads, gas and transport, apart from
quality living space. They would have complementary social
infrastructure such as housing, hospitals, schools, entertainment and
market facilities.

These zones offer a simple, integrated and efficient tax solution and
would fuel further economic growth in the State, the CM's Office said.

So far, the Union Government has approved 48 SEZs for Andhra Pradesh
with IT/ITES having a lion's share of 27, followed by pharma with six
SEZs, multi-product four and footwear three, while one each would come
up in the areas of building products, biotech, apparel, gems and
jewellery, paper, textile, services sector and semiconductor.


The SEZs in IT and ITES were expected to bring in around Rs 250 crore of
investments with net worth of Rs 50 crore. The developer/company should
construct a minimum of 10-lakh sq ft of IT space, creating at least
10,000 jobs. Thus, the total number of jobs from IT/ITES SEZs alone
would be in the range of 2.7-lakh from 27 SEZs.

Keeping in view the high employment potential, the State Government has
planned SEZs for gems and jewellery, footwear/leather and apparels with
these SEZs expected to create 50,000 , 30,000 and 60,000 jobs
respectively. These jobs would benefit the lower middle-class and weaker
sections, particularly SC/ST/BC and minorities.

The Government expects pharma SEZs to offer about 10,000 jobs, while the
multi-product SEZs being developed for HPCL at Visakhapatnam and ONGC at
Kakinada would create about 50,000 jobs in the manufacturing sector, the
release said.

Power ministry objects to clauses on plants in SEZs

Posted online: Monday, October 16, 2006 at 0000 hours IST

MUMBAI, OCT 15: The Maharashtra government, which is currently involved
in pacifying opponents of the upcoming 45 special economic zones (SEZ)
on the issue of land acquisition, has received yet another setback as
the power ministry has raised a series of objections on the provisions
of development of power projects and sale of power in and outside these
The ministry has forwarded its comments on the Maharashtra Special
Economic Zones and Designated Areas Bill, 2006, in the light of the
Electricity Act, 2003, government sources confirmed.

As per the state SEZ Bill, each SEZ developer is expected to set up
power projects to meet the demands of units in the SEZ.

The Mukesh Ambani controlled Reliance Industries has proposed the
development of a 2,000 MW power project in the MahaMumbai SEZ. Moreover,
a city-based developer, who has received approval for the development of
a SEZ on well over 2,000 hectares near Vasai in Thane district, has
planned a 500 MW power project, government sources informed.

The SEZ Bill says, “Any person generating electricity in the Special
Economic Zone or Designated Area may supply electricity to any State
Electricity Distribution Company or Corporation and any other generator
of electricity including Central Power Supply Undertakings (CPUs), with
the approval of the state government and subject to such terms and
conditions agreed by such Supplier and any State Electricity Company or
Corporation and any other generator of electricity including Central
Power Supply Undertakings (CPUs)”.

However, the power ministry observed that a State Electricity
Distribution Company is regulated by the state electricity regulatory
commission (SERC). Therefore the approval of the State Government is
inconsistent with the Electricity Act 2003.

Moreover, the Electricity Act, 2003 has already de-licensed generation
and a generating company is free to supply electricity to any licensee
or to a consumer subject to regulation of the SERC.

Therefore no approval of the State Government is required for such a
sale. Central undertakings would not be able to purchase electricity
unless they have taken a trading licence because it is understood that
these generating companies would ultimately sell the power and the
Electricity Act 2003 requires a trading licence for purchasing
electricity for resale.

On the provision regarding power supply to other SEZs of the designated
area, the ministry commented that, “A licensee (including a deemed
licensee) under the Electricity Act 2003 has a well-defined area of
supply in which he has universal supply obligation. Therefore, a
generating company cannot be deemed licensee for supplying electricity
for a loosely defined area” and due to the limitation of the state
legislation of not being able to provide sale of electricity outside the
state, this clause is not required.

On use of the transmission and distribution network of CPSUs or other
distribution companies for sale of power outside Maharashtra, the
ministry said that the SERC has jurisdiction for that state and,
therefore, this provision cannot be sustained in law, thus this clause
is required to be deleted.