Political Economy of SEZ in India


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 17thcentury 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. Very little is heard about their contributions to promoting Indian economy so far, except for the wage slavery of workers and the riches made by a few. Now with WTO calling for opening up trade in all its forms and extending liberalization in all fields including the land, a policy was introduced on April 1 in 2000 by the Bhartiya Janta Party (BJP) led NDA government for setting up of Special Economic Zones – SEZs – as foreign territories, in the country with a view “to provide an internationally competitive and hassle free environment for exports”. Units may be set up in SEZ for manufacture of goods and rendering of services. All the import/export operations of the SEZ units will be on self-certification basis. The units in the Zone have to be a net foreign exchange earner but they shall not be subjected to any pre-determined value addition or minimum export performance requirements. Sales in the Domestic Tariff Area by SEZ units shall be subject to payment of full Custom Duty and import policy in force. Further Offshore banking units may be set up in the SEZs. The policy provides for setting up of SEZs in the public, private, joint sector or by the State Governments. It was also envisaged that some of the existing Export Processing Zones would be converted into Special Economic Zones [see the box bellow]. Accordingly, the Government has converted Export Processing Zones located at Kandla and Surat (Gujarat), Cochin (Kerala), Santa Cruz (Mumbai-Maharashtra), Falta (West Bengal), Madras (Tamil Nadu), Visakhapatnam (Andhra Pradesh) and Noida (Uttar Pradesh) into a Special Economic Zones.  In addition, 3 new Special Economic Zones approved for establishment at Indore (Madhya Pradesh), Manikanchan – Salt Lake (Kolkata) and Jaipur have since commenced operations[14].

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&2). SEZs will be beyond the purview of most of the tax laws of the land but are allowed loans and grants from the Central Government (of course from the tax revenues), under the clause 35 of the Act. The Act has provision of a SEZ authority for each SEZ, who is to “undertake such measures as it thinks fit for the development, operation and management of the SEZ….”[21] Each SEZ Authority comprises a Development Commissioner, three officers of the Central Government and two entrepreneurs of the SEZ and no elected representatives. In the course of designating erstwhile rural areas into urban areas, the Act is silent on specific form of the governance (Panchayat or Municipal) giving apprehensions that even the activities like town planning, issuing the birth and death certificates will be responsibility of the SEZ authority. The SEZ shall remain out side the ambit of town planning and supervision by municipality. The Authority is also responsible for receiving and managing grants, loans and tax revenue of SEZ. The SEZ has overriding effect on all the other Acts of the Central Government (Clause 51):

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 for the purpose of undertaking the authorized operation.[23]

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 KangraValley is planned for an SEZ. In Jhajjar in Haryana near Delhi, 10,000 hectares of double cropped land, larger than Gurgaon, is taken over for SEZ. In Mangalore, Karnataka, 2200 hectares of double and triple cropped land is being taken over for setting up SEZ. In Orissa at Gopalpur land was originally acquired by state government for a paltry sum and handed over to Tata for a steel plant. But the plant did not come up and farmers wanted the land back. There Tata is building SEZ. 1600 hectares handed over to POSCO to build a steel plant is also converted into SEZ. The pattern of land acquisition for the SEZ boom is almost similar all over the country[25].

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.

Box 1

Some Features of SEZs in India[26]
·        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 India, the task of developing SEZs is totally transferred to private hands. In other countries these tasks, in most of the cases, were performed by the government itself.
·        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 Jamnagar (Gujarat) that “could end up ‘exporting’ bulk of its output in India”[27].
·        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 India enjoying fabulous tax-breaks and are making super-profits from export-earnings. Now Nasscom, the national association of the software companies want SEZ status for these STPs! The craze may be explained from the following facts: “So much so, that of the 237 proposals given final clearance so far, 148 (i.e., 62%) are for setting up IT SEZs. Further, of the 160-odd proposals given in-principle nod, about half are from this sector.” [28]
·        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. India is, perhaps, the only country to have promoted private SEZs — or at least in such numbers. Fuelling the popular distrust is the speed at which the zones are being approved by the Ministry of Commerce. Around 20-40 on an average are being cleared every other week, bringing the tally so far to 263, plus another 169 that have got in-principle approval[29].
·        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 China’s Shenzhen economic zone (326 sq. km), but large enough to throw up some discomfiting questions in the Indian context. For reference, Jamshedpur, the steel city run by the Tatas, is just 64 sq. km and Chandigarh’s real estate, including its rural periphery, adds up to just 112 sq. km. More to the point,Reliance expects to house one million residents and play host to two million others who would commute daily to their SEZs.[30]
·        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-19thcenturies, 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?

Box 2

Concessions and Incentives for the SEZ Enterprises[31]
Non-fiscal Incentives/Concessions
·        Exemption from industrial licensing for manufacture of items reserved for Small Scale Industries (SSI).
·        100 per cent FDI investment through automatic route to manufacturing SEZ units. Facility to realize and repatriate export proceeds within 12 months and no cap on foreign investment for SSI reserved items.
·        “Write-off” of unrealized export bills up to 5%.
·        No License is required for imports, including second hand machineries.
·        Profits allowed to be repatriated freely without any dividend balancing requirement.
·        Full freedom for subcontracting, including subcontracting abroad.
·        The area incorporated in the proposed SEZ is free from environmental restrictions.
·        Water, electricity and other services would be provided as required and the units would be given full exemption in electricity duty and tax on sale of electricity for self generated and purchased power. They shall also be allowed to allow generation, transmission and distribution of power within the Special Economic Zones.
Single point clearance system and minimum inspections requirement under State Laws/Rules would be provided.  For units inside the Zone, the powers under the Industrial Dispute Act and other related Labor Acts would be delegated to the Development Commissioner and that the units will be declared as a Public Utility Service under Industrial Dispute Act.

Fiscal Incentives

·        100 per cent income tax exemption for a block of five years, 50 per cent tax exemption for two years and up to 50 per cent of the profits ploughed back for next 3 years. Supplies from Domestic Trade Area to SEZ to be treated as export.

·        100 per cent Income-tax exemption for 3 years & 50 per cent for 2 years for off-shore banking units.

·        Exemption from Central Excise duty on procurement of capital goods, raw materials, and consumable spares, etc., from the domestic market.

·        Reimbursement of Central Sales Tax paid on domestic purchases.

·        SEZ units may import duty free, all their requirements of capital goods, raw materials, consumables, spares, packing materials, office equipment etc. for implementation of their project in the Zone without any license or specific approval.

·        Exemption from service Tax to SEZ units.

·        Exemption from State sales tax, octroi, mandi tax, turnover tax and any other duty/cess or levies on the supply of goods from Domestic Tariff Area to SEZ units.

·        Enhanced limit of Rs 2.4 crores per annum allowed for managerial remuneration.

Subsidies/Incentives Given to SEZ Developers

·        Developer of an SEZ may import or procure goods without payment of duty for development, operation and maintenance of the SEZ.

·        Income-tax exemption for a block of 10 years in 15 years at the option of the Developer.

·        Exemption from Service Tax.

·        Investment made by individuals etc. in SEZ developing companies eligible for exemption under Section 88 of the Income Tax.

·        100% FDI allowed for (a) townships with residential, educational and recreational facilities on a case to case basis, (b) franchise for basic telephone service in SEZ.

·        Duty free import/domestic procurement of goods for development, operation and maintenance of SEZs.

·        Developer may transfer infrastructure facilities for operation and maintenance.

·        Generation, transmission and distribution of power in SEZs allowed.

·        Full freedom in allocation of space and built up area to approved SEZ units on commercial basis.

·        Authorized to provide and maintain services like water, electricity, security, restaurants and recreation centers on commercial lines.

The area incorporated in the proposed SEZ is free from environmental restrictions.

·        The water, electricity and other services would be provided by the government as required.

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’s phenomenal growth has been attributed to its single minded (or mindless) pursuit of export driven SEZ policies and the success story has driven Indian think tank towards this mad rush. It is true that export-driven policy for economic growth has helped China touch record growth figures creating the bourgeois illusion of Wealth of Nation [Adam Smith]. But the fall out is more alarming as along with increasing unemployment, the income gap is widening and rapidly approaching the levels of some Latin American countries. As per the recent report by the Chinese Academy of Social Sciences, China’s Gini coefficient – a measure of income distribution where zero means perfect equality and 1 is maximum inequality – touched 0.496 in the year 2006 where figure   for India is 0.33, for US is 0.41 and for Brazilis 0.54. Even the rural-urban income divide is staggering .The annual income of city dwellers in China is around US $1,000, which is more than three times that of their rural counterparts[34]. The massive unemployment, widespread corruption and crime in China’s ruling establishments have been intimate companions and part and parcel of China’s rise as Economic Giant through liberalization and privatization. To compete with the capitalist countries in the world market on their terms, Chinese leadership began to dismantle the systems of state ownership and socialist values immediately after the Mao’s death beginning with the campaign against The Guilty Four. Post Mao CPC leadership’s choice for capitalist path anticipated the demands of corporate led globalization.

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. Chinese path to land grab exercise has not been smooth and “voluntary”.  It has pauperized the millions of its rural population. China has to feed 22 percent of the world’s population on only 7 percent of land. It can not afford to embark on such an aggressive pursuit of land garb. In July 2005, according to Chinese Minister Li Xuju quoted in the People’s Daily, China’s countryside had over 26.1 million people living in absolute poverty[35]. During 1996-2005, “development” caused diversion of more than 21 percent of arable land to non-agricultural uses, chiefly highways, industries and SEZs. Per capita land holding now stands at a meager 0.094 hectares. In short span of time from 1992 to 2005, twenty million farmers were laid off agriculture due to land acquisition. The rampant protests against land acquisition were brutally crushed,   especially in the provinces of Guangdong (south), Sichuan, Hebei (north), and Henan. Guangdong has been worst affected. In 2004, the government admitted to 74,000 riots in the countryside[36]. Environmental devastations are irreparable. Shenzhen, Chinese dream model of economic growth, after growing at a phenomenal rate of around 28 percent for the last 25 years, is now paying a huge cost in terms of environment destruction, soaring crime rate and exploitation of its working class, mainly migrants. Foreign investors were lured to Shenzhen by cheap land, compliant labor laws and lax or ineffective environmental rules. In 2006, the United Nations Environment Program designated Shenzhen as a ‘global environmental hotspot’, meaning a region that had suffered rapid environmental destruction. More than 50,000 disputes over environmental pollution occurred in 2005, and 97.1 percent of all environmental mishaps involved the release of pollution. Water contamination made up 50.6 percent of the total accidents. Almost 40 percent of environmental accidents involved air pollution. The accidents collectively caused up to 105 million Yuan (about 13.1 million U.S. dollars) in direct economic losses. “This environmental problem has become one of the main factors that affect national safety and social stability,” according to Pan Yuen, deputy director of the State Environmental Protection Administration (SEPA). Around 20 per cent of the population lives in severely polluted areas   and 70 percent of the rivers and lakes are in a grim situation. Around 60 per cent of companies that have set up industries in the country violate emission rules[37]

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 instead of looking into the pro-people models of development without or with minimum displacement are acting as the agents of the imperialist globalization. Thus we find that SEZ Act is a short circuit into people’s rights. Millions displaced people shall be turned into destitute. Creation of the “foreign territories” is a cheap and effective tool of corporate led imperialist globalization. These local battles would become part of and strengthen the global forces seeking human emancipation against the corporate led globalization.

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, Progress publishers, p. 30

[4]. Ibid p.38

[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

[7] Capital Vol. III

[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 KalinganagarEconomic 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.

[19] The Special Economic Zones Act, 2005, op.cit.

[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.

31 SEZ Act, 2005, op.cit.

[32] Manoranjan Mohanty, Students’ Movement for Socialist Freedom in ChinaThird World Studies, Volume 1, No.1, July-September 1989.

[33] www.chinalabourwatch.org

[34] ibid

[35] Peoples Daily, Beijing, 23 July 2005

[36] www.chinalabourwatch.org

[37] Peoples’ Daily, Beijing, 0p.cit. June3,2005

Ish Mishra is a retired professor of Delhi University




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