SEZ Report

8/3/2019 SEZ Report

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SEZ – India and ChinaAn Overview

BIM Trichy

Submitted by

Mandeep Kaur (27022)Nandakumar G (27028)Sangeetha K S (27044)Jagannathan R (27076)

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Table of Contents

SEZ: ........................................................................................................................................... 3

SEZs in India: ............................................................................................................................ 3

The Road Map: ...................................................................................................................... 3

Types of Economic Zones: .................................................................................................... 4

Advantages ............................................................................................................................. 5

Disadvantages ........................................................................................................................ 6

China – SEZ ............................................................................................................................... 6

Locating First SEZ’s .............................................................................................................. 6

Institutional Arrangements and Local Initiatives in SEZs ..................................................... 7

List of SEZ’s .......................................................................................................................... 8

Issues related to SEZ:............................................................................................................. 8

SEZs: Promoting Regional Disparities .............................................................................. 8

SEZs Leading to Loss of Revenue for Countries ............................................................... 9

Employment and Labour Rights a Major Concern in SEZs .............................................. 9

Scope, quality and nature of employment in SEZs .......................................................... 10

Violation of Labour Rights in SEZ .................................................................................. 10

Restricting Trade Unions and Banning Strikes ................................................................ 10

Minimum Wages and Working Conditions in SEZs ....................................................... 11

Exploitation of Women Workers in SEZs ....................................................................... 11

SEZs Shaping Access to Land, Livelihoods and Food Security ...................................... 11

Compulsory Acquisition of Land (CAL) or SEZs and Land Conversion ....................... 11

Emerging People’s Resistance to SEZs ........................................................................... 12

Comparison between India and China ................................................................................. 13

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SEZ:

―A SEZ or a Free Trade Zone (FTZ) is typically an enclave of units operating in a well –

defined area within the geographical boundary of a country where certain economic

activities are promoted by a set of policy measures that are generally not applicable to

the rest of the country‖. Export Processing Zones is the former name of the Special

Economic Zones. The countries like China, United Arab Emirates, Malaysia, India, Jordan,Philippines and Russia have utilized the concept of SEZ. In 1986, there were 176 zones

across 47 countries. Now the number has increased to over 5000 across 147 countries.

SEZs in India:

According to the SEZ Act 2005, A SEZ is a ‗specially delineated duty free enclave and

shall be deemed to be foreign territory for the purpose of trade operations and duties

and tariffs. The zones are known by different such as Free Trade Zones (FTZ),Industrial

Free Zones (IFS) Export Processing Zones (EPZ) Bonded Free Zones and Special

Economic Zones (SEZ).

The Road Map:

During the Jawaharlal Nehru‘s period, foreign collaborations were promoted in certain

sectors and foreign investment was encouraged. First Export Processing Zone (EPZ) was

set up in 1965 at Kandla, in Gujarat. This was a predecessor of the Special Economic

Zone in India. The Santa Cruz EPZ in Mumbai became operational in 1973.

The Foreign Investment Board was set up in 1968. In 1973, Foreign Exchange

Regulation Act (FERA) was enacted. India set up the Santa Cruz Electronics Export

Processing Zone (SEEPZ) between 1973 and 74. It was the first EPZ which was

dedicated to the electronic industry.In 1984, the Free Zone policy received a fresh start. By 1991, the Indian economy was

opened up for linking up the Indian market with the world leading to free flow of trade

and commerce. The multilateral Financial Institutions like the World Bank and the

International Monetary Fund while assisting the developing countries like India also

insisted upon restructuring the polity and the administrative machinery. There had been

introducing policies since July 1991 particularly in the industrial sector.

In1998, the first private SEZ started its operations in Surat .This was under the

jurisdiction of the Mumbai (SEEPZ)Development Commissioner, who was a nominee of

the central Government.

Bharathiya Janatha Party (BJP) government re-launched the Free Trade Zone Policy in

2000 and changed Export Processing Zone (EPZ) to Special Economic Zone (SEZ). The

policy made SEZs an engine for economic growth supported by quality infrastructure and

attractive fiscal package both at the Centre and the State level with the minimum

possible regulations.

The salient features of the SEZ scheme are:

No licenses required for import

Manufacturing or service activities allowed.

SEZ units to be positive net foreign exchange earner within three years.

Domestic sales subject to full customs duty and import policy in force.

Full freedom for sub contracting.

No routine examination by customs authorities of export/import cargo.

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SEZ rule introduced in 2006 provides for drastic simplification of rules and single window

clearance on matters relating to the union and state governments. The state

governments have also enacted their own SEZ laws to cover State subjects.

The Act offers a special fiscal package to the units set up in the SEZs. This packageincludes, exemption from customs duties, central excise duties, service tax, central sales

taxes, and securities transaction tax to both the developer and the units set-up, tax

holiday for 15 years like 100 percent tax exemption for five years, 50 percent for next

five years, and 50 percent for the ploughed back export profits for the next five years.

Also it provides 100 percent income tax exemption for 10 years in a block of 15 years for

SEZ developers.

There is a three-tier administrative structure.

1. On the top, a Board of Approval at the level of the Union Government

2. Authority created by the state governments for creation and promotion of the

infrastructure within each state.

3. Finally, in SEZ mechanism /authority is provided for single window approval

These zones can be set up by the developers, who could be private real persons,

companies, both Indian and foreign, as also the State governments or the central

government by themselves or jointly with private parties.

In India SEZs are divided in to three categories:

1. Multi-product SEZs Sector

2. Specific SEZs

3. Free Trade and Ware housing Zone (FTWZ)

There are 19 functional SEZs in the country which were set up prior to SEZ Act, and 154

SEZs that were notified under SEZ Act 2005. The maximum numbers of SEZs are comingup in the IT sectorThe total land requirement for the formal approvals granted till date is

approximately 44,268 hectares. Out of this, about 87 approvals are for State Industrial

Development Corporations (SIDCs) State Government ventures which account for over

21,169hectares.

Types of Economic Zones:

Zone Objective Typical Size Eligible

Activities

Markets

Industrial

Zone

Industrial

development

<100 hectares Mixed Industry Domestic and

export

Free Trade

Zone

Support trade < 50 hectares Ports, airports,

trade-related

processing and

services

Re-export,

domestic

EPZ Export < 200 hectares Ports, airports Export

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manufacturing Mostly

manufacturing

Enterprise

Zone

Urban area

renewal

< 50 hectares Inner city areas

Al l

N/A

SEZ/FEZ

/Freepor t

Integrated

development

> 100 km2 Mixed Multi-use Domestic,

internal,

export

Advantages

Allowed to carry forward losses.

No licence required for import made under SEZ units. Duty free import or domestic procurement of goods for setting up of the SEZ

units.

Goods imported/procured locally are duty free and could be utilized over the

approval period of 5 years.

Exemption from customs duty on import of capital goods, raw materials,

consumables, spares, etc.

Exemption from Central Excise duty on the procurement of capital goods, raw

materials, and consumable spares, etc. from the domestic market.

Exemption from payment of Central Sales Tax on the sale or purchase of goods,

provided that, the goods are meant for undertaking authorized operations.

Exemption from payment of Service Tax.

The sale of goods or merchandise that is manufactured outside the SEZ (i.e, in

DTA) and which is purchased by the Unit (situated in the SEZ) is eligible for

deduction and such sale would be deemed to be exports.

The SEZ unit is permitted to realize and repatriate to India the full export value of

goods or software within a period of twelve months from the date of export.

―Write-off‖ of unrealized export bills is permitted up to an annual limit of 5% of

their average annual realization.

No routine examination by Customs officials of export and import cargo.

Setting up Off-shore Banking Units (OBU) allowed in SEZs.

OBU's allowed 100% income tax exemption on profit earned for three years and

50 % for next two years.

Exemption from requirement of domicile in India for 12 months prior to

appointment as Director.

Since SEZ units are considered as ‗public utility services‘, no strikes would be

allowed in such companies without giving the employer 6 weeks prior notice in

addition to the other conditions mentioned in the Industrial Disputes Act, 1947.

The Government has exempted SEZ Units from the payment of stamp duty and

registration fees on the lease/license of plots.

External Commercial Borrowings up to $ 500 million a year allowed without any

maturity restrictions.

Enhanced limit of Rs. 2.40 crores per annum allowed for managerialremuneration.

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Disadvantages

Many traders are interested in SEZ, so that they can acquire at cheap rates and

create a land bank for themselves.

The number of units applying for setting up EOU's is not commensurate to the

number of applications for setting up SEZ's leading to a belief that this projectmay not match up to expectations.

China – SEZ

One of the key factors underlying China‘s successful economic reform and miraculous

economic rise has been its Open Policy. Through opening up its markets to international

investors and promoting trade, in particular exports, China has earned both valuable

foreign capital as well as met external economic demands. China pursued an inward-

looking developmental strategy from the 1960s to the late 1970s. From 1955 to 1978,China was nearly free of foreign direct investment (FDI).Foreign loans, a politically less

sensitive form of foreign capital, played a minor economic role, especially between 1960

and 1976. Between 1950 and 1960, China‘s foreign loans were provided by the Soviet

Union. During the 1960s and 1970s, foreign capital in China was mostly a down payment

for sellers‘ credit to purchase equipment from Western Europe and Japan. From late

1978 onward, Deng (Politician – Leader of Communist party of China) started to exert a

critical role in Chinese politics and the opening of China. Deng‘s first political hurdle in

his drive to open up China was the stern political opposition at the national level—

conservative ideologues, economic planners, and conservative leaders who believed in

the command economy and despised the free market system.

Locating First SEZ’s

During 1979 Chinese Communist Party (CCP) central committee approved for setting up

SEZ in in Shenzhen, Zhuhai, Shantou (Guangdong), and Xiamen (Fujian). The area of

the Shenzhen SEZ covered 327.5 square kilometres (km2), that of Zhuhai, 6.7 km2,

Shantou 1.67 km2

, and Xiamen 2.5 km2. During 1983-1984, the Zhuhai SEZ wasexpanded to 15.2 km2, Shantou to 52.6 km2, and Xiamen to 131 km2.

Reason for location Selection:

1. Geography

Guangdong and Fujian were selected as the best locations for setting up SEZ because of

the geographical, economic, historical, and political advantages of these provinces.

Shenzhen is adjacent to Hong Kong, Zhuhai is connected to Macao by land, and Xiamen

is close to Taiwan and the offshore islands controlled by the Republic of China based in

Taiwan. Shantou is located between Hong Kong and Taiwan. All of them are coastal cities

and have access to sea- ports. They were in advantageous positions to expand trade

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with developed economies. These cities could offer both inexpensive land and labor for

investors from Hong Kong, Macao, Taiwan, as well as Singapore, Malaysia, and Thailand.

2. Second, many overseas Chinese came from Guangdong and Fujian. Many of them

had become successful entrepreneurs, yet had strong sentimental bonds with their

Chinese home towns. The provinces could use these overseas Chinese‘s social

connections to attract overseas investment.

3. Human Smuggling:

Many residents in Shenzhen fled to and settled in Hong Kong in the previous years.

Leaders hoped that a successful SEZ in Shenzhen would reduce the illegal bordercrossings.

4. Long Tradition of Trade and entrepreneurship

5. Guangdong had leaders were open minded hence both Guangdong and Fujian becamethe best candidates for hosting the earliest SEZs and testing out the Open Policy.

Institutional Arrangements and Local Initiatives in SEZs

SEZs enjoyed a number of special policies until April 1984.

1. Joint ventures and foreign-owned enterprises were allowed in the SEZs, but

needed special approval.

2. Prices and distribution of goods were regulated by the market within the SEZs,

but by central plans outside the zones.

3. SEZs had jurisdiction in approving much larger investment projects than non-

zone localities

4. SEZs enjoyed preferential treatment in tax and tariff reductions and exemptions.

For example, the corporate income tax at the SEZs was set at a preferential rate

of 15 percent, even lower than the 18.5 percent in Hong Kong.

5. SEZs were granted preferential fiscal arrangements. For example, according to

national and provincial provisions, Shenzhen did not have to remit revenue to thenational and provincial governments until 1989, nor would the province and

Beijing provide subsidies.

These privileges enabled investors to enjoy the lowest corporate income tax rates and

tariffs on imports and exports, as well as a freer play of markets in SEZs. SEZs become

the premier place in China for attracting FDI. The success of China‘s Open Policy has

much to do with China‘s opening strategy. The strategy has been incremental, but

progressive and persistent. Progressive opening allowed reformists to sustain the reform

while appeasing powerful conservatives. China‘s central government set up SEZs so as

to explore measures that could be effective in attracting foreign investment and

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stimulating economic development. It then allowed more cities and areas to be opened

up and to adopt these proven-effective policies.

List of SEZ’s

As part of its economic reforms and policy of opening to the world, between 1980 and

1984 China established special economic zones (SEZs) in Shantou, Shenzhen, and

Zhuhai in Guangdong Province and Xiamen in Fujian Province and designated the entire

island province of Hainan a special economic zone.

In 1984 China opened 14 other coastal cities to overseas investment (listed north to

south): Dalian, Qinhuangdao, Tianjin, Yantrai, Qingdao, Lianyungang, Nantong,

Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang, and Beihai.

Then, beginning in 1985, the central government expanded the coastal area by

establishing the following open economic zones (listed north to south): Liaodong

Peninsula, Hebei Province (which surrounds Beijing and Tianjin), Shandong Peninsula,

Yangtze River Delta, Xiamen- Zhangzhou - Quanzhou Triangle in southern Fujian

Province, Pearl River Delta, and Guangxi.

In 1990 the Chinese government decided to open the pudong New Zone in Shanghai to

overseas investment, as well as more cities in the Yangzi River Valley.

Since 1992 the State Council has opened a number of border cities and all the capital

cities of inland provinces and autonomous regions.

In addition, 15 free-trade zones, 32 state-level economic and technological development

zones, and 53 new and high-tech industrial development zones have been established in

large and medium-sized cities. As a result, a multilevel diversified pattern of opening and

integrating coastal areas with river, border, and inland areas has been formed in China.

Issues related to SEZ:

SEZs: Promoting Regional Disparities

India: Exacerbating regional inequalities, both between and within states, is another

contentious issue surrounding SEZ policy. There are no restrictions on where SEZs can

locate nor incentives to set-up in lagging areas and so, not surprisingly, they have

concentrated in the most developed regions of the country where infrastructure quality is

the best. Approximately 75% of formally approved projects are located in just six states

(out of a total of 28). These are India‘s most industrialized regions; with the exception of

Haryana in North India, which surrounds metropolitan Delhi on three sides, the other

states are in the relatively prosperous regions of the South (Andhra Pradesh, Karnataka,

Tamil Nadu) and West (Gujarat, Maharashtra). In terms of performance too, these five

states accounted for 96 per cent of SEZ exports in 2009.

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China: The major SEZs in China are confined in Guangdong and Fujian Province. Within

a few years, these two provinces became economically powerful due to profits from

SEZs. Between 1979 and 1995, China received the largest share of FDI in the developing

world amounting to US$128.1 billion (OTA 2003). But the distribution of the FDI that

flowed into China has been severely skewed with the coastal areas accounting for over

90% of all FDI inflows since 1979. This has triggered uneven economic growth within thecountry. Enticed by the economic boom in the coastal districts, thousands of SEZs were

likewise established by local governments in other parts of the country in an effort to

attract FDI, but with little success (Wei and Liu, 2001).

SEZs Leading to Loss of Revenue for Countries

Almost all Asian countries have offered lucrative packages to investors for FDI in SEZs.

The investors are also allowed to repatriate their profit freely. The experiences show that

all these relaxations lead to loss of revenues for these countries and do not contribute to

the long-term economic development and self-reliance of the host nations.

India: The Finance Minister of India, P. Chidambaram, the central Reserve Bank of India

and even the International Monetary Fund warned the Indian government that tax

benefits accorded to industries operating in SEZs would lead to massive revenue losses.

The estimated at 900 billion rupees, or $19.5 billion during the initial phase.

According to the Finance Ministry of India, the promotion of SEZs in the manner in

which the Commerce and Industry Ministry is doing now would cause a revenue loss of

over Rs. 1,60,000 crores by 2012. The Commerce Ministry, on the other hand, says that

the SEZs would actually bring in investments amounting to Rs. 1,00,000 crores it also

added that there would be a net revenue gain of Rs. 44,000 crores and the creation of

five lakh additional jobs. Based on its own assumptions, the Ministry projects that the

government's tax collections would increase by Rs. 1,37,000 crores.

The Commerce Ministry's calculations, unlike the Finance Ministry‘s, include software

exports. It is well known that Information Technology (IT) and Information Technology-

Enabled Services (ITES) companies are gravitating towards the SEZs because the

current tax-free regimes governing this sector will mid 2011-12.

China: Tejal kantikar et al (2006) observed that experience in China had been that of

companies wrapping up their industries once the tax holidays expire. According to the

new tax policy of China which would be put into effect starting January 2008, SEZs

would continue to enjoy preferential treatment and this new policy would lead to arevenue loss of 93 billion approximately. Thus, if the number of SEZs continues to grow,

the nation-state will be losing more potential income. In the neoliberal regime, the soft

targets of these reductions are often the social sectors which will result in the worsening

of the economic conditions of the poor, and would weaken the economic future of the

country in the long-run.

Employment and Labour Rights a Major Concern in SEZs

SEZs are considered sources of large-scale employment generation (both direct and

indirect) in host countries thereby contributing to economic growth and poverty

alleviation. Moreover, SEZs are supposed to contribute to the skills development of the

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labour force and technological upgrading in the host countries through sharing of

knowledge with domestic firms. But the fact remains that employment generation in

SEZs have largely failed to address the unemployment problems in the host countries, as

the jobs created by these enclaves are nominal compared to the annual increase in the

size of the labour force in these nations (Aggrawal 2007).

Scope, quality and nature of employment in SEZs

Experiences from various Asian countries show that the nature and quality of

employment created in SEZs depend largely on the labour market (availability and skill)

of the host country and on global market demands. The main attraction for the big

investors in Asia is cheap labour, and different countries have projected ‗cheap labour‘ as

an incentive to lure FDI. Thus, jobs created in SEZs in Asia are mainly sector-specific,

low-skilled jobs and temporary in nature. There is no conclusive evidence that SEZs

promote skill formation of workers and improve technological knowledge in the host

countries. On the contrary, the experiences of China, Bangladesh, the Philippines and

other countries illustrate that during the initial phases SEZs are dominated by labour-

intensive industries such as clothing, footwear, and electronic component assembly, etc.

These industries are based on low cost technology which do not require highly skilled

workforces and do not provide much skill development opportunities for the workforce

(Aggrawal 2007).

Employment created in SEZs is often temporary in nature, and there is no job security

for the low-skilled workforce. Often the workers in SEZs do not have proper contracts

and in many cases they are employed not directly by the companies but by the

intermediary contractors. Labour laws are usually poorly enforced in SEZs and the

government has little power to monitor the respect for labour rights inside SEZs. In the

Noida EPZ in India, workers were dismissed when they demanded the enforcement of

existing labour laws in that enclave (ICFTU 2003).

Violation of Labour Rights in SEZ

International labour rights guarantee, among others, a minimum wage, defined working

hours, a safe working environment, freedom of association, freedom to form and join

labour unions, the right to strike and the rights of female workers, and the abolition of

child labour. Almost all of these rights are constantly being violated in SEZs all over Asia.

Restricting Trade Unions and Banning Strikes

Trade union activism is either prohibited or highly discouraged in SEZs and other

enclaves.

China: Enforcement of labour laws within SEZs in China is very weak and irregular.

Moreover, regional labour laws (mostly in SEZs) allow the authority to dismiss and

discriminate against such workers who try to organise independently outside of the

official All China Federation of Trade Unions (ACFTU). Several reports suggest that

prisoners are forced to work in SEZs virtually as bonded labourers (TUAC 1997)

India: In India many labour laws are not properly enforced and monitored within SEZs.Informal measures have been taken to exempt the zones from labour legislation, and in

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some states, such as Andhra Pradesh, the Department of Employment has been

instructed not to carry out inspections in the zones (ICFTU 2003). Strikes are not

allowed in SEZs in almost all Asian countries; though not necessarily by law.

Minimum Wages and Working Conditions in SEZs

Though it is difficult to make any general remark about minimum wages in SEZs, the

experiences of some countries reveal that minimum wages are not fully enforced in

economic zones. As per an ILO study, workers in Asian SEZs were found working 10 to

12-hour shifts that could go up to 16 hours during peak periods. Some firms used a

quota system, which workers had to meet in order to receive their day‘s pay

(Aggrawal2007).

China: In China, average working hours in SEZs vary from 54 to 77 hours per week and

overtime is more a rule than the exception (Aggrawal 2007 Safety regulations were not

followed properly and factory fires were quite common in different Asian SEZs, claiming

hundreds of lives. In the Guangdong SEZ in China, the most prominent SEZ district, the

death rate is rising by 62% a year (TUAC 1997).

Exploitation of Women Workers in SEZs

Women dominate the workforce in EPZs in most developing countries. In spite of the

large numbers of female workers in SEZs, the fact remains that the high incidence of

abuse of female workers is a matter of grave concern in SEZs. Majority of female

workers are young women between 16–25 years of age (Aggrawal 2007). Many

researches point out the fact that women are paid less than men for similar jobs and are

subjected to gender violence in these zones. Majority of women are engaged in low-

paying, low-productive jobs with insecure contracts and without any

social/health/maternal benefits. Over time, as the SEZs evolve with higher technological

inputs, female workers are simply replaced by more skilled male workers. Country

experiences illustrate the exploitation of women in SEZs. In China female workers are

often dismissed by the age of 25 and they are forced to return to their villages since

migrants cannot live in SEZ districts (TUAC 1997). All these confirm that SEZs are not

the tool for women empowerment in poor Asian countries as claimed by some. SEZs do

not guarantee long term employment for women and hence contribute very little in their

sustained empowerment. On the contrary these enclaves are zones of special

exploitation of female workers.

SEZs Shaping Access to Land, Livelihoods and Food Security

Land and SEZs are inseparable issues. The expansion of SEZs demand large amounts of

land and as states assume the responsibility of providing infrastructure (except in a few

cases), governments frequently resort to the Compulsory Acquisition of Land

(CAL) which has intensified over the years. The large scale acquisitions of land entailed

by SEZ development have had serious consequences on the livelihoods and food security

of weaker and vulnerable communities in Asia.

Compulsory Acquisition of Land (CAL) or SEZs and Land Conversion

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In some countries the government even amended existing laws to make it easier to

acquire land for big investments. The CAL has resulted in the eviction of hundreds and

thousands of peasants and endangered their food security, thereby worsening the

poverty and hunger scenario in the continent. The proactive role of the state in providing

land to big investors at the cost of land reform unmasks the political priorities of the

states — which clearly favour expansion of SEZs and ignores the need to address thestructural causes of poverty for meaningful and sustainable development.

China: Efforts started as early as the 1980s to develop the legal basis for land use rights

of private investors and to develop the lease system for the promotion of SEZs. National

as well as provincial and local governments introduced several zones and offered lands

as incentive to the investors to attract investments. By 1992 around 6,000 to 8,700

zones existed with an area of 15,000 square kilometres (Goplakrishnan 2007).The worst

hit was the agricultural belt as the rapid conversion of land affected the landholdings of

peasants. As of March 2005 (Qinglian 2007) more than 40 million Chinese farmers have

been displaced from their land since the beginning of market-oriented economic reforms.

As a result, nearly all displaced farmers have been thrown into poverty. In some cases

the local government paid little compensation to the persons affected by the land

acquisition and afterwards sold that land at a much higher price.

Qinglian gave the example of the government of Conghua City in Guangdong Province.

In this SEZ province, the government forcibly evicted merchants from their shops in the

town‘s Xiaohai District, paying proprietors 2,500yuan per square meter in compensation.

Afterwards the government decided to sell the land for 13,000 yuan per square meter

upon completion of the Xiaohai development zone project (Qinglian 007)...

India: India on the other hand has used the Land Acquisition ct (LAA) 1894, for CAL.This is a colonial act which does not require adequate consultation and participation of

stakeholders in the acquisition. Different state governments in India have proposed to

amend the land ceiling acts so as to allow large scale accumulation of land for SEZs,

which currently is restricted by the land reform laws. Also important is the fact that often

these CALs in India are associated with gross violations of human rights. Affected

peasants seldom get adequate and fair compensation as well as economic and cultural

rehabilitation. The process of CAL is generally marked with violence and involvement of

armed forces. Another big concern is the development of speculative land markets in

SEZs in India. The SEZ Act states that as much as 75% of the area under an SEZ could

be used for non-industrial purpose. This option will give rise to real estate business in

SEZs which by no means would strengthen the local economy. On the contrary, this islikely to introduce large scale real estate speculation.

Emerging People’s Resistance to SEZs

As SEZs expand into new regions, the victims of this offensive are also mobilising

themselves to fight back. The resistance to SEZs is advancing on two fronts:

1. Workers in SEZs are raising their voices against unjust and exploitative working

condition and contracts

2. Peasants and other rural actors who are suffering due to the loss of their

livelihoods. Besides workers and peasants, some concerned economists and many

social activists have also raised their voices against SEZ policy

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China: Guangdong, the biggest SEZ province is also the worst affected district in terms

of the ill impacts of SEZs. Social instability has reached alarming proportions in this

province. SEZs like Shenzhen in Guangdong, which is known as the miracle in China, is

plagued with a host of problems. Shenzhen is suffering from environmental pollution,

increasing crime and labour problems arising from severe exploitation of migrant

workers in the SEZ (Goswami 2007). SEZs in China are doing ‗miracles‘ for a few, at thecost of irrevocable damage to the environment and the economy of the country. SEZs

are making profits by exploiting workers. Violations of labour rights and the right to food

and livelihood security of the weaker sections of the population are rampant in the

country. People‘s resistance against SEZs in China is intensifying. The profits accruing to

the state from SEZs are spent on controlling pollution and pacifying mass unrest. SEZs

will have to face the strongest challenge not from the global market but from this

emerging people‘s resistance in the country.

India: In India spontaneous resistance against the expansion of SEZs is also taking

place, mainly concerning the issue of CAL and human rights violations. Farmers in

different corners of India are raising their voices against the common concern, i.e. loss

of land and loss of livelihoods due to SEZ expansion. Several civil society organisations

and human rights groups have also come forward to express their solidarity toward the

movements against SEZs. All over India several strikes and protest marches are being

organized by farmers and other victims of SEZs.

Comparison between India and China

Issue China India

Size Typically in hundreds

of hectares.

Even 10 hectares will

do

Location located only on

coasts.

Anywhere. No

restriction

Labour laws Relaxed Flexibility is totally

absent

Policy regime Experimentation of

liberal policies in the

specified areas

Based on fiscal sops

Investors Basically foreigners who

are wooed with sops

and promise of stability

in policy.

Basically locals. Not

foreign investor driven

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Commencement In 1979 In 1969 with the export

processing zone

concept,but failed

Number Only six: Shenzhen,Zhuhai, Shantou,

Xiamen, Hainan and

Pudong

So far 28 operational.About 200 received

approvals

Tax holidays Present Longer and steeper than in

China

SEZ Report

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