SEZ Saga continues .....

Background on what are SEZ: SEZ's can be viewed as islands within India where infrastrucutre is provided by SEZ owner - the corporation and various industries are set up. In return companies within SEZ's dont have to pay income tax for atleast 5 years and then part income tax. The other benefits are no custom duties and excise duty (SEZ is considered foreign for these tax purposes). The condition on SEZ is that they have to be a net exporter. Net atleast $1 should be the foriegn currency earned out of SEZ (which is a relatively simple requirment). Estimated cost of this policy to the nation over 10 years is Rs. 1,00,000 Crore in lost tax revenue or more as per the Finance Ministry of India.

After Nandigram SEZ approvals throughout the country were put on a hold till further notice. It was said that there is a "National Rehabiltation Policy" which is being discussed and once thats finalized SEZ's approvals will start.

Fast Forward 4 months and the "National Rehabilitaion Policy" is still draft version in the ministries, but SEZ approvals have started. Infact around more than 100 more SEZ's have got approval after that. Well there was one series of changes in the SEZ policy which were announced. Those were

1. size of SEZ is being restricted to 5000 hectares or sth. (Reality: To get around it corporations are now breaking up SEZs so that in contigous its more than 5000 hectares but any single SEZ is not large.
"Though RIL initially planned a single SEZ in Navi Mumbai, sources said it later decided to split the zone into four projects in order to bypass the contiguity issue and avoid procedural roadblocks." )

2. Now earlier 75% of SEZ land could be used for housing/retail - basically non-industry and only rest 25% land must be used for industry. That limit was increased to 50%. on 50% of SEZ land its housing and real estate.

Also now govt doesnt acquire the land it asks corporations to deal with it directly with farmers (though state govt. usually put in restrictions for sale of land other than to the SEZ owner - that was the case in Maharastra case atleast a few months back).

So basically nothing substantially changed in SEZ policy. There was noise for some time but now everything is hunky-dorry. The left parties also dont protest now as they are doing the same in West.

Notice I have not even raised the issue of land acquisitions and how bad they get. Even leaving that aside that, this is a CORPORATE SUBSIDY. More later on "flawed" rationale for SEZ's.

http://www.financialexpress.com/fe_full_story.php?content_id=167987