Special Economic Zones

Government Of India announced a comprehensive SEZ policy in April 2000 as a part of the EXIM Policy, which was followed by SEZ Act in February 2006. This act aimed to promote economic growth and development in the form of greater economic activity, promotion of investment, creation of infrastructure, growth of employment and promotion of export. After enactment of the Act, the country has witnessed several protests resisting land acquisition initiatives for SEZs.

Growth pattern of SEZs Among all the states of India, Andhra Pradesh boasted of operating maximum number (36) of SEZs in the country following Tamilnadu, Karnataka and Maharashtra. Over a period of time the growth curve of SEZs had indicated preference for urban agglomeration by industry, undermining the objective of promoting balanced regional development.Another significant trend in the SEZ growth has been the preponderance of IT/ITES sector and only 9.6 percent were catering to multi product manufacturing sector.

Land allotment and utilization Land is the most crucial part of the scheme.out of 45635.63 hectares of land notified in the country for SEZ purposes, operations commenced in only 28488.49 hectares (62.42%) of land. In terms of area of land, out of 39245.56 hectares of land notified in the six states,5402.22 (14%) of land was de-notified and diverted for commercial purposes in several cases. Many tracts of these lands were acquired invoking the public purpose clause. hus, land acquired was not serving the objectives of the SEZ Act.

Though the objectives of the SEZ id employment generation, investment, exports and economic growth, however, the trends of the national databases on economic growth of the country, trade, infrastructure, investment, employment etc. did not indicate any significant impact of the functioning of the SEZs on the economic growth.

Generation of employment opportunities, encouraging investment (both private and foreign) and increasing India's share in global exports were the important objectives of the SEZ Act. Performance of sampled SEZs (152) in the country indicated certain non performance in employment (ranging from 65.95% to 96.58%), investment (ranging from 23.98 % to 74.92%), and export (ranging from 46.16 to 93.81%).

(Data Source : https://www.cag.gov.in/sites/default/files/audit_report_files/Union_Performance_Dept_Revenue_Indirect_Taxes_Special_Economic_Zones_SEZs_21_2014.pdf)

land allotted for SEZs was misused and diverted. This is especially important in the light of the discussion happening around the Land Acquisition Ordinance of the NDA government.(Report number 21 of 2014 of the Comptroller and Auditor General of India (CAG) on Performance of Special Economic Zones (SEZs)) Diversion of SEZ land for commercial purposes: 14% of land i.e., out of 39245.56 hectares of land notified in the six States. 10,5402.22 hectares was diverted for commercial purposes after de-notification. Many tracts of these lands were acquired invoking the ‘public purpose’ clause. Thus, land acquired was not serving the objectives of the SEZ act. Restricted land allotted for SEZ activity: Nine (9) SEZs were allotted land which was restricted under various statutes (Defence, Forest, Irrigated land) in Andhra Pradesh, Maharashtra and West Bengal involving 2949.61 hectares of restricted land as detailed below.

Nature of Land	State	Area of Land (in Hectares) Notified as SEZ	Area of Land (in Hectares) Under restricted category	Area of Land % of restricted land notified as SEZ
Defence land	Andhra Pradesh	80.93	29.54	36.5
Forest land	Andhra Pradesh	331.97	331.97	100
Forest land	West Bengal	36.42	21.93	60.19
Irrigated land	Andhra Pradesh	3587.38	2556.14	71.25
Green Zone	Maharashtra	10.03	10.03	100
Total		4046.73	2949.61	72.89%

Loans raised on SEZ land used for non SEZ purposes : 11 developers / units in Andhra Pradesh, Karnataka, maharashtra and West bengal had raised loans of Rs. 6,309.53 crore against mortgage of lease hold government land.CAG also noted that 3 out of the 11 developers/units had raised loans amounting to Rs 2,211.48 crore (35% of 6309.53 crore) against the notified SEZ land which are not put to use.

Non fulfillment of leasing conditions by developer: A developer in AP was given land Rs 1 Rupee per acre per annum on the condition it can provide employment for about 60,000 people within 5 years of the commitment fulfillment date of Government of AP. As of March, 2013, only 11,737 people were employed (19.6% of the committed number).

Approval of SEZ without required land use permission: SEZ was approved without carrying out the due diligence of verifying the title and usage of the land proposed by the developer. In M/s Sricity SEZ, Andhra Pradesh declared in its application that the land acquired and allotted by the Corporation shall be utilized for developing multi-product SEZ only. The Developer requested (February 2006) for 5442.5 hectares of land for establishment of SEZ out of which 3158.70 hectares was handed (May 2006 to December 2011) to Developer. The land was acquired at Rs 2.5 lakh per acre for dry land and Rs 3.0 lakh per acre for wet land. The Developer notified only 1538.12 hectares of land (September 2007 to April 2010) and further de-notified 449.54 hectares of land (October 2010 and November 2011). Thus land involving 2070.12 hectares of the total allotted land was not used for the intended purpose. In case of Essar Steel Hazira Ltd. and Reliance Industries Ltd, Jamnagar SEZs in Gujarat, the de-notified area stood at 247.522 hectares and 708.13 hectares respectively.

Get a second approval despite failing to use the first SEZ land: For example - M/s Kakinada SEZ, Andhra Pradesh was granted formal approval for setting up of another multi product to the already approved SEZ in Kakinada on 1013.60 hectares of land in February 2012 even though the first SEZ measuring 1035. 66 hectares was not put to use.

Underutilization of land in processing area: For e.g., in case of Adani Ports, out of the notified (May 2009) area of 6472.86 hectares, only 833.77 hectares was utilized leaving 5639.09 hectares (87.11 per cent) un-utilized so far.

SEZ Land lying idle in Various States: According to the CAG, out of the 392 notified zones, only 152 have become operational. In various states, the Developers had not commenced investments and the land had been lying idle in their custody for 2 to 7 years.

State	% Of SEZ land lying vacant
Andhra Pradesh	48.29
Gujrat	47.45
Karnataka	56.72
Maharashtra	70.05
Odisha	96.58
Tamilnadu	49.02
West Bengal	96.34