SEZ who?

The Centre must stand firm in rejecting the decision by the Congress-led government in Goa to cancel 15 proposals to set up Special Economic Zones in the state. The UPA will lose credibility if it is not able to keep its commitment to industry on maintaining policy stability. It will be sad if the Centre gives in to rent seeking by the local politicians. The act of going back on notified SEZs is even more galling given that the state in question is ruled by a Congress-led coalition. Of the 15 proposed SEZs three have already been notified by the Centre after the state government earlier recommended them. The other 12 SEZs too have been recommended by the state government but remain to be notified. However, the land has been formally allotted in the case of all the SEZs. In the case of SEZs already notified construction is under way and investments worth Rs 500 crore are in the pipeline. Equipment has already been imported at zero duty by one of the SEZs being set up by a well-known pharmaceutical company. The company also has other non-SEZ operations in Goa where the bulk of the people employed are locals. The Centre will have to decide whether it wants to generate more employment or let rent seekers have their way.

Legally, the state government just cannot cancel SEZs which have already been notified and where work has started. The courts may not allow that. However, since land use is a state subject, the Goa government will try to cancel the SEZs which have not been notified. Technically they can do so. It is here that the Centre must stand firm. Technical arguments will not help restore the credibility of the UPA if it gives in to pressure from the Goa Chief Minister Digambar Kamat.

The country has gone through a fairly robust debate on the feasibility of SEZs. Several modifications to policy have been made in the area of land acquisition. Even within the UPA it is now accepted by all that SEZs are indeed desirable to drive development. It is of paramount importance that India moves large sections of its population from low-yielding agriculture to industry within a democratic framework. That is precisely what the SEZ policy seeks to do. The UPA must do everything to maintain the integrity of this process.