By Anuradha Shukla, IANS,
New Delhi : The merits or otherwise of special economic zones (SEZs) are under a raging debate in India but the realty industry is upbeat about the prospect of such zones and says it will drive infrastructure development in the country.
“Establishing world-class industrial infrastructure is an expensive proposition. Encouraging special economic zones is the best solution to create these pockets of growth,” says Rohtash Goel, chairperson of realty major Omaxe.
“To meet the demand for housing infrastructure, the government must also create special residential zones,” says Goel, referring to the tax and duty sops given to SEZs in the country.
The incentives make development of SEZs a highly profitable proposition. Little wonder many developers are setting up projects under the special scheme not just in metropolitan cities but also in smaller towns.
Figures, in fact, suggest that 214 SEZs have so far been notified. In addition, formal and in-principle approvals have been given to 439 and 138 such zones, respectively.
According to Subir V. Gokarn, executive director and chief economist of credit rating agency CRISIL, “By offering incentives to developers, the government is attracting much required investment.”
He feels this eased the financial burden for an important task that has traditionally been the responsibility of state governments – a view that finds support among realty developers.
“It was the government’s incentives to developers that established the twin cities of Noida and Greater Noida as a symbol of industrial and realty growth in less than a decade,” says Arvind Mohan, the general manager of Ansal API.
S.N. Sharma, the director for SEZs with another realty major, Parsvnath, has a similar view.
“Special economic zones are essential for rapid economic growth as it insulates industry from restrictive local laws, red tape and an army of various government inspectors.”
According to industry chamber Confederation of Indian Industry (CII), SEZs have facilitated a rise of 200 percent in exports and attracted investment of $17.66 billion.
Exports from 214 of such special zones are likely to cross $25 billion by 2008-09, with 10,000 additional jobs, the industry lobby said in a study.
But the model adopted for SEZs in India has generated protests in areas where farmland was being acquired, which led those being displaced to feel that they were being deprived of their source of livelihood rather cheap.
“I would say the fears expressed by farmers are largely based on lack of proper information about the compensatory benefits given to them,” says Sharma. “They are getting a hefty amount. Many farmers in Gurgaon or Noida are millionaires.”
Mohan feels those raising objections must look at the larger picture. “Since 70 percent of India’s available land is farmland, industrial projects may have to involve some parts of it.”
Adding another dimension to the story, Sharma says the land acquired for these SEZs is just 0.12 percent of the available farmland and that some amount of realignment of land use pattern has to be accepted in India.
“For this, what is required is strong political will,” says Gokran. “The government should lay down better policies so that the people whose land are acquired are properly relocated and get employment from these zones.”