SEZ means Special Economic Zone is the one of the part of government’s policies in India. A special Economic zone is a geographical region that economic laws which are more liberal than the usual economic laws in the country. The basic motto behind this is to increase foreign investment, development of infrastructure, job opportunities and increase the income level of the people.
The SEZ was first established by the China for increase in investment and increase job opportunities and technical knowledge and bring about certain tax reforms.
SEZ was introduced on 1/4/2000 in India with a view to provide an internationally competitive and hassle free environment for exports and make the domestic enterprises and manufacturers globally competitive. The units set up under SEZ can be for manufacturing or rendering service. The policy provides setting up the SEZ in the public sector or private sector or by joint sector or even by the state government.
Advantages of Sez:
SEZ’s are good from the point of view of growth and development. It increases income level of citizens, encourages competition and lowers labor costs.
Attracts FDI and exchange earnings:
FDI spells long term capital that can help sustain solvency. Also FDI will ensure meaningful ownership, in times of adverse claims pay put, it is only through the FDI route that foreign stake holders will infuse capital to come over the adverse situation
The state id well informed about the latest technology and also relevant information regarding the trade that goes on all over the world and how the domestic producers can penetrate into several markets. And private business’s can position them in the world market and boost the standard of living of citizen’s.
SEZ’s also create a lot of job opportunities:
Also when SEZ’s become a success it increases the GDP, and acts as a good economic model for the policy makers to mimic.
But SEZ has so many disadvantages too.
First and main loss of SEZ is large scale acquisition of land takes place which results in displacement of farmers and alternate means of livelihood are not available for them. This issue is a major problem; it is tough to relocate them to other jobs. It has to be seemed that it could create socio-economic disparities as the SEZ would accommodate the high and mighty the poor people will be pushed towards poverty and unemployment.
Second is lack of cultivable land, if cultivable land should be short than growth of agriculture should be reduced. That’s why the prices of food grains should be more up and inflation rate will be at top.
Third in the area of employment the disadvantage of SEZ is quite similar to the disadvantages of Wal-Mart entering retail business. New jobs are created and working conditions improve, but for whom…? It is for the educated masses and the literate people and not for the laborers. Laborers suffer in the form of; forced overtime, exhausting work schedules; poverty pay, and unhealthy working conditions. The majority of workers in the SEZ units are women who are exposed to the most humiliating sexual harassment s. Free trade creates a “race to the bottom”, whereby developing countries lower their labor charges and environmental standards in an effort to attract foreign investment.
Fourth, Companies would like to simply relocate to SEZ to take advantage of the tax concession’s being offered. This will bring about a significant revenue loss to the government. The companies that incorporate under SEZ enjoy a lot of tax holidays, this will result in a kind of ‘disguised industry’ just as ‘disguised unemployment’.
The Finance Ministry has estimated that SEZs could run up a revenue loss of Rs 1, 75,000 crore in direct taxes, custom and excise duties over the next five years.
At in the last, question is that what is the importance and necessity of SEZ in India? Is SEZ compulsory on the cost of thousand acres cultivable land, and the livelihood of farmers? Due to this sage government bare the lot of revenues losses, Farmers are fighting with the government and government surrendered in front of industrialist. Why is SEZ important?