The Political Geography of Special Economic Zones in India

October 27, 2010

By Partho Sarathi Ray, Sanhati

Summary: We found from the geographical distribution of SEZs in India that SEZs have been set up near the big cities, on fertile agricultural land, in coastal areas and in areas rich in water resources, and in the states where the governments have been most aggressively following neo-liberal economic policies. This dispels several myths, for example the fact that SEZs will build new infrastructure in the interior. In addition to the clusters, there are also vacua: we see how a spectrum of peoples’ struggles, ranging from the legal methods used in Goa, to the peaceful protests by the villagers of Jagatsinhpur in Orissa against the POSCO SEZ, to the armed struggle being waged in large parts of east-central India, has been able to stop the establishment of SEZs in large portions of the country.

Five years have passed since the first United Progressive Alliance (UPA) government passed the Special Economic Zones (SEZ) Act in 2005. In these five years 111 SEZs have started functioning in different parts of the country, 353 have been notified and 574 have received in principle approvals from the government. Altogether 1083 SEZs, in different phases of development today, represent the most naked form of aggression by neo-liberal capital in India. This huge number of SEZs is unprecedented in any other country in the world. 1.5 lakh hectares (3.75 lakh acres, 1 lakh = 100,000) of land has been acquired, or is in the process of acquisition, for the setting up of these SEZs. It has been calculated that around 2.7% of the total arable land in India is in the process of being diverted to SEZs. This number might not sound large in itself, but considering the pressure on agricultural land in India, and the precarious condition of food security of a large section of our population, diversion of such a proportion of agricultural land to non-agricultural purposes might spell disaster, especially under conditions when normal agricultural production is affected, for example when the monsoon fails, as has happened in some parts of India this year.

On one hand, the SEZs represent the handing over of resources such as arable land to corporate capital, on the other they have come to represent a huge burden on the public exchequer. The central finance ministry has estimated that over the past five years of operation, the SEZs have caused a loss of Rs 16000 crores (1 crore = 10 million) to the country in the form of tax and customs duty exemptions; in the 2009-10 financial year itself the extent of this loss is Rs 3204 crore. However, even with these huge tax exemptions, and allocation of resources such as subsidized land, electricity etc. many corporations have increasingly found the SEZs to be a unprofitable proposition, especially in the context of the recession in the world economy and reduction in demand in the western economies. Being dependent on exports by definition, many industries operating within SEZs have found their profits plummenting over the past two years, and nearly a dozen SEZs have denotified themselves over the last six months, the latest being the Jindal Steel Works SEZ at Salboni in West Bengal. In order to maintain the high level of profits, SEZs have increasingly gone into the real estate business as their mainstay, and the central and various state governments are coming out with a slew of new policies and legislations to keep the SEZs as an attractive business proposition to corporations, the latest being the proposed legislation by the Maharashtra government (Maharashtra special economic zones and designated areas act 2010) which plans to designate powers of local self governance to SEZs and to further reduce governmental regulation of activities within the SEZ. All this has turned the SEZs into virtually foreign enclaves on Indian soil dedicated to unchecked profiteering by national and multinational corporations.

Analyzing the development and distribution of SEZs in different parts of India in the last five years gives us some ideas about the political geography of special economic zones in India. The information about where SEZs have been established, and where they have not, allows us to make some surmises about the politics, economics and commercial motivations behind SEZs and gives us a picture of the ongoing corporate aggression on natural resources, and also the multifarious resistance movements against it that has erupted in large parts of the country.

And this picture becomes clearer when we look at the accompanying map (at bottom of article). This map has been prepared by anti-SEZ activists Aseem Srivastava and Kashif Ali as a part of the Citizens’ Report Card on SEZs prepared by a number of organizations involved in the struggle against SEZs in India. This map indicates the location of all the SEZs on a map of India and includes SEZs established before the promulgation of the SEZ Act 2005 (such as Falta in West Bengal and Kandla in Gujarat), SEZs notified under the SEZ Act 2005, and SEZs granted in principle and formal approvals. We will try to analyze the political geography of SEZs in India from the distribution of SEZs as shown by this map.

Where are the SEZs?

1. IT SEZs in Maharashtra, AP, Karnataka, Tamil Nadu

Firstly we will see in which parts of India the highest number of SEZs have been established and try to understand the economic and commercial reasons behind this distribution. From the map we can immediately see that the highest number of SEZs is in the states of Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. A majority of these, around 66%, are in the information technology (IT) and information technology-enabled services (ITES) sectors. We should remember that even before the enactment of the SEZ Act, these states where major centres of the IT industry, mainly because the IT sector was given tax holiday till 2010 and other benefits such as land and electricity at subsidized rates in these states. After the enactment of the SEZ Act, these same IT companies vied with each other to get into SEZs so that they could continue enjoying tax breaks for a further fifteen to twenty years. Which means that after earning super profits for the past two decades riding on the IT boom, in a large part facilitated by generous subsidies and benefits from the public exchequer, these corporations are now ensuring that they can continue to enjoy these benefits for the foreseeable future. Together with this we should remember that these are the same states that have implemented the most aggressive neo-liberal economic policies for the last decade and half. As a result, on one hand as unfettered profiteering by capital has been facilitated, on the other hand investment and expenditure in agriculture and social sectors have been curtailed. In this context it would be useful to remember that the most number of suicides by debt-ridden farmers have also taken place in these states.

2. SEZ clustering near big cities: Connection to real estate

After this we see that most of the SEZs are clustered around the big cities, specifically the metros. A majority of the SEZs are situated in and around Delhi, Mumbai, Kolkata, Bengaluru, Hyderabad and Chennai. From this it is clear that one of the original declared motivations behind the development of SEZs, that SEZs would help in infrastructure development in the underdeveloped regions of the country as SEZ developers would build roads, communication and power supply networks in areas surrounding the SEZs, have completely failed. SEZ developers have invested nothing for the development of infrastructure in interior areas, rather they have tried to locate the SEZs mostly near cities where there is existent infrastructure thereby increasing the pressure on this infrastructure. And as the SEZs are strongly supported by the state governments, they are enjoying a disproportionate share of this infrastructure such as water, electricity etc. and the common people are being deprived of the same. A brightly illuminated SEZ in a neighbourhood completely darkened due to a power cut is a common sight in many of these big cities now.

Another major reason behind the centering of SEZs in and around big cities is the real estate business which goes by the name of SEZs. It is for this reason that all the big real estate companies such as DLF, Emaar, Parsvanath, Raheja etc. are in the business of developing SEZs today. In most of the ITES SEZs, a couple of IT companies provide the façade behind which goes on a lucrative business of running shopping malls, multiplexes, hotels and luxury housing. This has been further facilitated by the government regulation that only 35-50% of the land in a SEZ need to be used for industrial purposes, the rest can be used for purposes such as real estate development. Over the last two years as land prices had depreciated in the big cities due to the economic recession, the government amended the SEZ rules to bring down the minimum land required for the building of multi-product SEZs in fifteen medium-sized cities to 250 hectares from the erstwhile 500 hectares. These include cities such as Raipur, Varanasi, Dhanbad and Amritsar. It has been further reduced to 125 hectares in the smaller cities. This means that the land around these cities has also been opened up for real estate speculation via SEZs and in the next few years we might expect a few hundred more SEZs in this map around the medium and smaller-sized cities.

3. SEZ clustering on agricultural areas

The third thing that becomes clear to us from this map is that many of the SEZs are coming up in fertile, agricultural areas. These include the Gangetic plains of West Bengal, Vidarbha and coastal areas of Maharashtra, south Karnataka, coastal areas of Kerala, Tamil Nadu and Orissa and the agricultural areas of Punjab and Haryana. Although the central government had initially claimed that not more than 0.5% of the arable land in the country would be acquired for SEZs, this amount has now increased by fivefold to around 2.7%. Agricultural land, and the non-agricultural common land in villages that is used by marginal sections of the agricultural population for grazing livestock and other means of subsistence, is being grabbed for SEZs, thereby putting the lives and livelihoods of a large section of the rural population in jeopardy. Rising food prices on one hand, and ever-decreasing government investment in agriculture, is pushing the country toward a food crisis in the near future. Under these circumstances, diverting this huge amount of agricultural land for non-agricultural purposes will worsen the situation. Together with this, states like Uttar Pradesh, where agriculture is the mainstay, and which have been left behind in the race for setting up SEZs, are now trying to hand over huge tracts of agricultural land to corporations, although not for setting up SEZs. The case in point is the attempt by the UP government to transfer around 1 lakh acres of land to the J P Group for building the Yamuna Expressway in Western UP and the three times larger Ganga Expressway in Eastern UP, and associated “high-tech” cities. The recent police firing on farmers in Aligarh, protesting against land acquisition for the Yamuna Expressway, should be mentioned in this context.

4. SEZ clustering along coastlines

The next thing that this map brings to our attention is that the entire coastline of India is being handed over to national and multinational corporations for setting up of SEZs. Starting from Gujarat in the west to West Bengal in the east, nearly the entire coastal regions of all the coastal states are dotted with large and small SEZs. Many of these SEZs are being specially established for commodities like petrochemicals and steel, which have large international markets. Which means that raw materials will enter these SEZs from either within the country or would be imported, to be processed into various exportable commodities which will go out of the country. For this purpose, huge tracts of coastal land in the states of Gujarat, Andhra Pradesh, Orissa and West Bengal is proposed to be handed over to private operators for setting up what has been christened as Petroleum, Petrochemical and Chemical Investment Regions (PCPIR). The PCPIRs of Andhra Pradesh, Gujarat and West Bengal has already received approvals from the central government. The Andhra Pradesh PCPIR is being built over a 140 km long tract of coastal land from Visakhapatnam to Kakinada. On the 60,000 hectare (more than 180000 acre) land that will be included within this PCPIR, five SEZs are being established. On the other hand more than 10,000 acre of coastal land south of Kakinada has been handed over to the G M R group for setting up another SEZ. Between these two SEZs, nearly the entire AP coast has already been sold off. The Gujarat PCPIR is being specially built with financial support from US corporations such as Dow Chemicals, Dupont and Raytheon to house their production units which have not been able to get environmental clearance in the US for a long time. The West Bengal PCPIR, to be developed by the Salim Group of Indonesia, was shifted from Nandigram because of the historic resistance by the people there. It is now proposed to be built on 250 square kilometers of land comprising the deltaic island of Nayachar and the contiguous areas of Haldia. The pollutants emitted from the highly polluting chemical and petrochemical industries to be situated within these SEZs have the potential to damage the fragile ecosystems of these areas irreparably. And this pollution is also going to cause the destruction of the marine life on which millions of fisherfolk in the country are dependent for their livelihoods. On one hand they are being displaced from their coastal villages because of land acquisition for SEZs, on the other hand the setting up of polluting industries in these SEZs will destroy the “crop of the seas” which is their main source of income, thereby pushing them towards certain destitution. To facilitate this process, the central government is trying to change the Coastal zone regulation act into a lax Coastal zone management act which will allow constructions in the coastal areas which were not allowed previously. On one hand as these petrochemical SEZs are being set up, on the other hand the deltas of various rivers, i.e. where the river opens into the sea, are being handed over to private corporations for the setting up of captive ports, as is being done for the Jatadhar river delta in Orissa, which has been handed over to POSCO for its SEZ in nearby Ersama. These sheltered mouths of rivers are especially suitable for building ports at a low investment, but once these ports are built these will adversely affect the natural movement of river water in such a way that the areas situated upstream of the river will get completely inundated, causing the ruin of the farmers and fisherfolk living on the river banks. On the other hand the establishment of these ports will destroy the ecosystems of the delta areas, as has happened in the case of the Dhamra port of the Tatas in Orissa.

5. SEZ clustering in river valleys: The loot of water

Finally, this map also shows us that the SEZs have turned out to be a great way for the looting of the water resources of the country. This is because we see that a large number of SEZs are coming up in the major river valley regions of various states. This includes the Narmada-Tapti valley in Maharashtra, the Godavari valley in Andhra Pradesh, the Kaveri valley in Karnataka-Tamil Nadu, the valley of the Mahanadi and its distributaries in Orissa and in the lower Gangetic valley in West Bengal. This means that the water of the major rivers of the land is going under the control of these SEZs at a cheap rate. And this is happening in various places where there is great scarcity of water for drinking and irrigation or there are intra-state conflicts on water usage such as the conflict between Karnataka and Tamil Nadu on Kaveri water. In many places water from dams are being preferentially supplied to SEZs rather than to farmers, as is happening for the Bharat Forge SEZ near Pune in Maharashtra, or has been proposed for the Jindal SEZ in Salboni in West Bengal. Today, while we see that because of scarcity of water for irrigation, crops are failing in different parts of the country, the central and state governments are handing over the control of water resources to the private owners of these SEZs.

Where are there no SEZs?

We found from this map depicting the geographical distribution of SEZs in India that SEZs have been set up near the big cities, on fertile agricultural land, in coastal areas and in areas rich in water resources, and in the states where the governments have been most aggressively following neo-liberal economic policies. Now we will see which regions of India does not have SEZs and try to analyze the possible geographical-economic-political factors behind that.

It is quite obvious from the map that there are nearly no SEZs in north-east India and Kashmir. Because of the geo-political sensitivity of these border regions, the government apparently does not give approvals for setting up SEZs in these states. Also, the higher costs of setting up SEZs in these remote and less accessible areas, and also the higher costs of transport and communication, does not make it a lucrative option for SEZ developers to set up SEZs in these states. Basically, all the reasons for setting up SEZs in a particular region enumerated above are generally absent from these regions. Moreover, the long standing movements for self-determination in these regions would have also dissuaded corporations from setting up SEZs there. We also see that there are no SEZs in the desert areas of Rajasthan or the arid regions of north Karnataka because of lack of water and other infrastructure.

Probing the absence of SEZs in Bihar and UP

Two major states where there are few or no SEZs are Uttar Pradesh and Bihar. The Nitish Kumar government of Bihar has taken a policy decision not to set up SEZs in Bihar. According to political activists and analysts from Bihar, the reason is not that Nitish Kumar is anti-capital or hostile to the corporates. The reason is the socioeconomic conditions specific to Bihar and the caste support base of Nitish Kumar’s government. The ownership of most rural land in Bihar is still in the hands of landlords and big peasants. These consist of both the traditional landowning Bhumihar-Rajput castes as well as other backward castes (OBCs) like Yadavs, Kurmis and Koeris who have been empowered in the last two decades and gained landholdings. The latter are the main support base of Nitish Kumar and their interests would have been directly hurt if land for SEZs had been acquired in Bihar, leading to the breakdown of the caste support base behind Nitish Kumar’s government. This is the reason why the current Bihar government is against SEZs in principle.

It is for the same reason that Nitish Kumar’s government rejected the recommendations for land reforms by the Debabrata Bandopadhyay commission, as that would have also affected the caste-based land ownership patterns in Bihar.

In Uttar Pradesh, especially in the eastern Purvanchal region, where caste-based land ownership patterns are nearly similar, the earlier Samajwadi Party or BJP governments did not try to acquire land for the same reasons. On the other hand, the current Mayawati government, drawing its support mainly from the landless dalits, did not deem it a problem to hand over huge tracts of land to corporations for the Yamuna and Ganga Expressways and other real estate development projects.

Peoples’ resistance prevents SEZ clustering

Finally, we see that the most important factor preventing the establishment of SEZs is peoples’ resistance. It is peoples’ resistance which has stopped the establishment of SEZs at Nandigram and Raigad, it is protests by people which has stalled a number of SEZs in Maharashtra or Orissa or has led to the cancellation of all SEZs in Goa. A very remarkable thing that we see in this map is that a huge tract of land comprising the extreme western part of West Bengal, the south-western parts of Orissa, entire Jharkhand and Chattisgarh, eastern parts of Madhya Pradesh, the Telengana region in the north-west of Andhra Pradesh, and going upto Gadchiroli district in the extreme eastern part of Maharashtra is virtually free of SEZs. The few SEZs that are there in this region are situated around the big cities such as Ranchi or Raipur. Although there are SEZs in areas close to this region, even in other parts of the same states, and although this region provides fertile soil and abundant mineral and water resources, what is the possible reason that there are no SEZs in this region? We find that this region is completely superimposable with the adivasi-populated region of east-central India where the insurgents of the Communist Party of India (Maoist) are waging an armed struggle against the Indian state. It becomes apparent that the resistance of the adivasi people, led by the Maoists, has prevented the capitalists from establishing SEZs in this region. The security and stability that is required for setting up an SEZ, and the facility to make profits in an unhindered manner which the capitalists envisage in a SEZ, are absent in this region, with the state also being unable to guarantee the same. Therefore it is the struggle of the adivasis to protect their resources, their jal, jangal and jameen, that has turned out to be a stumbling block in the path of establishment of SEZs in this region.

Therefore, if the Indian state is able to crush the peoples’ resistance in this region through operation Green Hunt, the ongoing war being waged against the Maoists, we might see the establishment of SEZs by various corporations in this region to exploit the mineral and other natural resources.

A look at the geographical distribution of SEZs on the map of India today clearly shows the scale of the aggression of big capital over the resources of India, resources that include our agricultural land, waters, sea coasts and infrastructure. However, we also see how a spectrum of peoples’ struggles against this, ranging from the legal methods used in Goa, to the peaceful protests by the villagers of Jagatsinhpur in Orissa against the POSCO SEZ, to the armed struggle being waged in large parts of east-central India, has been able to stop the establishment of SEZs and successfully resist this corporate onslaught.



4 Responses to “The Political Geography of Special Economic Zones in India”

  1. vinay sreenivasa Says:
    November 28th, 2010 at 11:31

    the political geography analysis is really useful!one question though – you say that Mayawati allowed corporates to allow SEZs because her support base is mostly landless Dalits. True, the landless Dalits did not lose land which they never had, but didn’t they lose their livelihoods once the farmlands govt gobbled up? Doesn’t this make them more vulnerable? Why would Mayawati want to do this?

    Also, is it possible to get the image file of the map above? will be useful in circulating around.

  2. skjit Says:
    December 12th, 2010 at 03:46

    interesting article. thanks.

  3. rupinder Says:
    May 17th, 2011 at 15:59

    thnks for the geographical perspective.

  4. k roy Says:
    May 21st, 2011 at 12:02

    SEZ concept has been changed in the recent years. The original concept was to import raw materials, process them into finished products which will be 100% exported. But now, SEZ means tax exemption without any contribution to the society by the promoters. Prime agricultural land is being diverted for industrial purpose. Considering the rise in population, the day is not far when our country will plunge into food scarcity. The barren lands, where no cropping takes place or there is no vegetation should be brought into use for development. It should be noted that visionaries like Dr BC Roy had developed Durgapur on barren land, 160 km away from Kolkata. Definitely real estate boom in Kolkata was not the agenda, proximity to raw material was. The height of misuse of SEZ concept is by Maharashtra where SEZ will not come under the ambit of Indian law. This is exactly what the British had extracted from the Moghuls when they set up their factories in various places in India and then they usurped the country. SEZ is no different from these British factories and only time will tell if our constitution is one day officially terminated by the SEZ promoters.

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