Untitled Document
Special Economic Zone by Fincy
Added on 2008-08-06 00:30:12
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Special Economic zones Act, 2005- A critique.
The article aims to critique the special economic zones Act 2005. First part of the article briefly outline the chief features of the Act, second part deals with right to development vis a vis the special economic zones Act, It tries to make a comparative study with the Land acquisition Act 1894, from the procedural perspective thirdly. Finally it examines how far the Act protects the fundamental rights envisaged under the Constitution of India in respect of right to life guaranteed under Art21.
SEZ – An Overview
The Government of India have announced the concept of Special Economic Zones (SEZs) in the year 2000 through a revision in the EXIM Policy 1997-2002 with a view to provide an internationally competitive and hassle free environment for export production. These SEZs are virtually deemed to be a foreign territory within the country free from all the rules and regulations governing the import and export. The SEZs are specifically treated as duty free enclaves for the purpose of industrial, tariff, service and trade operations with exemption from customs duties and a more liberal regime on levies, foreign investment and other transactions. The domestic regulations, restrictions and infrastructure inadequacies are sought to be removed for creating an investor & industry friendly environment. As per the Government of India guidelines, SEZs can be developed in the public, private or joint sectors or by the State Governments or their agencies. They are expected to promote establishment They are expected to promote establishment of large, self-contained areas supported by world-class infrastructure oriented towards export production. Exploiting the full potential of the concept of SEZs would bring large dividends to the State in terms of economic and industrial development and the generation of new employment opportunities.
The Government views the SEZs as engines of growth which will lead to increased growth and economic activity through increased foreign investment.
Chief features of the Act, 2005
The Act contains mainly 55 sections and three Schedules. Legislature also enacted a rule known the special economic Zones Rules 2006. The Act provide for the procedure for establishment of the Special economic zone under chapter 2 . It can be established by the Central Government, state government or jointly by both and also by any other person. After identifying the area the concerned person must make a proposal directly to the board for approval. After obtaining grant of approval it should also obtain concurrence form the state government within the specified time. The procedure provided under section 3 of the Act completely welcomes any person interested in setting up special economic zone provided if the conditions are complied with .The Central government shall follow certain guide lines before notifying an area as special economic zone . A board of approval to be constituted under the Act and it is vested with duties incidental for the setting up of the special economic zones . Once the approval for setting up of Special economic zone is given it is not final but if the board feels that the developer is unable to discharge the functions or persistently defaulted in complying with any directions or has violated the terms and conditions of the letter of approval or due to the poor financial condition of such developer he is unable to undertake his obligation the board may suspend the letter of approval .The board may instead of suspending the letter of approval may also permit it to remain in force subject to further terms and conditions. It further provide that the developer may with the approval of the board transfer his letter of approval to any person who is found eligible by the board for grant of such approval . The Act vests certain duties on the development commissioner viz., guiding the entrepreneurs for the setting up of the units in special economic zone; monitor the developers in SEZ etc . Further the act provides for the constitution of an approval committee, which is been vested with the powers of monitoring the activities at the SEZ. Each special economic zone has a special economic zone authority vested with the exercise of all powers under the Act .
Positive side of the Act
The Indian SEZ policy provides for development of theses zones in the government, private or joint sector. This offers equal opportunity to both Indian and International developers. 100% FDI is permitted for all investments in SEZ except for activities under the negative list. 100% income tax exemptions for a block of 5years and an additional 50% tax exemptions for 2 years thereafter. 100% FDI in manufacturing sector is permitted through automatic route, barring few sectors .External borrowing by SEZ units upto 500 million, facility to retain 100% foreign exchange.
Land Acquisition Act vis a vis Special economic zone Act : Government may acquire the land for various purposes viz., Public purpose, and Industrial purposes and for SEZ. Constitution of India no more guarantee the right to property as fundamental right, but it is merely a legal right where by a person can not approach the court for the violation of it as a fundamental right. There by under the land acquisition Act , 1894 the government can acquire the land for public purpose and for companies. Under the land acquisition Act proceedings start with publication of notifications under s. 4(1) by which public are informed about the acquisition of the land. Further section 5A provides for hearing procedure. Whereas under the special economic zone there is no such procedure is prescribed. Under the SEZ, if an area is been declared by the concerned authority the developers can go ahead with their power on making it an SEZ. Neither the Act nor the Rules of SEZ do not provide for the requirement of giving notice or giving right to hear the parties. The position of those persons whose land is compulsorily been disposed under the Act is not clear.
Whether the new rehabilitation policy of the government for those people whose land is been compulsorily acquired is applicable is yet to ascertain.
Right to Development vis a vis SEZ :
Right to development is the third generation right guaranteed under the International convention on right to development by the UN. Every person as well as every individual has the right to development. It is difficult often to balancing of protecting the rights of individuals and ensuring development. But the judiciary through in various cases like silent valley, Konkan railway etc provided that development must balance with the persons right to life. But the development must not completely neglect public interest. Adequate legislations must be enacted for the purpose of taking care of the interest of that section of people whose properties is been disposed for the development purposes. Mere granting of compensation in such a case may not be adequate. They must also been given the nature of employment they were involved in etc.
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Contact Author anantmandgi@hotmail.com
Designation Advocate
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