India economic zones get go-ahead

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The Indian government has given final approval for 24 Special Economic Zones (SEZs) to be created in the country.

Big companies, including Reliance Industries and Wipro, are among those to have their plans given the go-ahead.

The Commerce Ministry decision comes after a two-month freeze on approving SEZs, which have attracted protests from threatened farmers and landowners.

Inspired by similar zones established in China, the tax-free enclaves are seen as a way to promote trade.

Proposals for another nine SEZs were approved pending scrutiny by state government departments, while a further 13 applications were deferred.

Investment hopes

Among those projects given clearance are Reliance Industries' proposed 440 hectare site in northern state of Haryana near New Delhi, and another in Rewas in the western state of Maharashtra.

The Rewas scheme, located in the Delhi-Mumbai corridor, will have about 200 high-speed freight trains linking trade zones with industrial complexes and ports.

Industrial conglomerate Tata has had an SEZ approved for the eastern state of Orissa, while IT firm Wipro's proposal in the southern state of Andhra Pradesh has also been given the green light.

Overall, Manmohan Singh's government has given approval for 111 SEZs in the past two years.

There is no clear policy yet on how companies should go about acquiring land M K VevuNational editor, Economic Times

India believes that the zones will help provide employment and secure large amounts of foreign investment.

The initiative has inspired huge interest among would-be developers but has also prompted resistance from rural communities in India, where farming is the mainstay of some two-thirds of the population.

Recent government moves to clear land for a petrochemical centre in West Bengal led to conflicts killing 14. Other regions also saw protests.

This, and other protests by farmers has led the Indian government to bring in a law that would ensure financial compensation and jobs to people who would be displaced by these zones.

The 'Rehabilitation Policy' was to be introduced in Parliament earlier this year but differences between various ministries has delayed it.

'Commitment signalled'

Prime Minister Singh has also faced opposition from the finance ministry and central bank over tax incentives to be provided to industries in these enclaves.

The government "has still not resolved pending issues," says the national editor of The Economic Times, M K Venu.

He added that by clearing 24 proposals, the government had "signalled its commitment" to SEZs but pointed out that it had not cleared any of the controversial schemes, which require acquisition of vast tracts of land.

"There is no clear policy yet on how companies should go about acquiring land. That is a political issue and will take some time to sort out," Mr Venu pointed out.