How many SEZ are there in India

India's special economic zones divide the country

India wants to set up special economic zones on a large scale, which attract foreign investments with well-developed infrastructure and low taxes. The model for the project is China, which was very successful with such zones. In India, however, there is resistance.

On the highway, just 60 kilometers from the gates of Delhi, there is still nothing to be seen of modern India far and wide. Just barren, sandy fields and isolated cement farms. The dusty desert wind blows hot in your face and eyes. Tractors chug past, and skinny men in brightly colored turbans drive herds of cows ahead of them. But in five to ten years this rural spot should no longer be recognizable. India's giant Reliance wants to build a “world-class city” from the drawing board on an area of ​​100 km [2], a state-of-the-art sister of the filthy Cinderella Delhi. The project operates under India's new special economic zones (SEZ), with which the center-left government wants to cover the subcontinent. China was the inspiration for the idea of ​​these zones, which attracted large numbers of foreign investors.

Gold rush

However, India does not just want to copy China's model, it even wants to trump it. While China has created five huge enclaves, Delhi has already approved 220 applications and plans to consider over 100 more. Domestic and foreign corporations are already lining up. The range of projects ranges from mini special economic zones to ambitious large-scale projects in Delhi and Mumbai. In total, special economic zones with an area of ​​around 1200 km [2] have already been applied for - half the area of ​​Luxembourg. The Indian media are already talking about a gold rush. In fact, the zones attract with hefty tax discounts. Companies are to be exempt from taxes entirely for five years, and by 50% for another five years. The builders even have ten-year tax breaks, duty-free imports and the monopoly to supply the zones with water and electricity and to run the catering trade.

The Indian concept of special economic zones, whose architect is Minister of Commerce Kamal Nath, is supposed to make a virtue out of necessity: India needs investments of $ 320 billion for the ailing infrastructure by 2012. But the state lacks the money. In contrast to China, the private sector is now supposed to create “islands of excellence” in the midst of mass poverty, offering world-class infrastructure. One of the largest projects is that of Reliance near Delhi. You could call it an oasis of luxury. Far away from the stench, noise and garbage in Delhi, which suffers from a chronic lack of electricity and water, business and private people should be able to work and live comfortably here.

Criticism from the IMF

In the meantime, however, the special economic zones are also coming under fire. The International Monetary Fund (IMF) publicly dismissed the Indian concept and spoke of “perverse” incentives. The tax exemption carries the risk that existing companies will simply relocate to the favored zones. This suspicion seems justified: Allegedly, over half of the zones applied for are smaller than 1 km [2]. As a result, Finance Minister Palaniappan Chidambaram fears a loss of revenue of $ 19.5 billion in 2010. Legal professionals also report concerns. The areas would have their own courts and parallel legal systems, said Prashant Bhushan, attorney at the Supreme Court. The Indian government can override any law it wants there, he adds. That is unconstitutional. Critics suspect above all a disguised expropriation behind the special economic zones. A special article enables easy access to land, including farmland, in the zones. The farmers are being compensated, but their future is uncertain. The respected Indian historian Sumit Sarkar outraged politics as the greatest land grab movement in the history of modern India.

Sonia Gandhi smoothes the waves

In view of the angry criticism, Congress President Sonia Gandhi felt compelled to smooth things over: if possible, no fertile, first-class land should be used for the special economic zones, she said. But the formulation leaves a lot of leeway. Not only fallow land - which hardly exists anyway - monoculture fields are also not considered to be first class. Trade Minister Nath pulled out of the affair by simply giving the buck to the states. They have the last word on the special economic zones applied for and must ensure that no first-class farmland is used.

Even the Reserve Bank of India does not seem convinced of the special zones. It classifies them as commercial real estate projects for loans and denies them the preferential status of infrastructure projects. In fact, only 35% of the area in the zones must be occupied by companies, the other 65% may serve other purposes; a total of 25% house construction. After an intervention by the Ministry of Commerce, the Reserve Bank of India indicated that it would recognize at least some of the special economic zones or parts of them as infrastructure projects and thus grant them better conditions.

The real estate lobby has a lot of influence in India. The industry is flourishing, because not only companies, but also the aspiring middle class are drawn from the chaotic, filthy metropolises to new suburbs. But building land is scarce. Critics fear that the special economic zones will create a "two-speed India". While companies and the better-off flee to the new luxury cities, the masses of people remain cut off - and the state steals itself from its duty to overhaul the infrastructure.