Study on Economic & Legal Aspects of Special Economic Zones - Set Up In Gujarat Under the Special Economic Zones Act, 2005

GNLU/Ph.D./2011/007GNLU/Ph.D./2011/007
KALPESHKUMAR GUPTAKALPESHKUMAR GUPTA
Ph.D. Thesis Seminar at
Gujarat National Law University,
Gandhinagar, Gujarat, India
February 4, 2017 1
Dr. J T DesaiDr. J T Desai
SupervisorSupervisor

Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. Data Analysis & Interpretation
7. Concluding Remarks
8. Q & A
K L Gupta 2

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 3

Introduction :-
 What is Special Economic Zone ?
 Aggarwal Aradhna (2004) defines Export Processing Zones
(EPZs) as special enclaves, separated from the Domestic
Tariff Area (DTA)
 by fiscal barriers and are intended to provide an
internationally competitive duty free environment for
export production at low cost and benefitted usually
from modern and efficient infrastructure, general fiscal
and non-fiscal concession to firm and better governance
due to single window facilities to ensure corruption and
red tape free business environment.
 SEZ is big area compared to EPZ having more benefits.
 SEZ are mainly of two types Sector Specific & Multi-product.
K L Gupta 4

Introduction :-
 Kandla SEZ, Kutchch is Asia’s & India’s first EPZ. (Set
up in 1965).
 Mr. Murasoli Maran, the then Commerce Minister
visited China, impressed by Chinese SEZ esp.
Shenzhen SEZ and he brought SEZ Concept in 2000
and included in EXIM policy.
 7 EPZs converted in SEZ (Kandla 1965, Santacruz 1973, Noida 1985,
Chennai 1984, Cochin 1984, Falta 1984, Vishakhapatnam 1989).
 New Law passed SEZ Act, 2005 and rules SEZ Rules,
2006.
 Total 417 SEZs have formally been approved (Top IT 62%,
Biotech 5%, Multi-product 5%, Pharma 5%), 205 Operational.
 SEZs having share of around 25% in total exports of
India & Gujarat SEZ having 45% share in total exports
from SEZs in India.
K L Gupta 5

Introduction :-
K L Gupta 6
Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016

Introduction :-
K L Gupta 7

Introduction :-
K L Gupta 8

K L Gupta 9
District
SEZ approved by
Govt. of India
% of approved
SEZs
Kutchch 16 28
Ahmedabad 15 26
Bharuch 8 14
Gandhinagar 6 11
Surat 3 5
Vadodara 3 5
Valsad 2 4
Amreli 2 4
Mehsana 1 2
Jamnagar 1 2
Total 57 100
District wise Distribution of SEZs in Gujarat
www.ic.gujarat.gov.in. accessed on March 5, 2013

K L Gupta 10
Sector
SEZ approved by
Govt. of India
% of approved
SEZs
IT/ITES 12 21
Multi-product 11 19
Engineering 5 9
Pharmaceuticals 4 7
FTWZ 3 5
Chemicals 2 4
Textile 2 4
Apparel 2 4
Alternative Energy 1 2
Bio-tech 1 2
Ceramic Glass 1 2
Electronics 1 2
Energy 1 2
Flat Steel 1 2
Food Processing 1 2
Handicrafts &
Artisan
1 2
Multi-product
Port based
1 2
Multi-services 1 2
Non-conventional
energy
1 2
Oil & Gas 1 2
Plastic 1 2
Polymer 1 2
Power 1 2
Total 57 100
Sector-wise Distribution of SEZs in Gujarat
www.ic.gujarat.gov.in. accessed on March 5, 2013

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 11

Literature Review :-
K L Gupta 12

K L Gupta 13

 Linkage with domestic economy (Rabbani F. A., 1980)
 Develop external economic co-operation and technological
exchanges and promote the socialist modernization programme.
(D R Phillips & A G O Yeh, 1983)
 Kandla FTZ had little success by any criteria. (D L
LiJayawardena, 1983
 Chinese carefully researched a number of existing zones in
preparation for establishing their own. (Clyde D. Stoltenberg,
1984)
 EPZs in Asian countries have been developed primarily with the
aim of supporting the strategy of export led growth. Setting up
an EPZ is probably not a difficult task, but to make it work is a
completely different matter. When EPZs were first established,
they were usually not integrated with the domestic economy,
but in the long run, they should be an integral part of national
development and should complement the growth of the
domestic tariff sector. (Kwan Yiu Wong & David K Y Chu, 1984)
Cont…
K L Gupta 14

 China designated four SEZs as laboratories for its
experiments with market economy and foreign investment.
(Xie Wei, 2000)
 China, based on the SEZ strategy, embarked on its economic
open policy. (Albert G. Schweinberger, 2003)
 SEZ strategy serves to attain the goals of both increased
attraction of foreign capital and protection of domestic infant
industries simultaneously. (Young Namkoong, 2003)
 China’s idea is to minimize the gap between social and
economic development in the region. (Nadeem M Firoz & H
Amy Murray, 2003)
 The results do suggest that a heavy reliance on foreign
investors is unlikely to maximize the welfare of citizens and
that there should be a balance between domestic and foreign
investment. National interest may hold only if the zones
generate private profit to domestic shareholders. (Kankesu
Jayanthakumaran, 2003)
Cont…
Cont…
K L Gupta 16

 Though the gross exports, foreign exchange earnings and
employment increased phenomenally in absolute terms,
their growth rates declined substantially. (Aggarwal
Aradhna, 2004)
 To be globally competitive, Indian industry needs to invest in
quality and reputation. (Sheth Jagdish, 2004)
 SEZ’s has inadvertently created a nest of bad elements such
as widespread official corruption, smuggling, prostitution.
(Liu Haishan, 2005)
 Zones should not be considered the best policy option for
long-run industrial development. (Aggarwal Aradhna, 2006)
 Manufacturing units would shift base to the SEZ just to
escape tax. (Menon Ramesh, 2006)
 Frequent modifications in the policy will only detract serious
investors from investing in SEZs. (Tyagi Vinay et al, 2007)
Cont…
Cont…
K L Gupta 17

 SEZ as India’s supersonic engine of growth against latest
land grab instrument. (Kujur Rajat Kumar, 2007)
 Large SEZs on the Chinese pattern may not be suited to our
conditions because India does not have vast tracts of
contiguous land located close to ports. (Aggarwal Aradhna &
Rajiv Kumar, 2007)
 SEZs will aggravate regional disparities. (Bijoy C R, 2007)
 Valuable resources spent to create SEZs will be at the cost of
building better infrastructure for the rest of the country,
something that will affect both the domestic industry as well
as agriculture. (Goswami Bhaskar, 2007)
 Thus once again rather than building a space for new
opportunities, SEZs appear to be becoming a space for
intensification of old ones. (Gopalakrishnan Shankar, 2007)
 Benefit from SEZs can only be achieved by including the rest
of the economy. (Erlend Reigstad, 2007)
Cont…
Cont…
K L Gupta 18

 State Government – Investor Synergies. (Mukherjee Rahul,
2007)
 Non compliance of NFE provision. (Upadhyaya Himanshu,
2008)
 The conversion of fertile land into industrial land may create
food crisis in near future.(Khan Saeed, 2008)
 The government must slow down the process of giving
approvals. This is important not only for social or political
reasons but also due to economic realities. Restore STPI and
EOUs benefits. (Chaterjee Sumana, 2008)
 Lack of co-ordination between Commerce Ministry & Finance
Ministry. (Pillai Manoj, 2008)
 Developing SEZs in states which are lagging compared to
other states can help to alleviate the inequities which will
boost overall consumption. (Nema Pradeep & Pradeep
Pokhariyal, 2008)
Cont…
K L Gupta 19
Cont…

 Uneven distribution of SEZ investments across the country.
(Gopinath D, 2009)
 IT Zone concern. Quality of zone administration key
determinants behind success of zones.(Amitendu Palit,
2009)
 India is far behind in investing in skills and training of a
large work force that mans its export factories like China.
(Kasturi Kannan, 2009)
 Growing number of SEZs with sector-specific small sized
fragmented zones may not yield the desired results. (L.
Lakshmanan, 2009)
 SEZ may not have major impact on employment and exports
(5% of total exports in India) (Shah Deepak, 2009)
 The locations for the new SEZs should be selectively done so
that they spread development and address existing regional
imbalances. (S Narayan Menon & Soumya Kanti Mitra, 2009)
Cont…
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Cont…

 SEZ encouraging existing industries to locate in SEZ.
(Mukhopadhyay Partha & Kanhu Charan Pradhan, 2009)
 Use of eminent domain for acquisition of land.
(Sivaramakrishnan K C, 2009)
 Data on EPZs is scant. ILO only collecting data on SEZ. Case
study will be best method for study. (Nicola A. V. Virgill,
2009)
 Land is treated as a transferable commodity in the market
with no focus on people or their livelihoods. (Vaddiparti Neha
& Sheela Prasad, 2010)
 Small size of SEZ. IT/ITES SEZs. (D Nagayya & T V Rao,
2010)
 Indian export promotion policies failed because the Indian
government pursued a top down export promotion strategy
rather than a bottom up strategy. (Seshadri Triyakshana &
Virgil Henry Storr, 2010)
Cont…
K L Gupta 21
Cont…

 Prioritizing sectors which need to be developed. (Tantri
Malini, 2010)
 Most appropriate development strategy is one, which has a
vision of developing both agriculture and industry
simultaneously. (P Murugesan & P K Bandgar, 2010)
 SEZs are not creating mfg. base. (Loraine Kennedy, 2010)
 Coercive tactics for land acquisition, lesser compensation.
(Rawat Vidya Bhushan et al, 2011)
 Regional disparity. (Tantri Malini, 2011)
 Shenzhen SEZ has experienced extraordinary growth. (Mee
Kam Ng, 2011)
 Shenzhen suffers from a lack of overall planning. (Madalina
Giorigiana Mangra et. Al, 2011)
 Indian government incurs a net financial loss on the SEZ
plan by sustaining greater losses to tax revenue than gains
to FDI. (Jain Sumit, 2011)
Cont…
K L Gupta 22
Cont…

 Real estate corruption, regional imbalance, review of existing
tax incentives. (Singala Subbaiah, 2011)
 Need to restructure the SEZ scheme in the country. (Tantri
Malini, 2012)
 Horizontal linkages. (Wei Ge, 2012)
 Linkage of the SEZ with the SSI units. (Sharma Surendra,
2012)
 New taxation policy affected SEZ operation. (Dabas Ajay,
2012)
 Many farmers across the country refusing to give their land
at any price. (M Levien, 2013)
Cont…
K L Gupta 23
Cont…

 In Cochin SEZ, 55% workforce are contractual and don’t
enjoy any benefit as regular employee. (Venugopal P N,
2005)
 Maintaining global labour standard. (Burman Anirudh, 2006)
 Study reveals that casual workers are discriminated against
the permanent workers. (Bhandari Amit & Almas Heshmati,
2006)
 In Shenzhen SEZ, frustration with hard labor, merciless
factory bosses, low pay and miserable living conditions is
palpable. (Howard W. French, 2006)
 Chinese experience should be read not only as a model but
also as a salutary warning. (Gopalakrishnan Shankar, 2007)
 Due to stagnation, SEZ’s ability to absorb surplus labour has
been declining. (Aggarwal Aradhna, 2007)
Cont…
K L Gupta 25
Cont…

 Need of social infrastructure. (PriceWaterhouse Coopers,
2008)
 Below minimum wages, environmental damage.
(Ananthanarayanan Sriram, 2008)
 Labour Commissioner’s power to Development Commissioner
conflict of interest. (Singh Jaivir, 2009)
 SEZ policy can lead to serious and adverse consequences
including social conflict, civil strife and breakdown of
democratic institutions. (Sharma Naresh Kumar, 2009)
 SEZ creating disparity. (Centre for Education &
Documentation, 2009)
 Project-Affected Persons (PAPs) should be given assistance
by specialized R&R agencies in all these processes. (Datta
Sarkar et al, 2009)
Cont…
K L Gupta 26
Cont…

 Govt.’s inability to define priorities, and regulate and
manage the phenomenon called SEZs. (Mukhopadhyay
Partha, 2009)
 Set up of Shenzhen Labour Arbritration Committee and
court. (Anna P. Y. Tsui, 2009)
 For SEZ success, govt. must consult with the farmers before
acquiring their land. (Singh Dharminder, 2009)
 There is increasing evidence of usage of child labour in
factories in China. (Chaudhary Koel Roy, 2010)
 Land Acquisition without much backlash, Tamil Nadu,
Gujarat. (Sharma R N, 2010)
 Big private developers have responded to land acquisition
difficulties by partnering with state governments that helped
to procure the land. (Seshadri Triyakshana, 2011)
Cont…
K L Gupta 27
Cont…

 The role of SEZs in human capital formation appears to be
relatively limited. (A Abdul Raheem, 2011)
 There is a need to impose stiffer obligations on the SEZs to
justify the incentives. (Birajdar Shrimant, 2011)
 SEZs and other infrastructure projects do not generally
benefit small or medium sized enterprises in the development
stage. (Chelsea Fish, 2011)
 Privately developed SEZs are thus a form of arbitrage through
which capitalists receive artificially cheap land acquired by the
state and then re-sell it at many times that value. (Michael
Levien, 2012)
 It is observed that mere compensation for the land is not
enough because the money paid to the farmers will get spent
after a few days. (Barman Arup, 2012)
Cont…
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Cont…

The onus of land acquisition would be entirely on negotiations
between prospective SEZ entrepreneurs and the owners of
agricultural land. (Mitra Siddhartha, 2012)
There will be strict background checks for new SEZ likely.
State government officials are often unaware of the
performance of SEZs in their own states. The Centre has thus
decided not to approve proposals unless developers have a
record of developing operational SEZs (Basu Nayanima, 2014)
Over 90% SEZ’s land are lying vacant : Govt (Economic
Times, December 7, 2015)
Commerce Ministry working out policy initiative to revitalise
SEZs (Economics Times, December 10, 2015)
Cont…
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K L Gupta 30

Special Literatures :-
 Reluctance of zone officials and tenants to respond surveys.
(Malhotra Shavin, 2008)
 Lack of transparency in government’s actions. (Asher
Manshi, 2014) (Gujarat)
K L Gupta 31
“One Public Information Officer (PIO), when questioned about the
lack of transparency in governmental actions, was candid enough
to say: ‘I am just a PIO in name, the real PIOs are the top
bureaucrats, hand-picked by the government to work in favour of
the companies”.

Literature Review (Gist) :-
K L Gupta 32

Research Gap :-
 No comprehensive study has been done on Economic & Legal
aspects of Special Economic Zone at central level as well as
state level.
 No comprehensive study has been done on SEZs in Gujarat.
K L Gupta 33

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 34

Research Problem:-
As we have seen that India embarked on journey of SEZ model
looking at success of Chinese SEZ. Exclusive law Special
Economic Zone also passed in year 2005 for better governance
of SEZs in India. After the SEZ Act, 2005, till date 330 SEZs
have been notified by the central government.
There are many advantages of having SEZs in the country and
but presently it has been failing to meet the expectations in
terms of growth in exports, employment, investments.
There are several negative aspects of SEZs alongwith positives
ones. This study will analyze the economic and legal aspects of
SEZs in Gujarat.
K L Gupta 35

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 36

Objectives of the Study :-
Followings are the main objectives of the present study.
 To evaluate economic impact of SEZs in Gujarat.
 To evaluate compliance by SEZs in Gujarat under SEZ
Act, 2005 & SEZ Rules, 2005
 To do comparative analysis of SEZs in Gujarat with SEZs
in other states.
 To evaluate government’s policies regarding SEZs in
India and Gujarat.
K L Gupta 37

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 38

Hypotheses of the Study :-
Followings are the hypotheses of the present study.
 Special Economic Zone has promoted economy of Gujarat.
 Special Economic Zones in Gujarat are complying all legal
requirements as per the SEZ Act, 2005 and SEZ Rules, 2006
 SEZs in Gujarat performing better compared to SEZs in
other states.
 Government policies are supporting Special Economic Zone
to grow
K L Gupta 39

Universe of the Study :-
 417 formally approved, 32 in principally approved, 330
notified and 205 exporting SEZs in India.
 Gujarat having 57 approved SEZs out of which 18 are
functional
K L Gupta 40
Sample Design :-
 Researcher has taken those SEZs which notified at
least 5 years ago so that its progress can be analyzed
and interpreted accordingly.
 Total 17 SEZs as sample size

Selected SEZs :-
1. Kandla SEZ, Kutchch (2000)
2. Surat SEZ, Surat (2000)
3. Surat Apparel Park (2005)
4. Adani Port & SEZ Ltd. (2006)
5. Reliance Infra., Jamnagar (2006)
6. Zydus Infra. Pvt. Ltd., Ahmedabad (2006)
7. Gandhinagar Electronic Park SEZ (2006)
8. Dahez SEZ Ltd., Bharuch (2007)
9. Synefra Eng. & Const Ltd. Vadodara (2007)
10.Ahmedabad Apparel Park (2007)
11.E-complex Pvt. Ltd. (2008)
12.Larsen & Toubro Ltd., Vadodara (2008)
13. Aqualine Properties Pvt. Ltd., Gandhinagar (2008)
14.Sterling SEZ & Infra. Ltd., Bharuch (2008)
15. Jubilant Infra. Ltd., Bharuch (2008)
16.Tata Consultancy Services Ltd. (2008)
17.Euro Multivision Pvt. Ltd. (2009)
18. GIFT SEZ Ltd. Gandhinagar (2011)
K L Gupta 41

Data Collection & Analysis :-
Primary Data
 SEZ Act, 2005 & SEZ Rules, 2006
Secondary Data
 Articles from Journal, Books, News article,
Database, Central & State Govt. website, Govt.
Notification & Circulars
 Information received under RTI Act, 2005
K L Gupta 42
Around 150 references referred.
Basic statistical tools have been used.

Scope of the Study :-
Present study is going to analyze Economic & Legal
aspects of SEZs and the researcher has confined his
study to all notified SEZs of Gujarat region only.
Gujarat is one of the top five states in India which has
made significant effort in flourishing SEZs in the state.
K L Gupta 43

Scheme of Chapterization :-
Total 5 chapters
C 1 – Introduction to SEZs
C 2 – Legal Provisions regarding SEZs in India
C 3 – Special Economic Zones of Gujarat - Profile
C 4 - Data Analysis & Interpretation
C 5 – Concluding Remarks
K L Gupta 44

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 45

Data Analysis & Interpretation :-
Investment (Overall)
Growth 1.72 (2012-13), 14.33 (2011-12), 6.23
(2010-11), NA (2009-10)
None of the SEZ provided data on Investment except Surat SEZ
which shows unattractiveness of the zone.
Multiproduct and Pharma Zone top in investment.
4 times growth in IT/ITES SEZs.
FDI constitutes less than 1% of the total investment in SEZs of
Gujarat. Gujarat has failed to attract FDI in the SEZs of Gujarat
K L Gupta 46

Export-Import
Slow growth of exports
Heavily dependent on Imports
Less net export earnings, in some cases in negative
Export growth -1.66(2013-14), 19.24 (2012-13), 19.54 (2011-
12), 33.70 (2010-11), NA (2009-10)
Import growth 1.17(2013-14), 20.08 (2012-13), 14.47 (2011-
12), 27.17 (2010-11), NA (2009-10)
Average growth of Export-Import – 17.71% - 15.72%
Gujarat grabbed share of 45% share in total exports made from
SEZs in India but one of the state to register de-growth in
exports. This 45% attributed to Reliance SEZ which is having
83% share in total exports from SEZ in Gujarat.
K L Gupta 47

Net Foreign Exchange Earnings (NFEE)
NFEE most imp tool to measure performance of any SEZ. Its
requirement under law for cumulatively for a period of five years
from the commencement of production. (Rule 53 of SEZ Rules
2006)
Duty forgone & duty collected main component to calculate NFEE.
None of the SEZ provided information on this.
Kandla, Surat, Reliance positive NFE where Synefra, Dahej &
Adani showing negative.
K L Gupta 48

Domestic Procurement
Domestic procurement data shows the domestic linkages which is
utmost necessary for overall growth of the country. Many authors
also have suggested linkages.
Most of the SEZs have not provided information under RTI
application regarding domestic procurement so it is not possible
to arrive at any conclusion.
K L Gupta 49

Domestic Tariff Area (DTA) Sales
SEZs are allowed to sell goods in domestic tariff area provided
that they have achieved positive NFFE. Significant growth in DTA
sale is not healthy sign for economy
Many SEZs have not provided information on DTA. As per
available data, it seems that average negative growth in last 4-5
years. In fin year 2013-14, there is significant growth in DTA
sales.
As per CAG report, sometime SEZs are considering DTA sales
towards the calculating NFEE. It has been mentioned in the report
that 8% and 5% of total production considered while calculating
NFE for the financial year 2011-2012 & 2012-2013 respectively.
K L Gupta 50

Revenue Loss
RTI filed in Ministry of Finance to get this data.
Loss of Direct Tax & Indirect Tax, - Yearwise, Statewise
Transfer of application from top to bottom level, no satisfactory
reply.
Tax Authority, Ministry have not compiled the data for SEZ
scheme.
Office of Director General of System & Data Management, New
Delhi provided overall yearwise duty forgone (Excise & Customs).
This is not helpful for state level purpose study.
K L Gupta 51

K L Gupta 52
More than 1200+ replies
Wastage of Rs. 50, 000 + to govt. treasury

De-notification of SEZs
De-notified SEZ – 3
Under Process of De-notification – 5
Partly De-notified – 4
De-notification of SEZs shows that SEZs are no longer attractive.
This is because of change in govt. policy mainly taxation policy in
year 2011-12 i.e. imposition of Minimum Alternate Tax (MAT) &
Dividend Distribution Tax (DDT)
33 Developers surrendered their SEZ projects between December
2008 to July 2011 (Economics Times)
K L Gupta 53

Existed SEZ Unit
As per data available total 135 units closed down in last 8 years.
Most of SEZ have not provided the information.
K L Gupta 54

CAG Findings
As per CAG report there is still no revenue outcome analysis at
the economic and the Govt. levels.
SEZs are counting Domestic Tariff Area (DTA) sales in calculation
of net foreign exchange earnings (NFEE)
No specific audit observation available for Gujarat region.
K L Gupta 55

Single Enforcement Officer/Agency u/s. 21
No information provided.
Development Commissioner of the respective zone has been
notified as Enforcement officer in year 2010.
Penal Action u/s. Rule 54 (Monitoring of Performance) of
SEZ Rules, 2006
Most of SEZ not provided information. Some stated there are no
cases of penal action. Detailed information would have helped to
assess this phenomena.
K L Gupta 56

Employment
Average employment in last five 8.71% year.
Most of SEZs have not provided the information.
SEZs which have provided the information, not showing
significant growth. Surat SEZ achieved more than estimated.
Gujarat stands at a lowly 6th
position in employment after
Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh & Uttar
Pradesh
K L Gupta 57

Labour Laws compliance
All labour laws are applicable to SEZs. Most of SEZs have not
provided information under RTI
As per information received under RTI application even in FALTA
SEZ, MEPZ, VSEZ no case of labour laws violation noticed.
Labour Dispute
Out of 17 only one SEZ, Adani has provided information RTI
application and in that no case of labour dispute has been
reported. Not possible to arrive at any conclusion regarding
labour dispute position in absence of any information.
K L Gupta 58

Agency/Officer nominated u/s 20 of SEZ Act, 2005
No information provided under RTI for appointment of
officer/agency.
No officer/agency has been notified under the act to see compliance
of any central acts.
Designated Courts u/s 23 of SEZ Act, 2005
Only 2 SEZs replied stating that no court has been established
under the SEZ Act so far,
RTI Application revealed that no court has been established even in
old centrally established SEZs. Even after 10 years of SEZ Act none
of state govt. established a court/courts to try all suits of a civil
nature and notified offences,
K L Gupta 59

Reference of Dispute u/s. 42 of SEZ Act
Most of SEZs have not provided information. As per available
information no significant no of cases arisen so far and have been
referred under law. Also not in MEPZ, VSEZ, Falta SEZ.
Section 42 refers to a any dispute of civil nature arises among
two or more entrepreneurs or two or more developers or
between an entrepreneurs and a developer in the SEZ and the
courts to try suits in respect of such dispute had not been
designated u/s. 23, such dispute shall be referred to arbitration.
Central Govt. will make an appointment of the arbitrator.
K L Gupta 60

Implementation of guidelines for Green SEZ
Policy implementation is in nascent stage.
Some of the SEZs implementing the policy.
Most of the SEZ not provided the information
Training facilities in SEZs
None of the SEZs have provided the information.
Surat SEZ has set up jewellery training centre in the SEZ.
Facilities in SEZs
None of the SEZs provided the information regarding facilities
available. As per website information KASEZ & SurSEZ providing
good infrastructural facilities like Inland Container Depot, Customs,
bank facilities etc.
K L Gupta 61

Land Acquisition/Environmental
Field visit not possible due to permission issue. As per secondary
data available no adverse incident happened during setting up SEZs
in Gujarat except Adani SEZ issue. Adani got approval with
restricted expansion.
As per the latest report titled “Best Practices to Improve the
Business Environment across India” released in May 2014 by the
DIPP, MoC, Gujarat scored high on its land acquisition practices.
K L Gupta 62

Locational Difference
SEZs have been established in four regions very well. Kutchch,
Ahmedabad, Bharuch have huge potential for better growth for SEZ
thus it rightly having bigger proportion of total SEZs in Gujarat.
There is need of few SEZs in Dahod, Banaskantha, Rajkot region
also so that these districts also grow with other districts of Gujarat.
K L Gupta 63

Outline :-
1. Introduction
3. Research Problem
8. Q & A
K L Gupta 64

 There is insignificant growth in overall investment.
Investment in Gujarat is very low compared to national
average.
 Gujarat share of 45% in exports in the year 2013 to 14.
Reliance share 83% share in Gujarat. Question mark
against other SEZs in Gujarat.
 Considerable growth in imports. Not significant net
exports earnings from SEZs.
 Some SEZs are having huge imports than exports
showing negative earnings.
 Domestic procurement data have not been provided
under RTI explaining domestic industry linkages.
 No information provided by Office of the Industry
Commissionerate, Gandhinagar.
 No information is available regarding revenue loss due
to SEZ operation. MoF not properly maintaining data on
revenue loss due to SEZ operation.
Conclusion :-
Cont..K L Gupta 65

 Govt. of India does not have proper mechanism to carry
out cost benefit analysis of SEZs operation.
 Good no. of SEZs have been de-notified and some are
under process of de-notification being unattractive
destination for investors.
 As per CAG report, there is still no revenue outcome
analysis at the economic and the Govt. levels.
 After five years of SEZ Act, central govt. notified DC as
enforcement officer. DC will perform Admin activities plus
enforcement.
 No cases of revival of sick units.
 Less no. of cases under penal action taken under.
 Slow pace of employment generation. Some SEZs have not
provided information regarding employment generation.
 No information on labour dispute provided.
 No agency u/s 20 of SEZ Act to see compliance of any
central acts.
Conclusion :-
Cont..K L Gupta 66
Cont..

 No designated court u/s. 23 of SEZ Act to try all suits of
a civil nature and notified offences.
 Most of the SEZs have not replied regarding
implementation of Green SEZ guidelines in SEZ.
 None of SEZs have provided information regarding
training facilities provided in the SEZs.
 None of SEZs have provided information regarding
facilities available in the SEZs.
 There are not major cases regarding land acquisition for
setting up of SEZs in the state except Adani.
 There are not much environmental issues arisen
because of SEZ operation except Adani SEZ which
recently got the clearance from MoEF.
 SEZs in Gujarat are very well geographically located
covering all major part of state.
 Above all there is no transparency in operation of SEZs
in the state.
Conclusion :-
Cont..
K L Gupta 67

 Gujarat huge share in exports but only Reliance SEZ
effort. Performance of other SEZs needs to be evaluated
timely.
 Grow domestic industry so that SEZs are less dependent
on imports. This will lead to net foreign exchange
earnings.
 Govt. intervention in liberalizing fiscal policy. Many cos.
discontinued operation.
 Govt. should come out with a sound mechanism to
assess the net benefit coming out of SEZ operation as
there is no revenue outcome analysis.
 Data management from DC office to Ministry of
Commerce. It must be updated on website.
 Some legal provision have not been implemented i.e.
Agency to Inspect u/s. 20 and Designated Courts u/s.
23.
Recommendations :-
Cont..K L Gupta 68

 Central Govt. should appoint independent
person/agency as single enforcement officer/agency
u/s. 21 rather than giving power to DC.
 Proper tuning between MoC & MoF for development of
SEZs in the state and all over the India. Both
ministries should do periodic cost-benefit analysis so
that we can have proper picture of growth of SEZs.
 Gujarat SEZ Act, 2004 should be scrapped to follow
one single central law SEZ Act, 2005 and SEZ Rules,
2006. Gujarat SEZ law has been challenged by Mr
Shabbir from Kutchch contending that state govt.
incompetent to make laws on custom, excise, foreign
trade.
 All information of SEZ operation on exclusive website
of particular SEZ to bring transparency in working.
Recommendations :-
Cont..K L Gupta 69
Cont..

 Updated information is not available with various
govt. offices, website. They is mismatch regarding
information available with central and state govt.
Nicola A V Virgill (2009) stated that data on EPZs is
scant.
 Researcher could not visit specified SEZs which were
taken as sample size in absence of permission from
Industries Commissionerate. Malhotra Shavin (2008) during
his Ph.D. thesis found that zone official and tenants were reluctant to
respond survey. The admin. Seemed unwilling to share any financial
information on the zone and refused to offer any help in carrying out
the survey.
 Human Development aspects have not been studied
properly due to permission issues. Personal interview
in SEZ with various stakeholders would have helped
to understand the impact of SEZ on human
development.
Limitations of the Study :-
Cont..K L Gupta 70

 No proper response of RTI application. Transfer of
application from office to another.
 Govt. offices are not maintaining data as required.
 Major statistical tools could not be applied as required
data is not sufficient and not provided by the
concerned govt.
Limitations of the Study :-
Cont..K L Gupta 71
Cont..

As we seen in the above discussion that there are
various economic and legal aspects of SEZ in India and
Gujarat, which can be studied accordingly.
The researcher has outlined almost all economic & legal
aspects of SEZs with the help of extensive literature
review.
Researcher emphasized on secondary data for the
present study which can be enhanced by empirical study
in future. So far no significant study has been done with
regards to SEZ in Gujarat, so there is a very wide scope
to do further study the impact of SEZs in Gujarat by
looking at different aspects.
Future Scope of Study :-
K L Gupta 72

References :-
150+ references including web sources
K L Gupta 73

Kalpeshkumar L Gupta
www.klgupta.in
75

Study on Economic & Legal Aspects of Special Economic Zones - Set Up In Gujarat Under the Special Economic Zones Act, 2005

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