The summer of 2005 saw a major shift in India's economic policy, when Parliament passed the Special Economic Zones Act without even the semblance of a debate. Since then, widespread resistance notwithstanding, over 250 Special Economic Zones (SEZs) have received formal approval, and the government has made the final announcement of the creation of 80-odd SEZs. There are several hundred applications in the queue.
The notifications of SEZs have followed a particular pattern in India, whereby major shifts in the country's economic policy are effected through stealth. In 1991, a crisis regarding short-term balance of payments in the country's external accounts was manipulated by the country's policymaking elite, to quietly usher in major changes in the way the national economy was to be run. These far-reaching changes included the liberalisation of the import regime, which had a special significance for agriculture; becoming more open to foreign investment in various areas of industry and services; allowing more foreign investment in finance; and privatisation of public sector assets. There was no public discussion of these changes, no debate befitting a democracy. The role of the International Monetary Fund and the World Bank in this process was hardly incidental. Much of underprivileged rural India continues to reel under the impact of the structural-adjustment policies that the two Bretton-Woods institutions brought to the country 1991. If we also take into account the role of trade concessions made by New Delhi to the World Trade Organisation after 1995, we can understand the origins of perhaps the most prominent consequence of this remote-control management of India's economic policies: the rapidly rising pile of corpses of bankrupted Indian farmers who have committed suicide.
What is a Special Economic Zone? It is a specially demarcated area of land, owned and operated by a private developer, deemed to be foreign territory for the purposes of trade, duties and tariffs. With the intent of increasing exports, within the SEZ production can be carried out by investing companies utilising a large number of concessions – tax exemptions, guaranteed infrastructure and the relaxation of labour and environmental standards. These last are what make SEZs particularly 'special'.
It is worth noting that India may be the first country in the world to be experimenting with privately owned Special Economic Zones; in China, even when they have been developed by the private sector, SEZs are ultimately owned by the state. And SEZs are not new to the Subcontinent. Their predecessor was the Export Processing Zone (EPZ), the first of which was created in Gujarat in India in 1965. The Colombo and Dhaka governments have also been experimenting with SEZs. According to the International Labour Organisation, by 2002 over a hundred countries around the world were doing so.