In yet another sign that the Goa Government's U-turn over Special Economic Zones is more about political expediency than socio-economic rationale, the state on Tuesday wrote to the Centre saying that all the approved and notified SEZs in Goa be scrapped, citing its inability to provide water and electricity to the industrial units. The state has also expressed concerns over the influx of labourers from other states to work in SEZs.
Chief Minister Digamber Kamat had met Commerce Minister Kamal Nath on Thursday, who had asked him to write a formal letter to the Centre stating why Goa wants SEZs to be scrapped
On the concern over migrant labourers, Kamat said, "Goa's population is 9 lakh. When there's talk of 10 lakh jobs in SEZs, it makes Goans apprehensive that outsiders might take control of their land." Though the Commerce Ministry tried to reason with Kamat saying that he could make it mandatory for developers to hire 80 per cent of workers locally, he didn't budge. Incidentally, the three notified SEZs are not expected to hire lakhs of workers. Pharma being a capital-intensive business, the SEZs of Cipla and Piramal may hire 500 workers each. The Raheja group's IT SEZ is expected to hire 8,000 workers. If 80 per cent of these jobs go to Goans, the argument of 'social pollution' becomes redundant.
Goa's plea to the Centre will be put up before the SEZ Board of Approvals when it meets in February. "On the approved SEZs, the Board will issue notices to the developers and hear them out," said a Commerce Ministry official.
In the case of the notified SEZs, the Centre needs an amendment to the SEZ law before it can move. This is impracticable, as it can become a weapon for states to backout of SEZs approved by previous regimes. A likely outcome is that Goa reaches a compromise with the developers. With the land already transferred in their names, the units could come up without the SEZ tag. However, with the notified SEZs having placed import orders for machinery, if they agree to give up the SEZ status, they may face music from the Customs Department.
In either way, the state will have to compensate the developers, something Goa is not keen to do. For the developers, approaching the courts may be the only option.
Ironically, while the state is arguing that it can't provide water and power to the SEZs, Kamat was party to Goa's SEZ policy as Power Minister in Rane's cabinet. The policy exempted SEZs from paying for electricity for 15 years and allowed developers to set up power companies that may draw from the state's electricity grid. The responsibility for providing water was vested with the SEZ authority.
While the policy was evolved after long deliberations, the speed at which Kamat has backtracked on SEZs was amazing. And when Kamat announced that the Centre will be approached for cancelling all SEZs, the legal and financial implications were not given a thought and neither the developers nor the Centre was consulted.