Modi Series Part 6: A unique SEZ Policy + new Public Private Partnership

After taking a note on all local, rural and urban parameters, let's look at Industrial growth and economic policies of Gujarat. A large number of industrialists are too happy with Modi simply because his government has set up some of the best policies that even Centre can emulate.

Aspect 1: SEZ Policy of the state:
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The SEZ Policy of Gujarat was announced way back in 2000 when even the Centre was thinking on it.

Of the total area of SEZ in Gujarat, 45% is waste land (directly owned by the Government), 43% irrigational land (taken from farmers after actually paying the money directly to farmers) and 16% by Gujarat Industrial Development Board. So, there is no contention over land acquisition unlike West Bengal and other states. Further SEZ policy - some of the interesting ones include:

• Only an industrialist is allowed to invest and no builder. This will help in not allowing real estate businesses to prop up and raise the land prices. Land meant for industries must be used for that purpose.
  
• They will be given free electricity, water for 10 years and no stamp duty, registration fees
  
• If they want to acquire lands from farmers or land developers, it is a direct negotiation and Government won't interfere....This is really better..Because if govt intervenes, then they will get the money from MNC's and will never give back to farmers. Also, many farmers in Gujarat are not just farmers, but are willing to do non-farming jobs. This attitude has helped many farmers willingly give up their land for a very high price. Many farmers then do contracting job for such industrialists who take over their land. This is working good for many farmers too.
• Also whoever is a part of a business in SEZ must build the necessary infrastructure like roads. This means that the government is not involved in this basic issue. This ensures that the lethargic government machinery is kept away from this basic necessity...Very good
• The State Government has delegated the powers of the Labour Commissioner to the DC to function as Registration Officer, Conciliation Officer as well as Inspector under various labour laws to provide single window service. The units in SEZ would be required to file annually Consolidated Annual Report (CAR) to the DC.
• Inputs (goods and services) made to SEZ units from domestic tariff area would be exempt from sales tax and other state taxes. Any sales from SEZ to DTA would be deemed import and import duty would be applicable as per GoI policy. Sales tax would be applicable to SEZ goods as applicable to other imported goods.

Taken from Article1, Artcle2, Article3

Already an investment of Rs.35,000 crores has reached SEZ - the highest in the country and exports are Rs.140,00 crores by the end of 2008 - again the highest export figures by a state
This SEZ policy is what every economist in the country wants to be a part of even Central Govt's SEZ policy. However, questions like what if a farmer is coerced by the industrialist for a heavy price and is never given. What legalities or protection exists in such a case? Is the Government then going to interfere? Will farmers then file litigations? These questions need to be answered. However, this is also true that there is very little scope for farmer lands being taken over as all 51 SEZ of Gujarat fall under Gujarat Government's land and not that of farmers (so, as of now excepting a few lands belonging to farmers which have also peacefully been acquired after giving the actual money, most of it is Government owned). Further, the Gulf region is the only coastal region in the country receiving the least rainfall, not much effort is needed to build expensive breakwaters and ports can be easily set up.

The clearing of any venture by industrialists will be handled by a single commission dedicated to this. There will be a designated development commissioner and his team which will also be a single window clearance. i.e if got approved by this team, the industry can be given a green signal. Further, if any matter concerning pollution or other such environmental concerns arise, the Central Government must grant the green signal.

This simplified single window clearance has made newer industries to set up very quickly instead of waiting for years to get approval.

Note: The Gujarat model cannot be easily replicated across the country in terms of land acquisition, but the SEZ policy of Gujarat is surely a very inspiring one for a healthy growth without the farmers fury like the one happening in Nandigram. Except for one agitation against Reliance SEZ in Jamnagar, no protest has been reported anywhere. If Government was involved-as in several SEZ cases across the country - they would sell good land for cheap prices and keep the money and not give it to farmers.

Aspect 2: New Public Private Partnerships - example
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1) Kutch post earthquake in 2001 has become the hottest destination and is the largest area in Asia for wood production. With nearly the best infrastructure in place, Rs. 15,000 crores have come as an investment from private players, industrialists and NRI's. Mainly because tax holiday for 10 years has been announced by Modi in 2003.

2) Ever since Modi came into power, he realized the need for port development so that they become international gateways and inter linkages to ports from various places.

Hence, Kutch Railway Company Ltd (KRCL) was formed through a public private partnership - KRCL, with an equity base of Rs 200 crore, is a public-private partnership, owned by Rail Vikas Nigam Ltd (50 per cent), the Kandla Port Trust (26 per cent), Gujarat Adani port (20 per cent) and the Gujarat Government (4 per cent).

It was primarily set up to undertake gauge conversion work between Gandhidham, Samakhali and Palanpur, and cut short the rail transportation distance between Gujarat ports and the northern hinterland by about 28 per cent.

As of now, a green signal to construct a 223-km broad gauge line between Bhiladi and Samadari has been given in 2006. Currently, the two places are connected by a meter-gauge rail track. With a broad-gauge track in place, rail connectivity distance between Gujarat ports and Western Rajasthan, Punjab, Jammu and Kashmir and Himachal Pradesh would be reduced by almost 200 km as compared to the present route.

From Article4

3) Another public-private partnership is Pipapav Railways Corporation Ltd (PRCL), which was formed for construction, operation and maintenance of the 269-km long Surendranagar-Pipapav gauge conversion/new line project. PRCL has equal equity participation from Railway Ministry and Gujarat Pipapav Port Ltd.

4) Gas Grid of 1500 km is underway to transport cheaper gas (after gas discovery in Kutch basin) to ceramic and chemical industries. 600km has already been completed. All this has taken place in just a few years. Great Speed!!! Also, once completed, Modi plans to set up Asia's largest cold storage area.
Taken from Article5