CEC Working Paper

SEZ Rush in India

Challenges & Opportunities before Labour

Surendra Pratap

2009

Centre for Education and Communication (CEC)

173-A, Khirki Village, Malviya Nagar, New Delhi – 110017
Ph: +91 11 2954 1858/ 1841/ 3084/ 2473
Fax: +91 11 2954 5442/ 2464
Email: cec@cec-india.org; Web: www.cec-india.org
Acknowledgements

This study was undertaken on the initiative of Centre for Education and
Communication (CEC), New Delhi. I am grateful to Executive Director of CEC J. John
and Programme Manager Pallavi Mansingh for their active involvement at each stage
of the study. They raised so many questions on the first draft of the report while
encouraging me to face it in the study and resolve it theoretically and empirically. The
final shape of the report owes much to their valuable suggestions.

My thanks are due to the Chaitanya Jyothi Welfare Society (CJWS), Nellore, Andhra
Pradesh and its precident Mr I.Srinivasa Rao, for providing research assistants to
interview the workers of Apache SEZ. I am personally indebted to Mr Kishore and Ms
Madhavi of CWJS. They not only helped me in the study in Nellore but also became
my friends. My thanks are also due to AITUC secretary Mr DL Sachdev and another
AITUC leader Pramod Rajput. They not only helped me in making contacts with
workers of Noida SEZ but also provided deep insights on working conditions in Noida
SEZ and also outside the SEZ.

Lastly, I am indebted to workers who spared their precious time for interviews despite
lot of inconveniences; despite their belief that our study is not going to change their
life; despite the fact that they may be sacked if their names with their interviews any
how reach to the employers. This debt is really heavy and I tried my best in the study
to pay back at least part of it. All devotion for the study came from this spirit. To what
extent I succeeded in my efforts, it is to be judged by the readers.

Surendra Pratap
Senior Researcher
CONTENTS

1. The Context ..................................................................................................................3

1.1 The crisis that leads the country on SEZ path....................................................... 4

1.2 Major concerns of the study ................................................................................... 8

2. Journey from EPZs to SEZ Rush .................................................................................12

2.1 SEZ Act 2005 creates the dream enclaves for investors ...................................13
2.2 Towrds a new industrial relations regime ...........................................................14
2.3 The great SEZ rush................................................................................................17

3. Impacts of SEZ Phenomenon .....................................................................................22

3.1 Expansion of industrial working class and the reserve army.............................24

3.2 Dispossession of peasants, shift in land use and food security........................25
3.3 Fiscal losses and other concerns.........................................................................27
3.4 State within the state............................................................................................29

4. Conditions of Labour in SEZ Enclaves........................................................................31

4.1 Emerging features of workforce in SEZ enclaves................................................33

4.2 Working hours and working conditions................................................................36
4.3 Conditions of women ............................................................................................38
4.4 Exploitative enclaves.............................................................................................40
4.5 Child labour............................................................................................................41

5. Grievance Redressal Mechanism in SEZ ...................................................................46

6. New Challenges and New Counter Strategies...........................................................49

6.1 Struggles for unionisation.....................................................................................50

6.2 Evolving new strategies for unionisation & struggles .........................................57

7. References ................................................................................................................ 60

Not to be quoted 2
 1. The Context

This is a new era of new crisis, new challenges and new opportunities for both labour
and capital. The history of modern civilisation tells us that the development of society
proceeds in spiral motion. Cyclically it faces an all round social, economic and
political crisis and the resolution of the same drives it to the higher stages of
development. Who is benefited more by this development depends on the power
relations between labour and capital which ultimately decides how and in whose
favour the crisis is going to be resolved. This is also the fact of history that whenever
a severe world economic crisis occurs, the developed world makes all efforts to throw
the major load of the crisis on developing countries and which in turn throws most of
its weight on the head of labour. It intensifies a complex struggle between all the
competing sections.

Presently the world and our country is in the midst of a similar crisis and to resolve it
in one’s favour the struggle between different competing sections internationally and
with in the country has already intensified. Conflicts at national and international
level on different aspects of Policies of Globalisation, liberalisation can be seen in
this light. In our country the core point of the crisis is stagnation of Manufacture. The
nature of this crisis affects all other aspects of the social crisis. This is why it is not
only the concern of capital but also the concern of labour and all other sections of
the society.

The establishment of SEZs is supposed to be an effort by the state to resolve this

crisis. The SEZ path is consistent with the suggestions of World Bank and IMF. From
1970s onwards World Bank and IMF are continuously prescribing similar medicines
to third world countries to cure the under development. The World Bank regards the
SEZs as a signal of a country’s departure from import substitution towards an export
oriented economy. It amounts to opening and integrating the national economies to
the global economies to the extent desired by global powers. In this respect, what is
not possible now in the country as a whole, is being implemented in SEZ enclaves.
According to the ILO, the first zone was set up in 1929 in Spain. The 1970s then saw
the EPZs boom, mostly in developing countries of Latin America, the Caribbean, Asia
and to a lesser extent Africa (ILO 1998). But the real SEZ/EPZ rush started only after
the policies of liberalization are implemented in full bloom. These are all directed
towards fulfilling the above objectives.

Will the SEZ rush succeed to resolve the crisis of third world economies? In whose
favour the crisis is going to be resolved? What will be its impact on capital, labour
and other sections of society and how it will frame their future relationships? Heated
debates and intense struggle has started on all these issues. Power full peasant

Not to be quoted 3
movements are going on across the country against transfer of thousands of
hectares of agricultural land to industry and related issues. The state everywhere
tried by all means to suppress the movements. But the movements succeeded to
make it a issue of national concern. On the other hand, due to the opposition of the
left and trade Unions, SEZs could not get complete freedom from labour laws yet.
These struggles may continue longer. But in the given situations and given power
relations, it is almost settled that the crisis resolution is fully in favour of capital
rather than labour; which is reflected in the nature and structure of SEZs. The capital
has succeeded to throw the major load of the crisis on the head of the labour.

1.1 The crisis that leads the country on SEZ path

In the words of Prabhat Patnaik, “The absence of thoroughgoing land reforms, a
result of the bourgeoisie's compromise with landlordism, kept productive forces in
agriculture arrested. The market for mass consumption goods remained restricted
and grew slowly for this reason. Moreover, the ability of the state capitalist sector to
keep expanding, and thereby to keep enlarging the market for the private capitalist
sector, got progressively undermined: the low agricultural growth put a ceiling on the
rate at which public investment could grow without squeezing the living standard of
the masses to an extent intolerable in a democracy; in addition, the ruling classes
enriched themselves from the public exchequer, a form of "primitive accumulation of
capital," which further curtailed the growth of public investment. The dirigiste strategy
of capitalist development, dependent on expanding public investment, entered a cul-
de-sac and lost social support even as metropolitan capital—and, in particular,
finance capital—stepped up its offensive against this strategy through the Bretton
Woods institutions, and later the WTO, in a world where the crucial support coming
from socialist countries had disappeared.” (Patnaik 1999)

This is the sad story of the capitalist development in India. Due to its colonial past,
India was a latecomer on the road of capitalist development. When we started
moving the wheals of industrialisation the developed countries had already reached
the stage of imperialism and become global powers. The lack of technology and
capital on the one hand and backward agriculture on the other, acted as big
obstacles on the way of speedy industrialisation. Implementing radical land reforms
and focussing all our efforts to develop self-reliance on technology were the only way
out. It would have solved the problems to a large extent. But it was not done. The only
path left was dependency on developed countries and the Indian state chose to
move on this road. After more than fifty years of journey on this path this is evident
that it leads the country to a vicious circle from which it could not break out even
today. Vast rural areas of the country still remain backward and could not be
developed in an effective market for industry and on the other hand, the industry is
unable to absorb surplus rural population.

Not to be quoted 4
Thirty years before, Harry Magdoff explained this crisis in following words:

“Since the obstacles to successful capitalist development (in third world countries)
are today so gigantic, the pursuit of industrialization inevitably involves the
accumulation of capital at the expense of keeping the masses down. Agriculture
remains backward, investment is insufficient to cure unemployment in urban and
rural areas, and wages are kept at pitifully low levels to provide adequate incentives
for entrepreneurs. Production decisions are, and must be, made to satisfy the
desires of the middle-and upper-income sectors of the population, those that have
the money to buy. The technology introduced is the kind most favoured by, and
closely tied in with, foreign capital, since this is the technology best suited for profit-
making and for squeezing into some of the interstices of foreign trade. Brazil is an
outstanding example of what I am referring to. Brazil has been successful in taking
a significant step forward in industrialization -- one in which native capitalists have
actively participated, along with foreign investors from a number of advanced
capitalist states. With what consequences? The real wages of the working class
have declined and the backward agricultural regions have remained stagnant and
poverty-stricken.”1

This is a lesson of history that the problems of poverty and unemployment can be
solved only by gradually transforming predominantly agricultural economies to
industrial economies. The transformation must be such that it breaks the chains of
productive forces so that their energies are fully utilized for development of society.
This process is always going on in all societies but it takes different forms and moves
through different roads and at different speeds in different countries given different
political and economic situations. Therefore it also produces different outcomes in
terms of resolving the crisis i.e. mainly in whose favour the crisis is resolved-Labour
or Capital; and who is benefited more from this? If the crisis is resolved in favour of
capital, the problems of poverty and unemployment persist longer even if the
economy is transformed to predominantly industrial economy.

We can understand the problems persisting in the developed world from the above
perspective. In developed countries, the predominance of industry was established
far back but they could not completely eradicate the problem of unemployment and
poverty. In developing countries, the problem is deeper and far more complex. China,
South Korea, Taiwan, Malaysia, Indonesia and Thailand the share of industry in GDP
has become near about fifty percent. The case of India is most interesting. Here, the
share of agriculture in the GDP is going down at steady rate but its share in total
employment is almost stagnant. In 1983 share of agriculture in GDP was 37 percent
and its share in employment was 68.5 percent; while in 2004-05, its share in GDP

1
Harry Magdoff () : Capital, Technology and Development; Monthly Review 27(8), 1-11 (1976).
In this article, Harry Magdoff thoroughly critises the logic of bourgeois social science that capital and
technology on their own can solve the problems of under development.

Not to be quoted 5
and employment was 21.1 and 56.5 percent respectively. The share of industry in
GDP is just 26.4 per cent. Moreover, its share of GDP is stagnant or shrinking.
Industry's share in employment is just 17.6 per cent. The share of manufacturing in
GDP and employment in 1983 was 14.3 and 10.7 percent and in 2004-05, it
became 15.1 and 12.2 percent respectively.

The very interesting feature of India’s recent economic development is fast growth in
service sector. The share of services in GDP and employment was 38.6 and 17.6
percent in 1983 and recording a fast growth it reached to 53 and 24.8 percent
respectively in 2004-05. Although, fast growth of service sector is a general
phenomenon in recent decades, but in India and few other countries it has acquired
special significance. Manufacture is stagnant and the country is recording a high
growth rate; the credit goes to the fast growth in the service sector. The share of
industry in GDP has not increased significantly; but the share of agriculture in the
GDP has come down from 37 percent to 21.1 percent; the credit goes to fast growth
in service sector.

It is argued by many scholars that Indian case can not be understood from traditional
way of thinking about the development process, since it is moving through a different
path to achieve the same goal i.e. transforming its predominantly agricultural
economy to predominantly industrial economy. It is true in some respects. If we
include the services in the industry, the India has already become a predominantly
industrial economy. But such analysis leads us no where. The country’s economy still
remains predominantly agricultural since vast majority (56.5 percent) of its
population is still dependent on agriculture for its livelihood. Only the constitution of
GDP changed but not the country, not the people. This is the tragedy of our country
and it is the outcome of a distorted development.

From the above perspective the task of transforming our predominantly agricultural
economy to predominantly industri al economy still remains. It becomes more pain
full but more urgent. How this can be done? Merely the growth in service sector can’t
fulfil this objective. The growth in service sector leads to sustainable development
only if it is supported by corresponding growth in manufacture. If this is not the case,
the service sector growth is very unstable. Let us see what is the nature service
sector2 growth in India and how it is contributing to the growth of country’s economy.

Growth in service sector by and large depends on the growth in Industry and
particularly manufacturing sector. When industry is facing stagnation, there can be a
growth in service sector only by external influence and this is the case with India. It is
true that this growth in service sector to some extent can break the stagnation of

2
The economy is divided into three sectors: agriculture, industry, and services. ‘Industry’ includes
manufacturing, mining, and electricity, gas and water supply. ‘Services’ include trade, hotels, transport and
communication; financing, insurance, real estate and business services; and community, social and personal
services. Construction is sometimes grouped under industry, sometimes under services

Not to be quoted 6
industry also but it has its own limits provided the nature of the service sector growth.
One very important feature of the growth in service sector with external influence is it
vanishes in no time with any hint of crisis in the global economy. It implies that more
the disjunct-growth3 in service sector, more vulnerable is the economy to crisis. The
second feature of such growth of service sector is it leads to growth without
employment. We can see this in Indian case. The share of the service sector in GDP in
our country has grown dramatically by 14.4 percentage points between 1983 to
2004-05 and it resembles the share of the service sector in a developed economy.
But the share of services in employment has gone up only by 7.2 percentage points
over the same period. The high growth in service sector is contributing to high rate of
growth of economy but the same is not linked to the growth in employment. ‘Finance,
insurance, real estate and business services’ account for just 2 per cent of India’s
employment, but earns 13.5 per cent of its GDP. The same is true for IT&ITES
segments. Now let us see, what is the nature of IT sector in India.

India's IT sector is composed of the software sector and the IT-enabled sector (ITES).
Both the segments are basically based on the outsourced or sub contracted work to
India from developed world particularly from America.

In the case of the ITES, the activities outsourced include call centres, medical
transcription, data entry, ticket-reconciliation, claims processing, credit card
administration and such other routine office work as can be performed at remote
locations. While this work requires knowledge of English, it does not require superior
education or skills. Now the crisis is coming to rob these opportunities from two
corners. One; "Optical-character-recognition software is automating the work of data-
entry workers and natural-language speech recognition is likely to automate some of
the call centre work. Second; other countries too are entering in this business,
particularly those once colonised by an English-speaking country: the call-centre
business is now booming in the Philippines. Therefore the high growth in this
segment in India may not be long lasting. The sole basis on which India is competing
is wages and it will lose its competitive edge if wages in India rise or if other poorer
countries join the game. (Aspects of Indian Economy, 2008)

It is clear from the above that growth of service sector with out any corresponding
growth in manufacture will lead to very unstable development and rather than
resolving the crisis it will make the country’s economy more vulnerable to crisis. The
crisis of Indian economy can only be resolved with fast growth of industry,
specifically, expansion of labour intensive manufacture. The impact of SEZ rush in
India should be analysed with above perspective in mind. Whether the SEZs will
resolve this crisis or accentuate it? In whose favour the crisis is going to be resolved-
labour or capital?

3
All the sectors of the economy are linked to each other and growth in one sector leads to growth in other
sectors. If this link is not maintained, it shows that certain serious distortions have taken place in the
economy.

Not to be quoted 7
1.2 Major concerns of the study
Our study will be dealing with both of the above issues but thorough research in the
first aspect (Whether the SEZs will resolve this crisis or accentuate it?) is out of the
scope of our study and also it is not possible at this stage; since only a minor section
of approved SEZs have started their operations up till now and they are still taking
proper shape. The major concern of the study is to analyse the composite impact of
SEZ rush on the labour. Therefore our major focus will be on the second aspect-In
whose favour the crisis is going to be resolved? What is the nature of industrial
relations regime emerging in the SEZ enclaves? What can be the possible changes in
organising strategies of workers in new situations?

Study is mainly based on secondary sources. Case studies of the workers and
interviews with trade union leaders of the region were also conducted to gather the
primary information to test and support the findings. Two SEZs were selected for the
case studies of the workers; i.e. Noida SEZ in Uttar Pradesh and Apache SEZ in
Andhra Pradesh. Noida SEZ represents the one of the seven initial EPZs who is now
coverted to SEZs. On the other hand Apache SEZ represents one of the new private
SEZs. Noida SEZ is a government SEZ and located in NCR region of Delhi. Apache
SEZ is a private SEZ and is associated with multinational Adidas group. It is located in
coastal district Nellore of Andhra Pradesh. It is to be noted that most of the important
SEZs are either near coastal areas or around NCR region. Therefore, the findings of
the studies on these SEZs may represent an overall picture of SEZs of the country as
a whole.

Not to be quoted 8
 NOIDA SEZ

Noida Export Processing Zone was set up in 1985 and after the SEZ policy
came in to existence it was converted in to SEZ. It is situated in the National
Capital Region (NCR). It has highest number of units only next to SEEPZ,
Bombay. However it could not get the number of units for which it had got
valid approvals. It has around 150 units but the valid approval was for 252
units. Electronic hardware and software, Gems and jewellery, Garments,
Engineering products and plastic and rubber products are main exports
items from the Noida SEZ. Labour intensive light and medium scale
industries characterise the zone. Electronic software units account for
almost 27.4 percent of the units. Gems and jewellery account for 14.38
percent and Textile and garments account for almost 10.6 percent of the
units in the zone. Engineering and electronic hardware units account for
13.7 and 8.9 percent respectively and they also have significant presence in
the zone. It is also observed that there has been a continuous increase in
the number of electronic software units. Major export destinations are USA (
39.58%), UAE(20.06), UK(14.69), Netherlands(7.13), Germany(6.36%).

NSEZ provides direct employment to around 20000 persons and according

to official estimates women workers account for more than 22 percent of the
workforce. Garment(28.54) and engineering sector(17.5) accounts for major
share in employment followed by the electronic software sector(13.5) and
gems and gewellery (10.1).
Top 20 units of the zone account for almost 57 percent of the workforce of
the zone. Majority of workers in the zone are migrants from different states
of the country.

It is also reported that in the period before 2005, almost 70 units closed
down. Export performance also declined in terms of share in total exports
from EPZs of the country. But SEZ Act 2005 has again injected life in the
zone. It is claimed by SEZ office that more and more units are now coming in
the SEZ and export performance is also on rise.

Not to be quoted 9
 Apache SEZ

Apache SEZ is located in Mambattu village in Tada mandal, district Nellore of

Andhra Pradesh. This coastal region is only 172kms from Chennai and it is
gradually emerging as new industrial capital of Andhra Pradesh. Apache SEZ
started its operations in November’2006.

Presently, four special economic zones and nine other mega projects are
coming up in the region.

The total investment intentions for Andhra Pradesh in 2006-07 was Rs 25,173
crore, next only to Gujarat, and Nellore district was getting a good share of it. It
has easy access through road, railway network and two nearby airports -
Chennai and Tirupati. It has nearby, a 169-km coastline and upcoming
industrial port in Krishnapatnam. 13 mega industrial projects with a proposed
investment of Rs 40,150 crore, which are under different stages of
implementation, will provide employment to nearly 1,35,000 people. More
than 3,800 acres of land have been acquired for the four SEZs - Tawainese-
owned Apache footwear in Tada, MAS Textile and Apparel Park in Chintavaram,
Kisan SEZ in Kodavalur and APIIC Leather SEZ near Mambattu. An industrial
park for automotive, aerospace and engineering sectors, promoted by NRI
industrialist Lord Swraj Paul’s Caparo Group, is coming up in an area of 2000
acres in Menakur while another Taiwanese industrial park will be set up on
2,500 acres near by. Some parts of the 5000-acre Sri City SEZ, being
developed in neighbouring Chittoor district, will also fall in Nellore. (Business
Line, The Hindu, July 16, 2008).

But these developments are also creating threats to local population in terms
of acquisition of huge amount of agricultural land and also in terms of
environmental degradation. Some villages are facing complete eviction and
mainy other villages are facing threats to their livelyhood. Therefore peasants
and fisherfolks are agitated against the acquisiton of large tracts of
agricultural land and expansion of port.

Not to be quoted 10
 In Tada mandal, 12 villages are badly effected by the acquision of land for
SEZ. The Government provided 450 acres of land to Apache company in this
SEZ and another 2000 acres of land would be gradually handed over to
other companies for developing production units in this SEZ. According to the
report of a Fact Finding Team, due to construction of this SEZ and fencing of
nearby lands, the tribal people from 12 villages had no access to nearby
grazing grounds, fields and water bodies, which resulted into chronic hunger
and malnutrition. Raising these issues a petition was also sent by concerned
citizens to the global director of Adidas Social and Environmental Affairs
Team.

Taiwan based Apache group is a global footwear major and it is authorised

manufacturere for multinational Adidas group. Apache has also established
its production facility in china with a capacity of 60000 shoes per day. The
SEZ in Nellore is run by Apache SEZ Development India private limited.
In Nellore, Apache SEZ has only one manufacturing unit of its own and there
are no other units. It has claimed that with in four years it will expand its
facilities here to provide employment to 20000 persons.
Today about 4900 workers are employed in Apache SEZ. Its export
performance in 2007-08 was Rs 170 crores.

Not to be quoted 11
 2. Journey from EPZs to SEZ Rush

India was one of the countries who very soon realized the need of putting extra
efforts to boost exports. As early as in 1960’s, India conceptualized EPZs as the
platform to boost exports by providing economic incentives. Kandla EPZ established
in 1965 was first in Asia. Thereafter, Santacruz export processing zone was
established in 1973. Both of these were set up with multiple objectives.

These zones like in other countries were offered the financial incentives like tax
holidays, duty free imports and exports, dedicated infrastructure, cheap labour and
strategic location etc. In India labour laws were applicable in the EPZs, but there was
no right to strike since they were declared public utility services.

EPZs could not make a grand success in boosting exports. Tondon committee (1980)
reviewed these two Zones and made several concrete recommendations to improve
the performance of the zones. The committee pointed out that the growth of EPZs
was hampered by several handicaps including the absence of a policy, absence of
implementation authority to centrally coordinate and control procedural constraints,
infrastructural deficiencies, limited concessions and limited powers of the zone
authorities to take actions on the spot resulting in inordinate delays. Tondon
Committee also recommended establishing 4 to 5 more zones (Aradhna 2001).
Thereafter four more zones- Noida (Uttar Pradesh), Falta (West Bengal), Cochin
(Kerala) and Chennai (Tamil Nadu) were established in 1984. Visakhapatnam
(Andhra Pradesh) EPZ was established in 1989. However, Tondon committee’s
recommendations could not effect any policy changes in EPZs.

A path breaking change in the thinking about EPZs occurred with the change of
global economic environment after 1990 when liberalization policies were
implemented in full bloom. Now much more emphasis was given to EPZs and
thinking in the direction of delegating powers to zone authorities, providing additional
fiscal incentives, simplifying policy provisions and providing greater facilities in EPZs
started. The scope and coverage of the EPZ/EOU scheme was also enlarged in 1992
by permitting the agriculture, horticulture and aqua culture sector unit also. In 1994,
trading, reengineering and re-conditioning units were also permitted in EPZs. The
EXIM Policy (1997-2002) finally introduced a new scheme from April 1, 2000 for
establishment of the Special Economic Zones (SEZs) in different parts of the country
(Aradhna 2001).

Not to be quoted 12
2.1 SEZ Act 2005 creates the dream enclaves for investors
Special Economic Zones Act 2005 was passed by Parliament in May 2005. The SEZ
Act and Rules came into force from February 10, 2006. It faced opposition in
parliament and also in country as a whole. A nationwide debate started on different
aspects of the SEZ act and serious concerns were put forward. But only few aspects
of the original draft were amended.

SEZ Act 2005 creates the dream enclaves for investors. SEZs are not just extension
of EPZs but it starts a new, qualitatively different and aggressive phase. Whether it is
the question of acquisition of land or of labour laws, aggressiveness of state is
evident. On the other hand, state is also going on extremes in giving incentives to
investors. SEZs are clearly demarcated industrial zones which constitute a free trade
enclave outside a country’s normal customs and trading systems where foreign
enterprises produce principally for export. They are provided with huge tax
concessions and financial incentives. Labour laws in the enclaves are also diluted to
benefit the investors. Not only this, the SEZs are deemed to be foreign territories for
the purpose of trade operations, duties, tariffs and land occupation. There is no
scope of interference of any elected public body in the SEZ enclaves. SEZs are also
going to frame a new industrial structure and new industrial relations regime in the
country. We will discuss its different aspect in coming sections but here we can see
how it is different from the EPZ scheme and goes many steps further to benefit the
investors:
1. EPZs were fully controlled and governed by the government. But Now along
with government SEZs, there are private, joint sector SEZ also. These SEZs are
deemed to be foreign territory for the purposes of trade operations, duties and
tariffs and land occupation. In case of private SEZs only statutory functions
are controlled by Government through the Development commissioners. Its
operation and maintenance is fully controlled by the developers. The DCs are
made single point authority for SEZs. There is no interference of any elected
public body in SEZ enclaves.
2. Developers have Full authority in providing services like water, electricity,
security, restaurants, recreation centers etc. on commercial lines. Foreign
investment permitted to develop township within the SEZ enclaves with
residential areas, markets, play-grounds, clubs, recreation centers etc.
3. Labour laws are diluted to the extent that employers have virtually got the full
freedom of hire and fire and full authority to control the workers. On the other
hand workers are made powerless.
4. No minimum export performance (EP) or Net Foreign Exchange earning as
percentage of exports (NFEP) required for SEZ units. It was a condition for EPZ
units.

Not to be quoted 13
 5. 100% FDI investment through automatic route available to manufacturing SEZ
units. In EPZ, FIPB approval was required.
6. Reservation Policy of SSI Sector not applicable to SEZ Units. No cap on foreign
investments for SSI reserved items.
7. No domestic sales entitlement for SEZ units at concessional duty. Domestic
sales up to 50% of exports at concessional duty were permitted for EPZ units.
There is now no limit defined as a ratio to the FOB value of exports that apply
on sales in the DTA by SEZ units.
8. Subcontracting facility available to SEZ jewellery units, which was not
available to EPZ units.
9. All imports in SEZs on self certification; unlike in EPZs where attestation of
Development Commissioner was required for import of Capital Goods.
10. No routine examination by Customs of Export and import cargo in SEZ. In
EPZs, export and import were subject to customs examinations.
11. No pollution cess and the inspections regarding the environmental standards
can be carried out only with prior permission from Development
Commissioner.
12. Monitoring of performance of SEZ units by a committee headed by
Development Commissioner and consisting of Customs.
13. In SEZs facility to retain 100% of export proceeds in the EEFC Account to meet
the foreign exchange requirements of the units. While only up to 70% of
export proceeds were allowed to be retained in EEFC Accounts for EPZ units.
14. Procedural simplification for operations like record keeping, inter-unit transfer,
subcontracting, and disposal of obsolete material and waste and scrap.
15. Huge tax benefits and financial assistance to SEZ units and SEZ developers
that were unimaginable in EPZs (See the Box-2).

2.2 Towards a new industrial relations regime

With the advent of liberalization and globalization there started a move for thorough
going labour law reforms. The successive Governments push the wheel in the same
direction but the central trade unions resisted the move. The tussle still goes on and
the current state of the Indian labour law represents the aspects of both continuity
and change. This state of condition is best reflected on the one hand in the
recommendations of the Task force of the Planning Commission in 2001 and Second
National Commission on Labour 2002; and on the other hand SEZ Act 2005 and SEZ
policies of the states. NDA Government in 2002 proposed that provisions of Chapter
VB of the ID Act may now apply to industrial establishments employing not less than
1000 workers instead of 100 and separation compensation will be increased from

Not to be quoted 14
15 days to 45 days for every completed year of service. Similarly it was also proposed
to bring an amendment in Contract Labour(R&A) Act to facilitate outsourcing of
activities without any restrictions as well as to offer contract appointments. The
Union Cabinet in 2002, ignoring the opposition from the trade unions, approved the
above said changes in the ID Act relaxing rules governing retrenchment, closure and
layoffs. It is also interesting to note that prior to 1976 this threshold limit was 300
and after a long struggle of trade unions the threshold limit of 100 was introduced in
1976. The Task Force on Employment Opportunities (Ahluwalia Committee) in 2001
recommended completely eliminating the permission clause in all establishments.
On the other hand, the Second National Labour Commission recommended
restoration of the original threshold limit of 300 or more workers. The commission
also recommended the repeal of section-9A of the ID Act which makes it compulsory
for the employers to give 21days notice of change to the workmen or to their union
before effecting any change on any matter specified in the Fourth Schedule attached
to the Act which relates to conditions of service. Both task force of Planning
Commission and Second National Commission on Labour recommended
amendments in Contract Labour (R&A) Act to allow the use of contract labour in not
only non core activities but also to some extent in core activities. Task Force on
Administrative and Legal Simplifications (Kumar Mangalam Birla as Convenor and
Nusli Wadia, P K Mittal and Ratan Tata as members) constituted in the same period,
made recommendations for even more thorough going labour reforms. However till
date no amendments in labour laws could be materialized due to strong protest of
trade unions. SEZs are the only sector where the continuity and change in the arena
of labour legislation is reflected in most dynamic way. The original SEZ bill was meant
to grant SEZs complete freedom from labour laws.

But this could not be materialized. Section 50 of the original bill said: “the state
government may, for the purpose of giving effect to the provisions of this act, notify
policies for developers and units and take suitable steps for enactment of any law
granting exemption from state taxes, levies and duties to the developer or the
entrepreneur…..”. It further said: “Directing that any of the provisions of any act
relating to trade unions, industrial and labour disputes, and welfare of labour
including conditions of work…invalidity, old age pensions and maternity benefits or
any other activity relating to the SEZ shall not apply…”. Section 49 of the original bill
said: “The central government may by notification, direct that any of the provisions of
this act (other than section 54 to 56) or any other central act or any rules or
regulations made there under or any notification or order issued or direction given
there under (other than the provisions to making the rules and regulations) specified
in the notification shall not apply to SEZ…”.

On the other hand Section 3(4) of the original bill had the potential to derail the
federal structure of the state: “In case a State government intends to set up a SEZ, it
may after identifying the area, forward the proposal directly to the board for the
purpose of setting up the SEZ…provided that the Central government may after

Not to be quoted 15
identifying the area, suo motu set up and notify a SEZ without referring the proposal
to the State government concerned or the Board” (Venkatesan, 2006).

Thanks to the opposition of mainly the left parliamentarians these provisions of the
bill were omitted or amended. Finally, the relevant portion of the section 3(4) of the
act reads: “…the center may after identifying the area suo motu set up and notify the
SEZ, but only after consulting the State government concerned…”

In section 50 of the act the clause exempting application of any state act relating to
trade unions, industrial and labour disputes, welfare of labour including conditions of
work in the SEZs was deleted. Section 49 of the act finally carries a special provision
which says that this section shall not apply to matters relating to trade unions,
industrial and labour disputes, welfare of labour including conditions of work, PF,
employer’s liability, workmen’s compensation, invalidity, old age pension and
maternity benefits. Therefore now Centre can not by notification direct that laws
relating to these matters will not apply to SEZs. (Venkatesan, 2006)

Only major relaxation in labour laws in SEZ enclave by SEZ Act is that the whole
enclaves are declared as Public Utility Services and under section 22 of the ID Act, in
any public utility service 14-day notice is required before the employees’ undertake a
strike or the employers’ a lock-out. Moreover, the powers of labour commissioner and
various boards are delegated to the development commissioners of SEZs.

However, the efforts in the direction of relaxing labour laws in SEZ enclaves did not
stop here and now the states moved the wheel in the same direction by way of
making their own SEZ Policies. We can list here some of the amendments affected
or proposed by different states in their SEZ policies:

1. An amendment proposed by Maharashtra seeks to avoid the application of

Chapter V-A to industries in SEZs. A number of states have proposed that
SEZs, or at least undertakings in SEZs with less than 300 workmen, be
exempted from Chapter V-B of the ID Act.
2. In Maharashtra, an amendment is already made to the ID Act in terms of
exempting employers from the compulsion of giving notice to the workmen,
before making a change in conditions of service.
3. The Uttar Pradesh has exempted SEZs from Contract Labour (R&A) Act and
therefore contract workers in SEZs in UP will have no status in labour law.
Most of other states are also seeking to limit the application of the said Act in
terms of making the prohibition of contract labour applicable to only “core
activities.” States are also seeking to limit the application of the Act by
tinkering with section 31 of the Act to allow for the state government to
declare SEZs as exempt from this Act.

Not to be quoted 16
 4. Two states have already amended section 22 of the Trade Unions Act, 1947
and it is proposed to be amended by two another states, in terms of excluding
outsiders from becoming office-bearers of trade unions.
5. Several amendments to various provisions of the Factories Act, 1948 have
been affected and proposed. Most important among these are related to
working hours. There will be no restriction on the length of working hours in
SEZs on a daily or weekly basis, no restrictions on the employment of women
and no guarantee of weekly holidays.
6. In Andhra Pradesh, SEZs are exempted from section 18 of the Minimum
Wages Act and therefore employers in SEZs are not required to maintain
registers and records giving the particulars of employees employed, the work
performed, wages paid and receipts given. SEZs are also exempt from section
11 of the Act. Madhya Pradesh has proposed to exempt SEZs from the
operation of the Act, under s.26.
7. Maharashtra and Madhya Pradesh have proposed to exempt the principal
employer under the Employees Provident Fund and Miscellaneous Provisions
Act. Both the states have also proposed to exempt principal employers in
SEZs from any liability under Employees State Insurance Act, 1948, towards
employees employed indirectly.
8. Madhya Pradesh has proposed the amendment of the Employment
Exchanges (Compulsory Notifi-cation of Vacancies) Act, 1959 in terms of
exempting SEZs from the provision of calling the unemployed persons for
interview.
9. Madhya Pradesh has also made a proposal to exempt SEZs from the
application of the Apprentices Act, 1991. (Colin Gonsalves and Pragya Freya
Mehrotra 2007)

2.3 The Great SEZ rush

SEZ rush is not India specific but an international phenomenon. Till 1986, there were
only 176 such zones across 47 countries. By 2003, the number jumped over 3000
across 116 countries and now there are more than 4000 SEZ/EPZs all over the
world.

In India, the EXIM Policy (1997-2002) is the turning point in the sense that the state
finally settled to move aggressively by all means to resolve the problems of industrial
stagnation in favour of capital. Introduction of April 2000 SEZ scheme was like a
signal for it and thereafter a rush for establishment of SEZs started in India. However
it could gain a momentum only after the SEZ Act 2005 came in to existence, but even
before it, all the seven former EPZs were converted to SEZs and 12 more SEZs (State

Not to be quoted 17
government and private) were established. The real great rush started after 2005.
With in less than three years (2006-Dec 08) the number of approved SEZs reached
to 693 (552 formally approved and 141 in-principle approved), out of which 274
were notified.

We can see in the Table 1 that total formally and in principle approved SEZs are
going to acquire 193,541.9 hactare land of the country. However, this data does not
present total picture of the SEZ rush. There are many more proposals in the channel
and the total list may finally cross the figure of 1000.

Table 1: Total Number of SEZs Approved and Emphasis on IT sector

States Total SEZs Total IT & ITES %IT & ITES

Approved
Andhra P 101 55 54.45
Chandigarh 2 2 100
Chhattisgarh 3 1 33.3
Delhi 2 2 100
D& N. Haveli 4 1 25
Goa 7 2 28.5
Gujarat 60 16 26.6
Haryana 62 38 61.2
Himanchal 3 0 0
Jharkhand 1 0 0
Karnataka 59 41 69.49
Kerala 20 14 70
Mp 20 12 60
Maharastra 138 51 42.02
Nagaland 2 0 0
Orissa 13 4 30.7
Pondicherry 1 0 0
Punjab 17 6 35.29
Rajasthan 19 4 21.05
Tamilnadu 84 38 45.23
Uttarpradesh 35 26 74.28
Uttarakhand 3 2 66.66
West Bengal 37 20 54.05
All India 693 335 48.34
Source: Calculated from the data provided by the Ministry of Commerce 2008

Moreover, big SEZs like Maha Mumbai SEZ and Reliance SEZ in Hariyana which will
acquire more than 25,000 hectares of land are not properly represented in this data.
It is also clear from the data that more and more SEZs are concentrating only in few
states. Majority of SEZs are coming in coastal areas or in NCR region of Delhi. This

Not to be quoted 18
will certainly increase the interregional disparities. It is also clear that about 50
percent SEZs are for IT & ITES sectors. (See the Tables 1)

There are different concepts of SEZs implemented in different countries of the world -
Wide area concept, Small area concept, Industry specific and performance specific.
India is experimenting with all these types.

There are provisions of mainly four types of SEZs in India under SEZ act 2005:

1. Multi product: Minimum size-1000 hectares; Minimum size of processing

area-35 percent.
2. Multi-services : Minimum size-1000 hectares; Minimum size of processing
area-35 percent
3. SEZ for specific sector : Minimum size-1000 hectares; Minimum processing
area-50 percent
4. SEZ for IT, Biotech, Non conventional energy, Gems & jewellery: Minimum
size-10 hectares; Minimum processing area-50 percent; Minimum built up
space for IT SEZ-100000 sq.m.

Not to be quoted 19
 Table 2: Sector wise Distribution of SEZs

Source: Ministry of Industry and Commerce 2009

Not to be quoted 20
 Table 3: State wise Distribution of SEZs

Source: Ministry of Industry and Commerce 2009

Not to be quoted 21
 3. Impacts of SEZ Phenomenon

One can imagine from the number and coverage area of the SEZs that if they
succeed to attract enough investors they will speed up the process of
industrialisation many fold and economy of the country will be transformed to a large
extent. The SEZs are meant for different sectors and they almost touch all industries.
In overall terms whole manufacturing is supposed to expand. But it is also clear from
the data that the phenomenon is more IT&ITES dominated. It explains the nature of
industrialisation. It seems that focus is more on services and technology/capital
intensive industries rather than labour intensive manufacturing. Therefore, the great
SEZ rush may boost the exports many fold but they may not generate enough
employment. The total picture is still not clear but this seems the trend, and if this is
not reversed in the process of further development, the SEZ rush will accentuate the
problem of same distorted development.

The present data projects SEZ’s contribution to the export growth quite high. In the
initial years of 2006-07, the export growth is recorded to be 52% over 2005-06 and
in 2008-09 it is expected to be 92% over 2006-07. Ministry of industry & commerce
is projecting export of Rs. 125,950cr. in 2008-09 as against Rs. 66,638 cr. in 2007-
08. But on the employment front, this is not the case. The government projects only
five million direct-indirect employments in total formally and in-principle approved
SEZs and this figure is also highly inflated. (Table 4)

One more factor sheds light on the nature of industrialization. The SEZ/EPZ rush is
not India specific. Almost all the third world countries are moving on the same path.
This reflects intensifying competition among developing countries to win greater
share of investments from and greater share of exports to developed countries. The
capital having got unrestricted mobility, it becomes a continuous fight among the
third word countries to not only win these shares, but also to retain it. Getting better
opportunities of investments, capital moves away in no time leading to
disinvestments. It is now well documented how china’s growth also resulted shutting
down operations in various countries throughout the world and relocating them to
Chinese zones. Hundreds of factories closed down in Mexico since their orders had
gone to China.

Not to be quoted 22
 Table 4: Direct Employment in SEZs (as on 30.6. 2008)
Total employment in SEZs: 3,49,203 Lakh persons
Incremental employment since Feb., 2006: 2,14,499 persons

DIRECT Employment created in 100885 persons (all Incremental

notified SEZs (as of 30.6.08)
DIRECT Employment in Private/State
Govt. SEZs which came into force
prior to SEZ Act, 2005 (as of 30.6.08)
DIRECT Employment in 7 SEZs
established by the Central
Government (as of 30.6.08)
Employment generated after
February 2006)
48988 persons (Incremental
employment generated since Feb.
2006: 36,250 persons)
1,99,330 persons (Incremental
employment generated since Feb.
2006: 77,094 persons)

Table 5: Exports in Special Economic Zones

Physical exports in the year 2007-08 accounted for 84% total turnover 381%
increase in exports over four years (2003-04 – 2007-08)

Year Value Of Physical Exports Growth Rate (over

From SEZs (Rs. Crore) previous year)

2003-2004 13,854 39%

2004-2005 18,314 32%

2005-2006 22,840 24.70%

2006-2007 34,615 52%

2007-2008 66,638 92%

Private Investment in SEZs (30.6.2008)

Total investment as of 30.6. 2008: Rs. 81093 crore
Incremental investment since February, 2006: Rs. 77058 crore
Source: Ministry of Commerce and Industry, Department of
Commerce; http://www.sezindia.nic.in

Moreover, we have about 50 percent SEZs for IT&ITES sector (Table 1). This IT&ITES
dominated growth creates added problems. IT&ITES growth in India is mainly based
on the jobs outsourced from developed countries and these jobs simply vanish
whenever the crisis appears in developed economies.

This explains the nature of industrialisation by SEZs. The trend shows that this is not
leading to a sustainable development. This is creating an economic structure which
at one time may get boost in investments and at another time face disinvestments

Not to be quoted 23
leading to de-industrialisation. This will make the third world economies more
vulnerable to crisis.

3.1 Expansion of Industrial Working Class and the Reserve

Army
Table 6: Total SEZ employment and its share in manufacturing employment

Year SEZ Employment Share in Manufacturing (%)

(persons)
2005 100,650 1.05
2009 50,00,000* 7.1*
Source: Aradhna 2007 and Ministry of Commerce 2008. *Projected

It is very much clear from the SEZ rush that it will lead to the expansion of the
industrial working class. But one should not over estimate the employment
generating potential of SEZs. The most optimistic figure is five million jobs and even if
this is materialized (which seems next to impossible given the nature of
industrialization), this will be insignificant keeping in view the high level of
unemployment in the country. Moreover, we should not forget some very important
factors and processes working in the country.

First; there are every chances that many companies already operating in the country
may shift in the Special Economic Zones and they will not create any new jobs in the
country. More than 50 percent SEZs are for IT and ITES sector and it is but natural
that most of the IT and ITES companies operating in the country may shift in the SEZs
and to this extent no new job will be created in the country. Noted industrialist Rahul
Bajaj has already accepted that incentives offered to SEZs are compelling the already
established industries to move in the Zones. There is a similar example of another
third world country-Mexico: “employment in the EPZs ("maquiladoras") grew by 10.4%
in 1995, but this was accompanied by job losses of 9% in Mexico’s manufacturing
industries outside the zones. In other words, employment in manufacturing industries
shifted towards the EPZ sector without increasing the total number of jobs. This
process was described as the "maquiladorisation" of the Mexican economy. The
overall problem of unemployment has remained.” (ILO 1998, Jauch 2006)

Since the SEZs are still taking shape, we have no sufficient data to properly justify
our argument. But it seems the logical out come in Indian conditions and this is why
the scholars very pointedly arguing for SEZs are also raising this concern.

Second; the capital being highly mobile, the SEZs based on foreign investments will
not lead to a sustainable development and will not generate sustainable

Not to be quoted 24
employment. If the capital moves away in search of more profitable investment
opportunities, all the employment will be lost in no time.

Third; subcontracting the production and contractualisaton of workforce never offer a

sustained employment.

On the other hand, uprooting lakhs of people from their agricultural base economy
will lead to proletarianization of huge rural population and their migration to urban
centres. This will also result in swelling the ranks of the reserve army of labour. This
increase in the job seeking work force in the labour market will put further downward
pressure on already very low wages.

All these suggest that SEZ rush will certainly lead to expansion of the industrial
working class but major section of it will represent only the reserve army of the
working class.

3.2 Dispossession of peasants, Shift in land use and Food

Security
It is projected that if all the approved SEZs are notified more than 114,000 farming
household (each house hold on an average comprising five members) and an
additional 82,000 farm worker families(Average five members) who are dependent
upon these farms for their livelihoods will be displaced. It means roughly 10 lakh
(one million) persons will loose their livelihood and face eviction. However this figure
is under estimated since in the present data, area under SEZs is also
underestimated. Actual displacement will be not less than 20 lakh (2 million)
persons.
The transfer of agricultural land to the industry is in itself not an issue of concern.
History of Industrialisation shows that it happened everywhere in the process of
development. “The process of development — even the most equitable, broad-based
and democratic sort of development — will necessarily require that land use be
shifted from agricultural to non-agricultural purposes as economies and societies
become more diversified. This is not only inevitable but even desirable in the long
run, as long as food security issues are adequately taken into account.”
(Chandrashekhar, 2007)

But the issues of concern are:

1. Whether the fruits of industrialisation more than compensate the losses?
2. Whether the issue of employment and food security is properly addressed?
3. How and what type of land is acquired and whether the dispossessed
population is properly rehabilitated?
4. Whether the employment generated by industrialisation uplifts the standards
of living of peasants joining the ranks of labour?

Not to be quoted 25
It becomes a serious issue in the face of the fact that around 50 million people lost
their land since 1950 on account of development projects and almost 75 percent of
them are still waiting for proper rehabilitation. (Movement against SEZ 2006)

The Countrywide movements are raising the above issues. The nature and amount of
compensation to farmers and rehabilitation of displaced persons including the
landless workers has become the issue of foremost concern.

Table 7: Total land area going in SEZs and Expected loss of grain production

Total Agri. Total grain Total land % of Expected loss of grain

States land (Sown production going in land 000 tons
area) 000 tons Approved going in
(000ha) SEZs approve
d SEZs
Andhra P 10237 16951 14719.64 0.14 23.7314
Chandigarh 2 - 58.47 2.9
Chhattisgarh 4770 5714.8 2039.77 0.04 2.2860
Delhi 28 16.06 0.05
D& N.Haveli 23 - 117.75 0.5
Goa 134 159.8 369.98 0.27 .4315
Gujarat 9852 6154 25092.09 0.25 15.385
Haryana 3527 12998.1 29221.08 0.82 106.5844
Himanchal 541 1381.4 5030 0.92 12.7089
Jharkhand 1769 2067.6 36 0.002 .0414
Karnataka 10499 13489 9361.23 0.09 12.1401
Kerala 2155 638.3 874.26 0.04 .2553
Mp 14975 13195 8951.25 0.06 7.917
Maharastra 17490 12087 43142.96 0.25 30.2175
Nagaland 309 424.8 450 0.15 .6372
Orissa 5739 7359.7 5327.48 0.09 6.6237
Pondicherry 21 - 346 1.65
Punjab 4243 25184.2 2076.13 0.05 12.5921
Rajasthan 16549 11445 16454.14 0.10 11.445
Tamilnadu 5097 6127.2 16569.05 0.32 19.607
Uttarpradesh 16750 40410 1309.67 0.008 3.2328
Uttarakhand 776 1594 484.39 0.06 .9564
West Bengal 5374 15608.9 10719.24 0.20 31.2178
All India 132656 208601. 193541.9 0.145 298.0105
6
Source : Calculated on the basis of data provided by Ministry of agriculture and Ministry
of Commerce 2008
Note: While calculating the expected grain loss it is assumed that total land going in
SEZs is agricultural land.

The state in so aggressive that it is not ready to listen any voice of the people and
determined to move forward at any cost. Only the issue of compensation is of some
concern to governments and they are trying to bargain with farmers. The rush for

Not to be quoted 26
SEZs has become the rush for capturing the agricultural land and dispossessing the
peasants with the help of the State. There is no proper resettlement policy for the
dispossessed families including landless labour. The demand is raised for permanent
employment to at least one member of the dispossessed families along with proper
compensation. Peasants may get compensation and employment but what will
happen to landless workers? There is no answer to this question from any corner.

Moreover, we also do not produce much surplus grains and we have to go for
imports. “In recent years, according to Ministry of Agriculture data, the net sown area
has actually fallen, from 143 million hectares in 1990-91 to 140.9 million hectares
in 2003-04. One reason for this may be the increasing encroachment by non-
agricultural interests (such as urban real estate) on agricultural land. There is even a
decline in the net irrigated area, from 57.1 million hectares in 1999-2000 to 55.1
million hectares in 2003-04; as a result, the cropping intensity has stopped growing,
at around 1.35 (i.e., 35 per cent of the area is cropped more than once)”(Aspects of
India Economy, 2008). Resultant effects of the above are fall in the grain production
and food crisis. We should analyse the impact of SEZ rush in this background.
Drastically decreasing the agricultural land area further may certainly have serious
consequences on the food security.

The data shows that SEZs are acquiring large tracts of agricultural land in the states
like Haryana (29221.08 ha), Gujarat (25092.09 ha), Tamilnadu (16569.05 ha) and
Maharastra (43142.96 ha) where agriculture is more advanced and they contribute
more share in the nation’s agricultural output. Total land to be acquired by already
approved SEZs will be more than 193541.9 hactares. The land going to SEZs may
look meagre as percentage of total agricultural area, but it will certainly affect our
total agricultural output in serious manner particularly in short run. There will be a
loss of 298.0105 thousand tons of grain output (Table 7). Not only this, present data
on land for SEZs is an under estimation; the area under SEZs in the above states is
expected to be one and half times more than government data and therefore the
annual loss of grain will not be less than 4.5 lakh tons. Long run impacts will depend
on: first; capacity of industry to absorb surplus population of agriculture; and second;
efforts of the state to modernise the agriculture.

3.3 Fiscal Losses and other concerns

The aggressiveness of the state in promoting and establishing the SEZs is such that
even finance ministry opposed the move saying that the manner in which commerce
and industries ministry is promoting SEZs would cause a revenue loss of over Rs.
160000 crs. by 2010.

The Commerce ministry asserted that these are mere paper calculations and that
SEZs would bring investments of Rs. 100000 crs. by the end of 2007. There would

Not to be quoted 27
be net revenue gain of Rs 44000 crs. and five lakh additional jobs would be created.
Union Development minister Raghuvans Prasad singh termed the promotion of SEZs
a land scam. Many more politicians and scholars said that the SEZs serve as a ploy
to handover huge tract of agricultural land to corporate bigwigs. The fear is also
raised that it will give rise to a new form of landlordism. SEZ Act provides the use of
only 35 percent of enclave’s area for industrial units and therefore there is a fear
that major portion of the land will be used for real estate. CPM government in West
Bengal stipulated that multi-product SEZs in the state will use 50 percent of the land
for industrial use. (Suhrid sankar 2006)

Former prime minister VP Singh said“ Development is of course required. But if you
say that to promote development the basic rights of lakhs of people have to be
denied, if you say that interests of corporate have to be advanced at the cost of
farmers, that is not acceptable.” He demands that let the SEZ developers negotiate
directly with farmers and arrive at mutually agreeable compensation. (Venkitesh
Ramakrishnan 2006)

A doyen of India’s automobile industry Rahul Bajaj said that the current promotion of
SEZs is impelling even established industries to move in to special zones. According
to him, tax concessions and other privileges extended to SEZ projects are steadily
leading to an unequal trade-industry regime, which is bound to be hazardous to the
country’s economic health in the medium and long term. (Venkitash Ramakrishnan
2006)

Even the WTO questioned the cost-effectiveness of Special Economic Zones - in

generating incremental investment and employment in India. Since many of the
industries that SEZs attract are capital intensive, it is unclear how these can create
employment, especially for less skilled labour that needs jobs the most. It noted that
finance ministry figures put the revenue foregone from these projects at Rs 53,800
cr. in 2006-07, with an additional Rs 2,100 cr. estimated for SEZs. The Asian
Development Bank and the International Monetary Fund have also questioned the
viability of the Indian government’s promotion of SEZs, which requires dispossessing
farmers of their land.

Noted economist CP Chandrashekhar says, there is every possibility that in the name
of level playing fields, the industrial units outside the enclaves may also succeed in
getting the benefits provided in the SEZ enclaves. If this happens, then SEZs may not
get industrial units in their enclaves. In such a situation who will hold the land and
why? (Chandrashekhar, 2006)

The most important comment on the SEZ policy came from Comptroller and Auditor
General of India. The audit report of CAG released in March 2008, pointed out huge
tax losses in SEZs. The audit report of CAG on indirect taxes (tabled in parliament on
11 March 2008) reveals that in case where there is "nil" excise duty in DTA, SEZ units

Not to be quoted 28
have been selling manufactured items and no provision has been made to recover
duty foregone on inputs procured by the SEZ units. The report mentions distortions in
22 units out of the 550 units audited for the report. The CAG has pointed out that the
revenue implication of the audit review of SEZs is Rs 247 crore. An additional Rs
1,725 crore was foregone or could not be recovered in the absence of enabling
provisions. (Business Standard; March 11, 2008). On the other hand Duty foregone
by the Government on the SEZ scheme during the period 2000-01 to 2005-06 was
estimated to be Rs. 8,842 crores and the budget estimates of the duty foregone for
the year 2006-07 was Rs.2,146 crores.

3.4 State within the State

The structure and functioning of SEZs is such that it becomes a state within the
state. Development commissioner is a single point authority for SEZs and powers of
all relevant state and central departments are vested in DC. The private Developers
of the SEZs are under the Act provided with full authority for development and
maintenance of SEZ enclaves. For private SEZs the Development Commissioners are
basically to help them and to address the statutory issues only. All facilities from
water to transport will be provided by developers. SEZ developers will even control
the security of the enclaves and police can not enter in the enclaves without the
permission of the DC. Any inspecting authority of the government has to take prior
permission from DC. (See Box 1)

No one can enter the enclaves without permission. Pass is issued to the workers with
counter sign of respected factory management and office of DC. It is also proposed
that separate courts will be constituted /designated to settle the disputes related to
SEZs.

On the other hand, SEZs are out of control of panchayats or any elected body. There
is no interference of any elected public representative including MPs and MLAs of the
area. The population in SEZ enclaves will loose their constitutional rights in as much
as they will face a non elected authority and will have no say in any policy matter. A
decade back no one could have imagined that in India there will be foreign controlled
territories. SEZs are going to fulfill this imperialist dream. Now there will also be SEZs
covering thousands of hectares of land inhabiting lakhs of people, ruled by foreign
business houses or multinational corporations. Besides earning huge profits by using
cheap labor, they will also have the better opportunities to capture the Indian market.

Not to be quoted 29
 Box-1: Autonomy to SEZs
Policy Framework: 2. Industries Department
2.1. b: Single window for all agencies of GoAP including Power, water, Commercial Tax
Department (sales tax, entertainment tax), Food & Drug Administration, Andhra Pradesh
Pollution Control Board (APPCB), Industries & Commerce Department, Commissioner of
Industries/District Industries Commissioner, Chief Inspector of Factories, State Labour Officer,
Employment Exchange Officer (Apprenticeship Act etc.) District Fire Officer, AP Transco, Police
Department (Foreigners' registration cell) available at SEZ etc. and other terms and agencies
included from time to time by GoAP, Officials of above state departments and agencies will be
nominated to DC's office to assist the DC on a need basis, at the discretion of the DC
2.2. d: SEZ Company will provide necessary infrastructure (building, office space and
equipment) for DC and pay equitable amounts as salary and prerequisites to the DC's office
staff through suitable escrow account
2.3. b: Role of Development Commissioner
Regulation: To provide clearances under various statues and regulations of Government of
India and State Government
Facilitation: To facilitate clearances not granted within SEZ and advise Government on issues
requiring Framework amendments of clarifications
Promotion: To undertake marketing of the zones alongwith private promoter
4.3 The APSEZ will take necessary steps to make arrangements in respect of transmission,
distribution and collection of bills
5. The SEZ Company will ensure the provision of adequate water supply within the SEZ
6. Labour Department
6.1 The State Govt. delegates power of Labour Commissioner to the DC
6.2 State Govt. will also place an officer of Labour Department under the DC
6.4 Appropriate officials with DC will be designated as Inspectors, Conciliation Officers and
Registration Officers under the labor laws to provide Single Window service
6.5 For inspection relating to workers' health and safety, the State Government permits units to
undertake inspection by accredited agencies notified by DC
7.2 SEZ does not require Environment Impact Assessment (EIA) approval
8. Municipal Administration Department and Panchayat Raj Department
8.1 The State Government will declare the SEZ as a local authority, which shall replace the
existing Panchayats. Such local authority will be vested with all powers and shall carry out all
functions in the existing provisions. The State Government may further declare this local
authority as a Municipality
8.2 SEZ land will be notified in line with the SEZ Master plan approved by DC. The SEZ Master
Plan will be undertaken in accordance with international best practice in town planning and
Environment and Social Management Planning norms. Town planning Authority (with nominees
from State and SEZ Company) will be established for regulating land usage in SEZ
9. Home Department
The State govt. will process creation of State Police, Fire Services and Home Guard Structures
for SEZ(s) for the maintenance of Law & Order
10. Law Department
Special territorial jurisdiction will be accorded to Special Courts as necessary in the SEZ, in
consonance with High Court approvals. Prescribed court fee and suitable service fees may be
notified for such courts
Source: Industries & Commerce Department - Policy framework for Special Economic Zones
(SEZs) in Andhra Pradesh - Orders issued, INDUSTRIES & COMMERCE (INF) DEPARTMENT;
G.O.Ms.No.15; Dated 09.04.2002

Not to be quoted 30
 4. Conditions of Labour in SEZ Enclaves

The mode of labour deployment in the SEZs has serious implications in terms of
labour security. Trends convey that practically the labour laws are being diluted to the
extent that workers in enclaves are virtually in conditions of slavery. Practically, they
have no freedom of expression and no space for collective bargaining with
employers.

The SEZs are not out of the ambit of Labour laws of the land but the laws are diluted
in such a way to grant full freedom of hire and fire to employers and to make workers
powerless. All the activities in SEZs regardless of their actual public utility are
declared as public utility services. It practically means that workers have no right to
strike. On the other hand, outside trade unions are prohibited in the SEZ enclaves
and outside trade union leaders can not enter the enclaves. Therefore, unionisation
of workers becomes almost impossible. In such a situation, SEZ workers are poised
to suffer and capital is gifted with unquestioned authority to freely exploit them as
much as she can and the way she wanted. These factors not only make the workers
powerless but also make it easy for employers to violate the laws since there is no
one to challenge.

Added problems are created by watering the labour laws in SEZ enclaves by states.
We can see this in the Andhra Pradesh SEZ policy as given in Box-2. Moreover, unlike
EPZs, the industrial relations regime in SEZs will have an overall negative impact on
industrial relations regime of the country as a whole, since they will now represent
significant section of the organised sector workforce. It is also well known that now
many industries outside SEZ enclaves have already started demanding same
incentives and same labour regimes as in the enclaves, in the name of level playing
fields. It is feared that it can be matterialised in the same way as it was matterialised
in case of 100 percent EOUs..

Not to be quoted 31
 Box-2: Labour Framework for SEZ
Amendments to Industrial Disputes Act
Notified 100% EUs as Public Utility Services
Exemption from Sec 9A-Notice of Charge to SEZ Units
Development Commissioner delegated powers for Sec 25-M and 25-N
Development Commissioner and other senior officers notified as Conciliation
Officers for SEZ
Deletion in Chapter V.B (2 months advance period for Lay offs/ retrenchment) from
Act
Minimum Wages Act, 1948
a) Exemptions under Sec 18, 11 and 13
Sec 18 - Maintenance of Registers and Records.
Sec 13 - Fixing hours for normal work days.
b) Jurisdictional Labour Officer to be notified as Inspector under Minimum Wages
Act,
Payment of Bonus Act and Payment of Gratuity Act
Simplification of Procedures: Changes by notification
AP Shops and Establishments Act, 1988
Suitable exemptions to make possible 365 days working for 24 hours in a day,
provided suitable overtime allowance is paid
Industrial Employment (Standing Orders) Act, 1946
Exemption from publication of working time, wage rate and shift working
Contract Labour Employment
Power of registering and licensing delegated to jurisdictional Labour Officer
Sec. 31 presently allows exemption by State under emergency - amendment to
empower appropriate Govt. to exempt establishments from Act without
reference to Emergency
Payment of Equal Remuneration, 1976
Appointment of two State Officers to SEZ-DC to be designated as Authority and
nominee to SEZ as Inspector for SEZ
Trade Union Act, 1926
Exclude outsiders from becoming officer bearers of a Trade Union.
The Govt. has agreed that at least 30% of workmen employed be members of
the recognized Trade Union
Appendix A
Single Labour Authority
Factories Act, 1948 - issuing notification of labour officer in SEZ as Inspector
and Chief
Inspector of Factories for units in SEZ
General Provisions
Introducing a provision in Factories Act for exempting Units located in an SEZ
area or of
a class of units from all or some provisions of the Act
Source: Industries & Commerce Department - Policy framework for Special
Economic Zones (SEZs) in Andhra Pradesh - Orders issued, INDUSTRIES &
COMMERCE (INF) DEPARTMENT; ANNEXURE- A G.O.Ms.No.151; Dated: 09.04.2002

Not to be quoted 32
4.1 Emerging Features of Workforce in SEZ Enclaves
Women account for as high as 70 per cent or even more of export processing zone
labour force. This is one of the universal features of SEZs across the world. Both
developed and developing countries have high percentage of female labour-force in
SEZs. The low skill needed, high degree of manual dexterity and the ability to
concentrate on repetitive jobs for longer periods attract more of female labour than
male. The second almost universal feature of the SEZ is most of the workers fall with
in age group of 16-25 years. The third feature which is also almost universal is that
we always see more of new faces of workers in the SEZ units due to short durations
of employment. The period of employment rarely exceeds a few years. (Mohammed
Ahmadu; 1998).

The studies on the Indian EPZs/SEZs also support these facts. India also follows the
global trend in terms of feminisation of labour but here the intensity is not so high.
The data reveals that the percentage of women workers in SEZ enclaves is
significantly higher than that of organised sector and also slightly higher than that in
unorganised sector (Table 8-10). The percentage of female workers in SEZ/EPZs
declined particularly after 1996. This is also in line with many countries like Mexico,
Malaysia and Korea etc. It is also revealed by the studies that there is very high level
of casualisation and contractualisation of workforce in SEZ enclaves and therefore
the workers are very easily hired and fired as and when required. This practice has
created a pool of experienced workers in the labour market. They are linked with
labour contractors and act as reserve army of workers for these industries. (PRIA
2000, Mazumdar 2001, Neetha 2004, Agrawal 2007)

Table 8: Share of female employment in SEZs

Year Kandla Santakruz Noida Madra Cochin Falta Total

s
1981 40 58.3 46.5
1985 40 53.3 93.0 37.5 46.5
1990 48 48.8 16.2 61.7 54.6 35.5 47.7
1996 39.3 37.8 25.3 69.5 61.2 38.6 44.8
2002 40 35.7 22.0 46.7 48.0 37.0 35.8
2003 40 35.7 22.0 46.7 48.0 33.0 36.9
2008 48.04 30.96 17.93 56.47 44.29 51.62 36.58
Source: Calculated on the basis of data provided by Ministry of Commerce,
Government of India 2008 and Agrawal 2007.

Not to be quoted 33
 Table 9: Female employment in organized and unorganized sector in India

State Female Emp. in Female Emp in Share in Total

Organized sector Unorganized sector Employment
Gujarat 5.2 18.3 11.75
Maharastra 12.1 30.0 21.05
Tamilnadu 37.6 78.7 58.15
Westbengal 2.1 70.5 36.3
UP 5.5 36.6 21.55
Kerala 57.1 95.3 76.2
India 18.0 33.6 25.8
Source: Ministry of Labour, Government of India (As quoted in Aradhna2007)

Table 10: Sector wise employment in NEPZ

S No. Sector No. of Workers

Male Female Total
1 Textile/Garment 63.03 36.94 28.64
2 Electronics(softw 79.67 20.33 13.49
are)
3 ( Hard ware) 82.3 17.7 7.1
4 Engineering 80.84 19.16 17.47
goods
5 Gems & 94.8 5.2 10.11
jewellery
6 Chemicals & 84.83 15.17 3.43
Pharma
7 Leather 82.10 17.90 2.82
Products
8 Latex 70.41 29.59 4.59
gloves/plastics
9 Others 75.22 24.78 12.43
10 Total 76.08 23.92 100
Source: Neetha & Verma (2004)

A significant downfall in the overall employment in SEZs was recorded in 2002 and
its impact was mainly on female employment. But now there are hints that it is again
on rise; as in the case of Kandla, Falta and Madras. (Ministry of Labour, GOI 2008)

It is also revealed by the studies that majority of workers are with out any formal
contract. Casual/contract workers represent the majority of the workforce.

The current data on employment in SEZs shows that a total of 349,203 persons were
employed in SEZs in 2008 out of which women represented 37 percent. Total
incremental employment generated in SEZs since Feb. 2006 is recorded to be

Not to be quoted 34
214,499 persons (www.sezindia.nic.in). But it does not give us complete picture
since the data on female labour in Indian SEZs seems to be under estimated. Studies
reveal that majority of female workers are either casual or contract workers and they
are not on the roles and therefore it is but natural that they are under represented in
official data.

Our studies in Noida SEZ and Apache SEZ also justify the above findings. Apache SEZ
apparently revealed a different structure of employment but in essence it is also the
sophisticated version of the same employment structure.

In NSEZ, interviews with workers and trade union leaders revealed that majority of
workers are casual or without any formal contract. It also came out from the
interviews that employing workers through contractors is a dominant trend in NSEZ.
These casual/contract workers posses no records or no proofs what so ever, to prove
that they are engaged in the companies where they are working. They are hired and
fired most frequently and therefore they keep on moving from companies to
companies in the zone. There are periods of unemployment. These practices have
generated a pool of experienced workers in the labour market. They actually
represent the reserve army of labour, always ready to be deployed. Most of the
workers are in the age group of 16-29 years and when they cross this age limit they
do not get employment easily.

Most of the women come under contract/casual category of workers. Majority of

women workers are unmarried and in the age group of 16-22 years. But we found
that few married women in the age group of 25-30 years are also working in the
zone.

Majority of workers in NSEZ are migrants from other states.

Apache SEZ apparently presents a different picture. It started only in 2006 and one
should not forget that this is the period when peoples’ movements against SEZ were
on peak. Moreover, Adidas group had already a bad reputation of using sweat sops.
Probably these factors compelled the company to devise new strategies of
exploitation that apparently “does not look so bad”.

There are no other units in the zone and only Apache footwear unit is running. All the
workers of the unit get I-cards and salary slips. PF and ESI contribution is cut from
their wages. The company directly employs the workers and there are no contract
workers. It gives an impression that they have some sort of job security; but this is
not the case. No worker is permanent and by virtue of exemptions from section V-B of
the ID Act; they are hired and fired in the same way as contract/casual workers.
However by virtue of I-cards and salary slips, company is compelled to pay them at
least the minimum wages fixed by the state government.

Not to be quoted 35
In Apache SEZ also, majority of women workers are unmarried and in the age group
of 16-25 years. Majority of male workers are in the age group of 16-29 years.

There is one other major difference between Apache and other SEZs. In Apache
majority of workers have an educational qualification of 10th standard or more. Some
workers are educated up to 8th standard, but they are few. Yet another, specific
feature of Apache SEZ is that majority of workers are recruited from local area, at
least from the same district, i.e. Nellore. Many workers are from surrounding villages.

4.2 Working Hours and Working Conditions

The question of labour standards continues to be one of the most controversial
aspects of EPZs. The collective bargaining and sound tripartite relations are no where
in EPZs. High labour turnover, absenteeism, stress, fatigue, low productivity and
labour unrest characterise most EPZs in the third world. This is universal
phenomenon that the EPZ companies are trying to compete in the global market on
the basis of reducing their costs by using cheap labour, intensification of work and
putting more pressure on workers to reach higher production targets. Due to
generally low wage levels, workers are amenable to working extra hours. It is almost
a general feature of SEZs that most of the workers work 10– 12 hours per day, the
units with unionised workers are the only exceptions.

Most of the Studies on Indian SEZs reveal that Even though the working hours are
legally restricted to 48 hours per week, 60-72 hours of work is common practice. In
peak seasons, almost every worker has to work at least 12 hrs per day. It is done in
the name of overtime but the workers did not get premium rate (double wages) for
the extra hours. Contract and casual workers do not get paid leaves. There is always
a fear of retrenchment of workers and therefore they comply with the orders of
supervisors just or unjust. It is a fact that many companies in the zones shut down
without paying any compensation to the workers. Usually the companies reap the tax
and other benefits for five years and then shut down all of a sudden and reopen in
some other zone within country or outside the country (e.g. Bangladesh) or
surprisingly may reopen in the same zone with some other name. In NSEZ during a
period of 10 years 68 units have been closed. Retrenchments, layoffs and closures
are general phenomenon during the periods of recession. Workers are easily
available and hence the industries in the EPZs do not mind dismissing a worker in
the event of his/ her falling ill or medically incapacitated, even if temporarily.(Neetha
2004)

The work environment at many places is hazardous but Development

Commissioner’s office turns a blind eye towards it. It is observed in some zones that
during hot summers, workers are unable to take adequate quantity of water due to
heavy workloads. Dehydration, heat stroke, heat rashes and gastrointestinal

Not to be quoted 36
problems are common. In garment industry improper ventilation is a common
problem and the workers face respiratory disorders like include asthma, long lasting
cough, breathlessness etc. Women working in garment industry work in
uncomfortable position for long hours and it leads to musco-skeletal disorders, like
body ache, back ache, joint pains etc. It is also revealed in some studies that many
women workers were suffering from many gynaecological disorders like pains&
excessive blood flow during the periods. Workers are not provided with sufficient
protective equipments and accidents are also common both minor and major. (PRIA
2000)

Our studies in Noida SEZ and Apache SEZ also exposed same scenario.

Interviews with workers and trade union leaders revealed that Noida SEZ presents an
example of worse working conditions. Majority of workers are contract/casual
workers with no formal contract and therefore no rights what so ever. It is amazing
that the walled enclaves were made to prohibit any illegal entry inside the zone but
now hundreds of workers daily enter the zones with out any legal validity, with out
any ‘pass’. The companies do not put them on their roles or records; they put their
names on a plane paper and security at the gate allows them to enter. Nexus
between employers and SEZ officials makes every thing possible and walls of the
enclave hide their sins.

According to workers, two hours overtime is compulsory in almost all units inside the
zone and depending on requirement it may extend to even more than four hours. Any
one not willing to do overtime is thrown out. Production targets for workers are very
high and pressure is such that they are not easily permitted to go to toilets. Contract
and casual workers do not get paid leaves. There is always a fear of retrenchment
and very high turnover. Therefore, one can always see many new faces in the units.
Respiratory disorders and posture related diseases are commonly reported by
workers.

The Conditions are not much different in Apache SEZ. Interviews with workers and
trade union leaders revealed that Apache management fix very high targets for
workers and if the targets are not achieved, overtime is must. One or two hour’s
overtime is a regular practice and it is compulsory for women workers also. Work
pressure becomes a regular physical torture and if the targets are not achieved it
also adds to mental torture by the management. The workers have to take
permission for going to toilets and many times they are not allowed. Women workers
face severe problems in this regard. It is also reported that workers are physically
beaten.

Here also sword of retrenchment is always hanging over the head of the workers.
According to workers, if the targets are not achieved, the management terminates
the workers after the three warnings.

Not to be quoted 37
But conditions are better in Apache than NSEZ in terms of workers getting paid
weekly holidays and also one earned leave in every 20 days. However, if they take
any more leave, they loose not only one day wages, but some other monthly
allowances also. No worker reported any disease due to work. But they reported
backache problems due to posture and respiratory problems due to continuous bad
smell.

4.3 Conditions of women

Women constitute a significant proportion of the workforce, but they are mainly
employed in low paying jobs that are unskilled or the low-skilled ones. Women mainly
get employment in labour intensive units like garment, electronic assembly units etc.
Majority of women workers are contract or casual workers and did not get their legal
benefits. Studies on Indian SEZs reveal that the preference was given to unmarried
females. Most of the women (85%) were employed in low paying jobs like trimming,
checking, packing or as helpers. 64 % of the women workers belong to the lowest
wage category. The entry of women was found restricted as regular workers on the
obligation to grant maternity benefits. Generally they did not get maternity leave
anywhere in the Zones and generally lost their jobs if they get pregnant. It was found
that many companies employed women on the condition that they won’t get married
or pregnant in near future. It is also reported in many zones that women also work
overtime and also work in night shifts. But no special facilities were provided for
them in spite of their large number.The world over the SEZs/EPZs reveal the same
sad stories of women workers. Sexual exploitation is also very common. This problem
is so serious in Taiwan SEZs that a study quotes a female worker saying that working
in karaoke bars where they face sexual exploitation is better than working in EPZs
since in bars they are at least better paid (Lai-Shiang-Lin 2001).

Not to be quoted 38
 Box-3: I am Overjoyed! Now I can live on my own; But….

My husband is not taking my responsibilities; therefore I came to my mother’s place

with my small daughter. I had a bad time. I am educated only up to 8th standard; I
started teaching in the school but I was getting only Rs. 600.00. I was unable to live
on my own. But after getting job in Apache my life started again. I am overjoyed, now
I can live on my own, I can take care of my daughter. I do very hard work in Apache,
but I enjoy it. I work there from morning to evening and my daughter goes to school.
I do not get much money; however, I am happy, at least I can manage my affairs.
But, I am facing a problem; I am over exhausted when come back home and unable
to even talk to my daughter. I am now suffering from backache and this problem is
aggravating day by day. I can not take leave; otherwise I loose wages plus other
bonuses which are linked with attendance and performance. I do not know what
should I do? If the workload is not reduced and overtime is not stooped; only god
knows, how many years I will survive in this job?
- An Apache Worker

The studies on working conditions in some Indian SEZs also assert that large number
of women in Indian EPZs also face sexual harassment. “It was seen that in all the
three zones (NSEZ, SEEPZ & MEPZ) the problems of sexual harassment were present
at the workplace. The supervisors are generally male and they use highly
objectionable language with the women. If women are unable to complete the set
target, the supervisor may even abuse them physically. This is not all, women tend to
work late in the evenings, and they may be sexually harassed even on the way to
their homes.”(PRIA 2000)

Our studies also justify these findings. However the problem is more severe in Noida
SEZ than in Apache SEZ.

According to workers of the NSEZ and trade union leaders working in the area,
problem of sexual harassment is very common in the zone but not frequently
reported due to social reasons. The supervisors are always males and use of
objectionable language is common. Supervisors, contractors have the power to throw
out casual/contract workers and using this power they sexually exploit the female
workers. It is also reported that many women work in night shifts also.
Casual/contract women workers do not get maternity leave and they are generally
thrown out after getting pregnant.

In case of Apache SEZ, it is worth mentioning that the workers went on two-day strike
in 2007 against harassment of a women worker by a Taiwanese supervisor. The

Not to be quoted 39
women worker was beaten by the supervisor and this was not an exception. After the
strike, things improved in this regard. But some facts reported by workers put a
question mark on this general observation.4

In Apache SEZ there is no discrimination with female workers in terms of

employment, opportunities and wages. Women also get maternity leave for three
months.

4.4 Exploitative Enclaves

Workers in SEZs get wages in the form of daily, monthly and piece rate. Piece rated
wages are common in the SEZ garment units. The wages of contract labour is paid by
the labour contractors. Minimum wage act is implemented on paper but workers
never get it. Most of the studies reveal that only permanent workers get minimum
wages and rest of the workforce which forms significant majority do not get minimum
wage. According to a rough estimate on an average less than 34 percent of the
workforce in SEZs get the benefit of minimum wage act. As far as Provident fund is
considered, it becomes applicable only after 3 to 5 years in EPZs. Employer’s
contribution to PF is limited to just 8%. On the other hand Bonus law prescribes a
minimum of 8.33% and maximum of 20%. However, bonus is not obligatory in the
first five years, if profits are not earned. Since bonus is not obligatory, during first five
years, most companies generally do not pay any bonus to workers. It is also revealed
by the studies that generally only permanent workers get the benefits of PF, Bonus
and ESI acts. Casual and contract workers rarely get these benefits. Labour
contractors cut the PF contribution from the wages of workers but generally they loot
it and workers never get it. (PRIA 2000, Mazumdar 2001, Neetha 2004 and Vyas and
Sunanda (2007)

In our study in NSEZ, we found that conditions of workers are more are less same as
in industries outside the zone. The majority of workers inside the zone do not get
minimum wages as is the case outside the zone. Both inside and outside zone
workers face compulsory overtime, easy hire and fire, mental and physical tortures
etc. But according to workers there is one difference: inside the zones the employers
are more equipped to hide their sins and get more support from the government
officials than outside the zone. Both inside and outside the zone majority of workers
loose their PF since they have no records what so ever. Small section of permanent

4 It is reported by workers that at least 25 unmarried women workers went through abortions with in
two years. In one incident, a women worker gave birth to a child in a bathroom inside the zone and run
away. According to them, some company officials are taking care of the child. But, in their view, these
cases do not expose the sexual exploitation; rather, sexual relations are established by consent. To
verify these facts, we could not make further investigations, but is seems, this may not be happening
only by consent.

Not to be quoted 40
workers get minimum wages but there is rarely any increment in their salary.
According to workers and trade union leaders, the workers of the units outside the
zone can at least protest against wrongs of employers but inside the zones it
becomes impossible. Restrictions on entry in the zone make it impossible for outside
trade unions to come on their support. Workers outside the zone form unions when
they face problems, but inside the zones it is not that easy. Till now no union
emerged inside NSEZ despite all efforts of workers and some national trade unions.
The dominant strategy of exploitation inside the zone is lengthening of working hours
and intensification of work in addition to simply looting part of wages by not paying
minimum wages and premium rate of overtime. Lengthening of working hours and
intensification of work becomes unbearable in peak seasons. This makes the
workers old very soon. Workers are finally thrown out of SEZ job market at the age of
around 35-40 years.

In Apache SEZ also, the dominant strategy of exploitation is intensification of work

and lengthening working hours. One-two hour’s overtime is almost a regular practice
and compulsory. Production targets are so high and pressure to chase the targets is
so cruel that some workers could not bear this and left the job. One ex-worker told
that he resigned from the job because he was beaten by a Taiwanese official.

But, conditions of labour in Apache SEZ are better than in NSEZ. In Apache SEZ,
workers get minimum wages including Basic+Attendence bonus+Motivation bonus+
Cost of living bonus). But the bonuses are paid on the basis of performance.
Overtime is also paid at premium rate (double wages). But company loots some part
of overtime wages. It pays over time of maximum 25 hours per month, however,
according to workers; they work overtime about 40-50 hours per month. Moreover,
there is no proper increment in the salary despite the strike. There is a high
discontent among workers on this regard. They are also demanding to decrease
workload and stop overtime.
There are also opportunities of promotion for operators to the post of water spiders
and then assistant supervisors and rarely to supervisor also. Operators, water spiders
and assistant supervisors are different categories of workers (all with light green T-
shirts) and supervisor (dark green T-shirts) is a link between management and
workers.

4.5 Child Labour

Child labour is widely reported in EPZs of third world countries but only few studies
report child labour in Indian SEZs. According to PRIA (2000) there was prevalence of
child labour in Madras Export Processing zone. Young girls of the age group of 12-16
years were found working in some companies. Even some investors in the zone
frankly admitted of employing children. The employer of an artificial flower
manufacturing company, which employs only young girls, maintained the job is such

Not to be quoted 41
that it needs only small and delicate fingers. The number of child workers in the zone
can be in thousands. Children are paid much less wages than adult and they are
recruited on daily wage basis. Absence from work would mean no wages. The study
suspects use of child labour in other zones also.

In our studies in Noida SEZ and Apache SEZ, we did not get any evidence of
exploitation of child labour in the zones.

Box-4: The Ideal Worker!

Almost all the workers interviewed in Apache SEZ made sarcastic remarks
about a so called ideal worker. This fellow never took a leave. His attendance
was 100 percent. He also attended his duties when due to flood, most of the
workers did not turn up. Not only this, He was attending his duties during the
strikes. Almost all workers except him participated in the strikes. He obeyed
the orders before they were delivered, fulfilled heavy targets without any
complain and did overtime without any word. The management awarded him
and in the assembly of workers projected him as an ideal worker. The workers
who participated in the two- day strike lost their two days wages, but they
proudly remember those two days. They laugh at this ‘ideal’ worker and say
that they do not want to be the ‘ideal’ worker.

Box-5: No Future Sir!

During the interview with workers, one question was raised before them-how
you see your future in Apache? Most of the workers responded in these words:
What future! We get I-cards and salary slips, but it does not mean that we are
not “permanent workers”. No one knows when he will be thrown out. There is
no hope of promotions and salary increments for majority. Work-load is so high
that no one can hope to live longer like this. One can work like this till he is
young. What future! There is no future sir!
--An Apache SEZ worker

Not to be quoted 42
 Box-6: The Sad Story of Brilliant Manjesh
(An Ex NSEZ Worker)

Manjesh Yadav was a workers in a factory making JCB parts inside NSEZ and thrown
out just two months back. He daily comes at the gates of NSEZ to see whether there is
any vacancy in any factory. He told us about his hopes and sufferings. He came from a
village of western UP and joined as helper in some factory in NSEZ. Only in two days
was working with full efficiency of a trained worker. According to him youngsters coming
from villages learn the skills of running the machines only in two to five days. But even
when on the floor he was working as operator he was paid the wages of unskilled
worker. Therefore, after about two months he left the job so that he can join in some
other factory as operator. He joined this JCB parts making factory in 2006 and in very
short period he developed such technical skills that with the help of chart with desired
specifications he all alone made a hydrolic iron drilling machine. He was over joyed by
this success and in the mean time he was assured that he will be made permanent. But
just after successfully running his machine, without any reason, he was thrown out.
Manjesh has no proof that he was employee of the said company. He says that ‘pass’
was given to him for a short period but thereafter he had to return it to the factory
office. Now he is unable to make any claim for his dues and neither he can make any
complaint against illegal dismissal. As for as PF is concerned, he says, no slip is given to
the worker so no worker knows its PF account number. He says, actually there is no PF
account of any such workers and the labour contractors plus company loot this amount
from the wages of the workers. Manjesh is helpless; he says if he does not get a job in
this month the family in the village will die of hunger.

Not to be quoted 43
 Box-7: How can I bear this torture! I left the job
I am educated up to 12th standard and my age is 25 years. Before joining the Apache
SEZ I was unemployed and engaged in cultivating my fields with my father. I joined
Apache in Jan 2007 as operator after a training of one months. Training is given by the
company. During this period company does not pay any stripend but provides free
accommodation and food. After one month, the company identified my abilities and
promoted me as assistant supervisor. I was earning 6000 to 7000 including all
bonuses and I was satisfied with my salary. But the production targets created
problems. It the targets were not achieved in my department, I was made responsible
and got threatening. Targets are so high that it becomes almost impossible to achieve
them, but I devoted all my energies and skills to chase it. Many times I was successful
but some times failed. Mental torture was increasing day by day and the limit was
crossed one day when an angry Taiwanese official physically beated me. Thereafter, I
realised that this mental and physical torture is part of this job in Apache and this is the
question of whole life. How can I live like this and bear the tortures whole life. So, lastly
I decided to leave the job and resigned.
-An Ex-worker of Apache SEZ

Not to be quoted 44
 Box-8: Boundary Walls hide all sins of investors
High boundary walls of the SEZ enclaves make it impossible for the world outside the
walls to know what is happening inside. Media also can not enter the enclaves with out
prior permission of DC. The workers working in the enclaves and residing outside the
zones are the only source of information about the incidents happening inside. Stories
gathered from workers of NSEZ reveals how the labour laws are violated inside the
zone and how brutally the workers are repressed. It seems that the high boundary walls
are made for the purpose of hiding all the sins of the investors.

More than 70 percent workers are illegally working in the zone?

Between 9AM to 10 AM we usually found many workers sitting out side the gates of the
NSEZ. The labour contractor or supervisors of the factories came outside the gates and
took their workers inside the zones without any pass only showing a list (name of the
workers on a plane paper) to the security in charge. On the one hand the workers
having pass are duly checked by the security but these casual/ contract workers are
allowed with out any check. The workers told that more than 70 percent workers inside
the zones are with out any legal record either at the security gate of the zone or in the
factory. Their name is written only in a simple register at the factory gate to record their
attendance. Some workers also get short time entry pass. The PF and ESI contribution
is cut from workers’ wages and workers are assured that their contribution is going in
their PF accounts but they do not get any slip or record. When they are thrown out they
come to know that he/she has no PF account.

According to workers of NSEZ and trade union leaders of the region, the workers in the
zone do not get minimum wages. Generally skilled and unskilled workers get Rs. 2700
and 2200 respectively and that too not for eight hours but for 12 hours. However the
state minimum wage is now Rs.3800 and 4200 for unskilled and skilled workers
respectively. According to them number of female workers decreased over time. Now
they are around 30 percent and they are mostly contract and casual workers and
therefore do not get any relevant benefits. They are thrown out after getting pregnant.
There are cases of sexual harassment of female workers by supervisors and labour
contractors but they are rarely reported. In the Northern India, such incidents if
reported, the marriage of a girl becomes difficult and not only this, for a married women
also the life becomes hell. Therefore, on the one hand the cases of sexual harassment
are not reported and on the other hand, the workers at any case do not want their wives
or other relatives to work in these factories.

Not to be quoted 45
5. Grievance Redressal Mechanism in SEZ

It is already discussed that SEZs are different from the rest of the economy in the
sense that the Development commissioner of the SEZ is the single point authority
and all the powers of relevant central and state departments are vested in DC for the
purpose of SEZ. Powers of labour commissioner are also vested in the DC for the
purpose of SEZ. In such a situation, even if the labour laws of the land are applicable
in SEZs, the officers of labour department can not freely enter the enclaves and see
whether these laws are implemented or not. They have to take prior permission from
DC if they find it necessary to visit the factories..Only DC is responsible to ensure the
implementation of the laws and for conciliation to settle the labour disputes. This is
the irony that the DC, whose major responsibility is to help the investors to boost
exports, is provided with the responsibility to settle the labour disputes.

Any labour dispute arising in any unit of the SEZ enclave comes to the DC office for
conciliation (Outside zones it goes to DLC office). Any complaint regarding the labour
dispute goes first to Dy. Development Commissioner, who then assigns the task of
first level of conciliation to his assistant officer. If the issue is not resolved in first
level of conciliation, then second level of conciliation is done by the Dy. Development
Commissioner. If the issue is not resolved at his level then he refers it to DC who calls
both the parties for final conciliation. If the issue is not resolved he refers the dispute
to labour court.

This is the formal procedure outlined as per the provisions of the SEZ Act 2005. But
how it works! Our studies in Noida SEZ and Apache SEZ reveal two different stories
but essence of both is same--this system is either totally defunct as in case of Apache
or works totally in favour of employers as in case of Noida SEZ.

Our own experiences reveal that it is easier to meet with the Prime Minister of the
country than to meet officers of the DC office. To properly understand the grievance
redressal mechanism in SEZ enclaves we tried hard to talk to any officer of the NSEZ
i.e. DC, Joint DC and Dy. DCs and other lower rank officers, but we could not get any
appointment from any officer. They avoided talking on such issues. Some officers on
phone openly expressed their fear as if talking on such issues without permission of
DC or Joint DC will be a punishable offence for them. Not only this, email contacts of
not only NSEZ but also VSEZ and APIIC are not working. Lastly Dy DC NSEZ told us (on
Phone) that we can send in writing whatever information we want and DC office will
send the same to us by post. we sent the letter and after a month they sent us the
broscher of NSEZ with a letter saying that all the information we want is available on
their website. However, we could not get any desired information from their website.
We again approached but they were not ready to talk on such issues. Workers of the

Not to be quoted 46
NSEZ told that they were also not allowed to meet to the relevant officers and they
have to file their complaint whatsoever only on the reception. On the other hand
representatives of the industries were privileged to meet any officer.

This leads us to two conclusions; first, every thing is not all right in the enclaves and
they don’t want such things to be exposed; and second, it is next to impossible for
common workers to approach them to make a complaint. In such situations how can
any one expect impartial justice for workers?

Moreover, this is the formal structure of dispute settlement and given that there are
no trade unions in NSEZ and workers are powerless, there are also informal dispute
settlement mechanisms.

Discussions with workers and former workers of three export garment companies in
NOIDA SEZ and experienced trade union leaders working in the area exposed
following informal brutal methods of dispute settlement:

Up till 2006 or even after that the labour disputes were mainly centered around the
illegal dismissal of permanent workers. The management started replacing them with
contract workers. For putting pressure on the workers to resign they even used police
and local goons. Generally, the management putting some serious blame on workers
handed over them to the police. According to workers police tortured some workers
after making them naked and they were spared only when they gave their
resignation. However, this phase by and large ended with removal of most of the
permanent workers and now almost all the companies are running mainly by
employing contract workers. In such situations, there is no need for resignations for
firing out the workers. But local goons and police still play important role in informal
dispute settlement mechanism.

The labour contractors have emerged as the new species of bloodsuckers. Now big
labour contractor companies are emerging with a large pool of workers of all
categories. They not only ensure just in time supply of the workers, but play a crucial
role in informal dispute settlement mechanism. Mostly these contractors may also be
from among the local goons or they may have cordial relations with local goons. The
contractors generally provide supervisors from among the locals who can behave like
local goons and at the time of dispute they also send local goons in disguise of
supervisors for shorter periods. These ‘supervisors’ ‘resolve’ the dispute on the spot.
The management also employs a very small number of workers from among locals
and tries to convert them as dalals of management.

According to trade union leaders, the colonies where the workers live are the
erstwhile villages and many powerful villagers have constructed 100s of rooms and
earn huge money as rent from workers. Many times they also open shops in the
same lodge and workers purchase daily needs from there only and many times on

Not to be quoted 47
credit. Since they also have a control over the life of workers, it is observed that many
times they also play a role in informal dispute settlement. The managements in many
ways maintain good relationship with such powerful villagers. However, SEZ workers
interviewed had no such experience.

The story of Apache SEZ is different and far more interesting. The workers of the zone
do not know about any such Development Commissioner or SEZ Authority. There is
no such office nearby or in district headquarters. On APIIC website it is written that
responsibilities of DC of the new coming SEZs will be with the Andhra Pradesh
Industrial Infrastructure Corporation Limited (APIIC) till DCs are properly appointed.
But the workers have no knowledge about whom to complain when there is a
problem. Therefore practically, as they feel, there is no place to complain against
Apache management. According to them, during the strike DM, local MLA and an
officer from the labour department visited the SEZ. By their interference the problem
was resolved and the concerned Taiwanese supervisor (who beated the woman
worker) was transferred back to home country.

Even if there is no trade union, after the strike Apache management have adopted
the strategy to create such conditions that ‘problem’ workers have no option but to
resign, rather than taking the blame of terminating the workers. Increasing the work-
load and mental torture is prevalent strategy. However, it does not mean that
terminations have stopped.

To justify that there is no need for a trade union, the management is projecting an
alternative grievance redressal system. According to workers, in this system the
workers will nominate one representative for their respective cells. There are total 13
cells in the unit. These worker representatives are supposed to represent the workers
of their particular cells and put their grievances before the management. However,
there was still confusion about whether this policy is in operation or still under
discussion.

Not to be quoted 48
 6. New Challenges and new Counter
Strategies
An ICFTU report in 2004 presented the SEZ scenario in the third world in these
words: “…Whilst EPZs are often in countries which have in theory ratified the
International Labour Organisation’s (ILO) core labour standards – in practice these
standards are regularly flouted in the zones. Denying workers the right to join and
form trade unions – a common violation in EPZs – is a flagrant violation of
international labour standards. Bangladesh’s 6 EPZs, for example, are currently
exempt from the country’s major laws which protect the freedom of association and
the right to bargain collectively – therefore no trade unions are allowed in its zones.
As a result, international labour standards are flouted – paid overtime is denied, child
labour is used and minimum wage laws are ignored. Dismissals are routinely used in
Central American EPZs to get rid of workers who attempt to form unions and in the
United Arab Emirates where 85% of the workforce are migrants - mostly from Asia –
workers risk expulsion if they try to organise trade unions. In Egypt, trade unions
report that most workers in the “Tenth of Ramadan City” zone are forced to sign
letters of resignation before beginning employment so that they can be fired at the
employers’ convenience. Women workers in the zones often face a number of
barriers at work including discrimination in hiring, wages and benefits and sexual
harassement. Cases of women workers in the zones being forced to take pregnancy
tests are also well-documented. For example, pregnancy tests have been imposed on
new recruits in the maquilas (or EPZs) of Central America…” (Miyazaki 2004).

In India labour and factory legislations of the land are applicable in the zones, but
they are diluted or reframed in the favour of employers e.g. exemption from section V-
B of ID Act and declaring them as public utility services. Moreover, labour laws what
so ever, are rarely practiced and informally employers get full freedom from labour
laws. All SEZs in India have been declared as a ‘Public Utility’ under the Industrial
Disputes Act. This restricts the workers from going to strike, as it requires
complicated legal procedures. Outside unions are not allowed in the SEZs and it
becomes very difficult for trade union leaders to contact and freely talk with the SEZ
workers.

Studies reveal that all the attempts of workers to get organised are discouraged by
the investors as well as government authorities. Workers trying to form unions are
thrown out. An atmosphere of terror is created so that no worker initiates or supports
any unionisation process. Zones being the walled enclaves prohibit union organisers
to freely talk to workers and organise them. Even the workers of different units inside
the zones are in one way or the other prevented from interacting with each other.
Due to these problems it has become quite difficult for even the renowned national

Not to be quoted 49
trade unions of the country to break inside. Not only in India but all over the world
conditions in SEZs/EPZs are almost same and unionisation of workers in enclaves
has become a challenging task. In many countries the union activity inside the zones
is legally prohibited.

Box-9: Factors making the unionisation process difficult in

Indian SEZs
1. Whole Environment is hostile to Unionisation
2. Declaring SEZs as public utilities turns everything in the favour of capital and
against labour. Unions are usually formed in the process of struggle and here the
same scope is not available.
3. Major section of SEZ workers are casual or contract workers. They are hired and
fired easily and therefore does not stay longer in a factory, therefore organising
them at a work place becomes difficult.
4. Young and Unmarried women represent the significant section of the workforce
and they are still not regarded as the main bread earners in the society. This
psychology of women workers as well as the society plays a role against their
unionisation.
5. There have been no serious efforts by trade unions to understand the problems
of women workers and to devise a proper strategy to unionise them. Their problems
do not relate to only shop floor; they are exploited as workers and also as women
and many times both issues are mixed in such a way that they can not be treated
separately.
6. Specific nature of SEZs, their boundary walls and their work culture makes the
free interaction between workers difficult. They can freely talk to each other or to
any other person only outside the gates of SEZs on their way to home.
7. Boundary wall of the SEZs make it difficult for trade union organisers to freely
interact with workers.
8. The workers initiating the efforts for unionisations are thrown out in no time.

6.1 Struggles for unionisation

Despite all difficulties, SEZ workers all over the world have started their struggle to
unionise themselves. Experiences from Bangladesh and Kenya are worth mentioning
in this regard. In our country also, the efforts are on, but it could not get momentum
yet. “MEPZ (now MSEZ) is the only EPZ in India with a recognized trade union viz.
Madras Export Processing Zone Employees Union. It is affiliated to the Centre for
Indian Trade Unions (CITU). MEPZ workers’ union was established in 1995, after a
hard struggle for 3 years. It has a membership of 4,500 (20-25% of total workforce)

Not to be quoted 50
involving only 13 units of the zone. In other zones of the country, there is no
breakthrough in this respect. An all-India Convention of SEZ/ EPZ workers was
organized by CITU in 2002 at Visakhapatnam and it was the first ever effort by a
trade union to develop a nationwide coordinated movement of the SEZ workers in the
country. However it could not make any breakthrough (PRIA 2000 and Agrawal
2007). In most of the zones, antiunion attitude of the government is also acting
against the process of unionisation. It has become impossible to get registration of a
union of zone factory workers.

Our study reveals that SEZs are on the way of becoming new war zones. Discontent
among the workers is growing at very high degrees and it can come out as sudden
out bursts any where any time. This will also push the efforts of unionisation of SEZ
workers to a new stage.

In NSEZ, according to workers and trade union leaders, the intensity of workers
protests both individually and collectively, has increased.

Not to be quoted 51
 Box-10: The story of Samtex: They fought and Thrown out

Few months back, in July 2008, a tragic incident happened in an export

garment company Samtex inside the NSEZ. According to workers, one worker
was seriously ill but supervisor denied leave. Under pressure the worker came
on duty despite the illness and again his request for leave was not entertained
by the management. Instead, he was threatened that if he does not turn up,
he may loose job. Therefore, on second day also the worker came on duty
despite serious illness. But same night he died. Next day, when the workers
came to know about the incident, forgetting all fears of loosing job they stood
up and organised a ‘shok sabha’ at work place and demanded compensation
to the worker’s family. They made a delegation with two workers from each
department and went to meet MD with their supervisor to demand the same.
According to workers MD did not entertained their demand and instead
shouted at them. In reaction the workers resorted to go slow. Then the
management replied by cutting the power and the work was stopped. This
situation continued for two days and management termed it as the strike.
According to workers, during this period they were also attacked by local goons
with in the premises of the factory but even after making a complaint in thana,
police did nothing. There after 9 permanent workers were locked out from the
factory. The workers approached the AITUC and with the efforts of the union
conciliation process started. Lastly, with the intervention of the DC, lockout of
eight workers was converted to suspension. Workers are still in the state of
suspension and with the passage of time loosing hope. The workers of Samtex
also tried to form union but could not manage the numbers. The trade union
leaders of the region say that till now they could not move a file for registration
of a trade union in NSEZ because it becomes difficult to manage the required
number of workers from a factory. The workers are thrown out if management
gets any hint of unionisation efforts. Some workers of AMS fashion and Evinex
told that similar conditions exist in their factories also.

Not to be quoted 52
 Box-11: We fought, we won!

“How can we see a Taiwanese official harassing and beating one of our sister
workers before us? The incident generated such anger among us that we
forgot our fears of loosing the job and went on the strike. Once we stooped the
work and came out of the factory we got a feeling that we are powerful.”
Almost all the old workers expressed their feelings in these words. The strike
started suddenly after the incident in 2007. But the incident was only the
immediate cause of outburst. Discontent was continuously growing among the
workers against mental and physical harassments in the unit. Moreover,
discontent was also growing against over time and no proper increment in
wages. Workers also wanted at least one more leave with full allowances.
‘Bad’ food in the subsidised canteen was another issue of discontent.
Therefore, after jumping in the strike they raised all these demands. DM and
MLA of the area came their and talked to workers and management and with
their interference said Taiwanese official was transferred to home country.
Strike was then called off. After the strike such harassment and beating of
women workers almost stopped. Workers feel victorious in this regard.
However, their other demands are still un-addressed. Moreover, workers lost
their two days wages and some of them who were identified as leaders of the
strike were gradually thrown out. But workers’ morals are high. After almost
one year, they again showed their strength and they suddenly stopped work for
more than two hours in April 2008. They demanded holiday on Ambedaker
Jayanti. The management did not entertain their demand.

The intensity of individual protests is much more higher and almost in all such
incidences workers are thrown out. Example of collective protest is that of Samtex
workers struggle six months back in 2oo8. Knowing well that they may be thrown out,
they protested and stopped the work when an ill worker was not allowed to take
leave and later he died. Seven workers of Samtex were thrown out. With the help of
AITUC, they challenged their lockout and won the struggle to the extent that their
lockout is converted to suspension. There are several other such struggle but not well
known since all those workers were thrown out and they did not get justice.
Now, the unionisation efforts are getting more attention and support of SEZ workers.
Many workers of the zone are already associated with the National level Umbrella
unions. Therefore we encounter with a situation when workers claim that they are
union members but there is no union inside the zones.

Conditions in Apache SEZ also reveal that storms may be knocking the doors again
and again. The Apache SEZ started its operations in 2006 and only after one year it

Not to be quoted 53
had to face a full-fledged two-day strike even when there is no union. Workers
suddenly stopped work in protest against harassment and beating of a women
worker by a Taiwanese official. The workers also put forward their demands for
increment in wages and stopping overtime etc. Theses demands are still not fulfilled.
Not only this, on April 14th this year, the workers suddenly stopped work for 2-3 hours
and made a demand for holiday on Ambedaker Jayanti.

According to workers, if management gets even a hint of any unionisation effort, it

will throw out the suspected workers in no time. However, workers have some how
evolved such strategies to make a coordination among themselves and act
collectively even if there is no union.

While interacting with workers it was quite evident that the discontent is growing
among them and since there is no unions there will be such sudden outbursts again
and again if the condition is not improved. Probably this may be reason why concepts
of workers representatives are coming under consideration of the management. Even
if, management implements its designs (cell wise nomination of workers
representatives) it can not escape from these storms.

Not to be quoted 54
 Box-12: EPZ workers struggle stormed the Kenya

EPZ workers struggle in Kenya stormed the whole country. The Export processing
zones in Kenya started in 1990 and it also went through a EPZ rush after 2000. Till
2006 about 39 zones were gazetted and a total of 71 units were operating in them
provide employment to 40000 Kenyans. Textile sector dominates in the EPZs. In the
year 2003 a nation wide strike wave of EPZ workers started in Kenya. In the first
strike more than 15000 workers participated and the second wave of strike was even
more wide spread. Demonstrations went violent and there were lootings and clashes
with riot police. It is very interesting that the strike was not led by any national union.
The leader of umbrella organization of trade unions COTU (Central Organisation of
Trade Unions) Mr Atwoli and executive officer of the Federation of Kenya Employers
(FKE) Tom Owuor blamed Non-Governmental Organisations (NGOs) for interfering with
labour relations. According to them, “What we have in our hands is a work force that
took part in bringing the new Government into power and they expect, in that euphoric
mood, that their problems can be solved overnight.” They Accused some NGOs of
inciting workers and asked them to keep off labour issues. COTU distanced itself from
the strike and obviously split down the middle on whether to back the new
Government that has promised so much or to pursue COTU mandate of protecting its
rank and file. Later the Labour minister Najib Balala warned NGOs that inciting
workers against employers risked de-registration. Mr Balala attributed the wave of
strikes to activists in NGOs "now searching for activities to retain donor funding, as
most donors have shifted their support to the government. It is clear from this that
NGOs played a role in organising the workers in SEZs. After this battle formally the
SEZ workers are allowed to associate themselves with the unions. The unionisation
process has got a momentum in Kenya EPZs.

Not to be quoted 55
 Box-13: Bangladesh workers fight for union rights in EPZs

In Bangladesh, in 1986, the government declared under the BEPZA Act that
the IRO (Industrial Relations Ordinance) was not applicable in the EPZs. This
declaration effectively suspended the rights of workers in EPZs to freedom of
association and collective bargaining. The government always claimed that the
restrictions on trade unions in EPZs are temporary measures, however it
continued. Struggle of workers, trade unions and other people’s forces
continued against suspension of these rights. Bangladesh Garments workers
Unity Council (BGWUC) called a national strike in Bangladesh garment industry
in 2001 and raised six demands before Bangladesh Garment Manufacturers
and Exporters Association (BGMEA): New wage structure for the garment
workers on the basis of a basic minimum wage; Ensure the health and safety
of garment workers; Necessary steps for the development and expansion of
the garment industry and its markets; Implementation of trade union rights in
the garment sector and trade union rights for the EPZ workers; Separate
industrial zones for the garments industry; Settlements, schools and hospitals
in the zones; Implementation of the Memorandum of Agreement signed
between the MGMEA and the BGWUC in 1997 and 2000 (appointment letter,
identity card, service book, weekly holiday, maternity leave, etc.). In the mean
time GSP (generalized system of preferences) agreement signed between
Bangladesh and United States also ended in 2001 and on the pressure of
labour groups at home, US extended it for another three years on the condition
that Bangladesh allows trade unions to operate in the zones. Thereafter the
Bangladesh government issued a declaration in 2001 to withdraw restrictions
imposed on trade union rights in the EPZs from January 1, 2004. In 2004 and
thereafter campaign and struggle for trade union rights in EPZs got the
momentum. In 2004 a two-day first national conference of EPZ workers was
held and an organization "EPZ WORKERS CENTER, Bangladesh" was formed.
(The New Nation, February 01, 2004). Lastly, Government and the BGMEA
(Bangladesh Garment Manufacturers and Exporters Association) reached an
agreement to hold referendum among workers on the issue of unions. They
wanted that workers should be convinced to form workers welfare committees
(WWC) rather than unions. This experiment was also done in Sri Lanka but
failed and later the workers formed their own trade unions. In Bangladesh also
the idea of WWC was rejected by the trade unions. Finally referendum was
held in March 2008 and in 69 units workers associations are formed. 22 units
voted for not having trade union for now. Another 120 more eligible industrial
units in two EPZs will have to hold referendum on the issue by 2010.

Not to be quoted 56
6.2 Evolving new strategies for unionisation & struggle
Strategies for struggles always depend on the politico-economic environment,
industrial structure and the conditions of the workers. One has to always remember
that SEZ/EPZs are consciously created to exploit cheap labor. SEZ rush is a unique
war among third world countries to win more and more foreign investments from and
more and more share in exports to developed countries. It is unique because victory
depends on another actual war with its own people, its own working class. Victor is
one who is able to suck more blood of its own labour. In this cut-throat competition
the capital of one country flourishes at the cost of other, while the labour in all the
countries faces inhuman hardships in one way or the other.

The classic example is China phenomenon. “China’s accession to the World Trade
Organization and phasing out of the Agreement on Textiles and Clothing (ATC) which
allocated clothing export quotas to developing countries, have accelerated the recent
trend of shutting down operations in various countries throughout the world and
relocating to the Chinese zones. The International Textile, Garment, Leather Workers’
Federation (ITGLWF) estimated that the phenomenal rise of China would lead to a
million jobs lost in Bangladesh (an estimate confirmed by the UNDP), another million
in Indonesia, around 200,000-250,000 in Sri Lanka, several thousand more in the
Philippines and many other countries. Hundreds of factories have closed down in
Mexico since their orders have gone to China which offers cheap and perhaps the
most exploited labour” (M.Suchtra 2008). The story does not end here. SEZ rush is a
world-wide phenomenon and now many countries are competing with same
strategies to win foreign investments and also competing for exporting the same
goods eg. textile products. On the other hand the capital is more mobile than ever
before. In such a situation a country may win huge foreign investment at one period
of time but soon after it may face disinvestments if the investors speculate better
conditions elsewhere (the tragedy of Mexico). Phazing out of MFA/ATC is leaving
garment exporters free to choose location according to speed, quality and price. In
such a situation competition is intensifying and most of the third world countries are
trying to compete on the basis of low wages, making the life of workers hell.
Industrial lobbies in India are also demanding more liberalized labour laws – like
those in China – to compete in the international market.

The whole environment is such that SEZ/EPZ investors and the governments are
hostile towards trade unions and express strong opposition to international labour
standards. An interesting case is of Pakistan where strikes were forbidden and ILO
questioned it. In its response the Pakistan government told the ILO that “it was not in
a position to correct major legal violations of trade union rights in its EPZ because the
repressive law in question represented a precondition set by foreign companies for
investment” (ICFTU 1991). Transnational Corporations (TNCs) also played a major
role in maintaining abusive legislation in Malaysia. In countries such as Dominican

Not to be quoted 57
Republic and Sri Lanka, EPZ companies made it clear that a “union free”
environment is crucial for their continued investment”(Jauch, 2006). According to an
ICFTU report, the danger facing the free trade union movement is that EPZs became
established as links in a global chain used by internationally mobile capital to set off
a competitive downward spiral in the observance of international labour standards”
(ICFTU 1991). The extreme competition for foreign investment between EPZ host
countries and their willingness to compromise on worker rights and conditions poses
a threat to the established achievements and continuing work of trade unions in such
countries. Host governments do not exert themselves to monitor and enforce
national labour legislation within EPZs for fear of frightening off the foreign investors
(Jauch and Keet 1996).

The above dynamics of SEZ rush has a significant role in framing the new industrial
relations regime in whole of the third world. Therefore, it will also affect the counter
strategies of the working class.

On the other hand, The Industrial structure and working conditions of the workers
also make the unionization process difficult. The majority of workers are casual or on
contract and do not stay for long in any one unit. Moreover, industrial structure is
such that free interaction among workers and entry of trade union organizers in the
zones is difficult. Peculiar feature of the workforce in SEZs, with larger proportion of
young unmarried female workers, makes the situation more complex.

It is evident from the above that the old forms of shop floor unionism are no longer
relevant to new conditions. In new situations new strategies of organization and
struggle are to be evolved both at local and national-international level. The
coordination between worker’s organizations at national and international level and
integration of local struggles to national and international struggles has never got
such relevance in the past.

Therefore, the new situations demand new strategies that must address the following
aspects:

1. Transformation of structure and functioning of the unions to give more space

to women workers and greater emphasis on their issues; since women
workers now form the significant section of the workforce and they are the
most exploited ones.
2. To build an effective organization you always need permanent members with
stable sympathy and support. Old unionization strategy was mainly based on
the workers who had some kind of job security and they stayed longer in the
units. But in new situations, the majority of workers are casuals and they do
not stay longer in any one unit. However, they stay for a long time in the same
enclaves working in different units. Moreover, working conditions in different

Not to be quoted 58
 units of the enclaves are more or less same. In such situations, it is better to
organize the workers of different units under one banner and raise the issues
from a common plate form. In initial stages, forming unit level unions
becomes nearly impossible if the majority of workers are casual.
3. Union activities must reach to the colonies of workers. In the new situations, it
has become difficult to freely talk to workers and promote the unionization
inside the enclaves, due to various factors. In such situations, it is more
promising to build our bases in the colonies of workers. By doing this unions
will also be transformed in the sense that they will develop concern for variety
of issues related to the life of labor.
4. There is a cut-throat competition among third world countries for winning the
major share of exports to and major share of investments from developed
countries. Studies suggest that they are competing to minimize their cost not
on the basis of technological up-gradation but on the basis of exploiting cheap
labour and intensification of labour process. Therefore fate of third world
labour is linked to each other and it has an inbuilt national and international
dimension. It is not easy to get better labor standards in SEZ enclaves of a
country if there is no such struggle in other third world countries. In the same
way, with in the country also, it is not easy to get better labor standards in a
SEZ enclave if such struggles are not developed in other enclaves also.
Therefore, In the new situations, our struggles will have always a national and
international dimension and to advance these struggles it is necessary to
develop national and international platform of SEZ workers.

Not to be quoted 59
7. References
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