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

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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

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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

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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).

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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.

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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

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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

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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.

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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 18

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 Approved

Total IT & ITES %IT & ITES

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

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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.

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Table 2: Sector wise Distribution of SEZs

Source: Ministry of Industry and Commerce 2009

Not to be quoted 21

Table 3: State wise Distribution of SEZs

Source: Ministry of Industry and Commerce 2009

Not to be quoted 22

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.

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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

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 notified SEZs (as of 30.6.08)

100885 persons (all Incremental Employment generated after

February 2006)

DIRECT Employment in Private/State Govt. SEZs which came into force

prior to SEZ Act, 2005 (as of 30.6.08)

48988 persons (Incremental employment generated since Feb.

2006: 36,250 persons)

DIRECT Employment in 7 SEZs established by the Central

Government (as of 30.6.08)

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 From SEZs (Rs. Crore)

Growth Rate (over 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

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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 (persons)

Share in Manufacturing (%)

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

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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?

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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

States

Total Agri. land (Sown area) (000ha)

Total grain production 000 tons

Total land going in Approved SEZs

% of land going in approved SEZs

Expected loss of grain 000 tons

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.

6 193541.9 0.145 298.0105

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 27

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

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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

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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.

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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

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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..

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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

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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 Madras

Cochin Falta Total

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.

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Table 9: Female employment in organized and unorganized sector in India

State Female Emp. in Organized sector

Female Emp in Unorganized sector

Share in Total 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

No. of Workers S No. Sector Male Female Total

1 Textile/Garment 63.03 36.94 28.64 2 Electronics(softw

are) 79.67 20.33 13.49

3 ( Hard ware) 82.3 17.7 7.1 4 Engineering

goods 80.84 19.16 17.47

5 Gems & jewellery

94.8 5.2 10.11

6 Chemicals & Pharma

84.83 15.17 3.43

7 Leather Products

82.10 17.90 2.82

8 Latex gloves/plastics

70.41 29.59 4.59

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

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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.

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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

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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.

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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).

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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

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

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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.

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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

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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

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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.

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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

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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.

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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

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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

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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.

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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

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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.

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)

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.

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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.

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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.

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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

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.

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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.

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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.

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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.

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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

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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

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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.

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7. References

1. Aggarwal, A. (2006): ‘Performance of Export Processing Zones: A Comparative Analysis of India, Sri Lanka, and Bangladesh’, Journal of Instaflag Institute, World SEZ Association, Arizona, USA, 30(1).

2. Aggarwal, A. (2007): Impact of Special Economic Zones on Employment, Poverty and Human Development; Working Paper No. 194, ICRIER

3. Aspects of Indian Economy (2008); India’s Runaway ‘Growth’: Distortion, Disarticulation, and Exclusion; Nos. 44 –46; April 2008

4. Chandrashekhar, CP (2006): Primitive Accumulation, Frontline; Oct 20, 2006 5. Chandrashekhar, CP (2007): SEZs in India: The record so far; Business line,

Hindu; Nov 27, 2007 6. Dewan, R., (2001): ‘Ethics of Employment and Exports: Women in Export

Processing Units in India’, in A.S. Oberoi, A. Sivananthiran and C.S.Venkata Ratnam, et al. (ed.)

7. ICFTU (2004): Behind the brand names: Working conditions and labour rights in EPZs, ICFTU Report 2004

8. ILO (1998): ‘Labour and Social Issues Relating to Export Processing Zones’, Technical background paper for The International Tripartite Meeting of Export Processing Zone-Operating Countries in Geneva from 28 September to 2 October 1998, International Labour Organisation, Geneva.

9. ILO (2003): ‘Employment and Social Policy in Respect of Export Processing Zones.’ Committee on Employment and Social Policy. International Labour Organization, Geneva, GB.286/ESP/3, March.

10. Jauch H (2006): The Impact of Global Production Systems on Trade Union Strategies; The Case of Export Processing Zones (EPZs) in Namibia; Labour Resource and Research Institute (LaRRI

11. Jauch H. (2006): The case of EPZs in Namibia; Labour Resource and Research Institute.

12. Jauch,H. (1997): Regional Mirage: Southern Africa and the EPZ; Southern Africa Report, SAR, Vol 12 No 4

13. K.Hemlatha (2001): Mexico workshop on labour rights; People’s Democracy, Vol.xxv, No.31.

14. Ken Opala (2003): Investor Dollars Versus Workers' Rights; Website of Global Policy Forum; February 21

15. Labour Issues in Export Processing Zones: Role of Social Dialogue, South Asian Multidisciplinary Team and Indian Industrial Relations Association, ILO, New Delhi.

16. M.S ch i t ra : P r o s p ec t s f o r labour; Seminar, Feb2008 17. Majumdar, I., (2001). ‘SEZs and Their Workers in India: A Study of the Noida

Processing Zone’, in A.S. Oberoi, A. Sivananthiran and C.S.Venkata Ratnam, et al. (ed.) Labour Issues in Export Processing Zones: Role of Social Dialogue,

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South Asian Multidisciplinary Team and Indian Industrial Relations Association, ILO, New Delhi.

18. Mohammed Ahmadu 1998: Labour and employment conditions in EPZs; Journal of South pacific law, working paper 3 of Vol.2

19. Movement Against SEZ; March 2006, on the website of merinews, power to people

20. National strike in Bangladesh garment industry; Clean clothes compaign website, July. 2001

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22. Prabhat Patnaik (1999): Capitalism in Asia at the end of the Millennium; Monthly Review July-August, 1999

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