SEZs must be freed from labour laws — ESC

MUMBAI, APRIL 8: Special Economic Zones (SEZs), as announced by the Union Commerce Ministry in its new Exim policy, must be freed from the...

MUMBAI, APRIL 8: Special Economic Zones (SEZs), as announced by the Union Commerce Ministry in its new Exim policy, must be freed from the existing labour laws in order to make these zones more competitive and productive in international trade, according to Electronics and Computer Software Export Promotion Council (ESC).

Welcoming the objectives of setting up such zones for promotion of exports, chairman, Regional Committee (Western Chapter) of ESC, Lalit Kanodia said that besides rationalisation of duty structure at a uniform five per cent, the special economic zones should do away with the Industrial Dispute Act to attract foreign investors. As per the Exim guidelines, these zones come under the Labour Act and banking and foreign exchange laws.

To get rid of the Labour Act and promote the interest of workers, Kanodia suggested that companies setting up units in SEZs could be allowed to pay their workers salaries in dollar since these zones would be treated as foreign lands in respect of movement of goods and products from these zones.

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There will be no hindrance vis-a-vis the movement of goods between ports and the SEZs. Additionally, they can now undertake job work from the domestic tariff area (DTA) and get their goods processed in the DTA as well. The "no wastage input-output norms" have been done away with under the new exim policy.

As per the information technology is concerned, he said that customs bonding has been done away with entirely for the IT industry as this used to affect timely and speedy delivery of projects and therefore affected software technology park units.

Kanodia who is also the chairman of Datamatics Ltd felt that if the SEZs are treated as foreign lands, as the Minister mentioned in his speech, India could boost its exports substantially in the coming years and might touch a figure of $ 40 billion in near future. In China, such zones contributed about 22 per cent in total China’s export annually. In contrast, in India, the contribution of export processing zones to exports is very minimal because of several bureaucratic hurdles.

Although the Commerce Minister has looked eastwards to China in creating SEZs, he did not take a lead from the Communist rulers in adopting stringent labour regulations including the hire and fire policies, Kanodia added. “We have a long way to go to match our policies with China’s export zones,” he observed.