Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 1

CHAPTER 1

INTRODUCTION

1.1 Introduction

Special Economic Zones, epitomizing the contemporary approach to development

being followed not only in India but holding its sway the world over had been in

existence in India since 1965, but got a fillip with the shift from import-substitution

based industrialization strategy to export led economic growth facilitated through the

general process of liberalization of economy in the early 1990s. Till 1990s there

existed a mismatch between the general regulatory macro-economic policies of the

government and the liberalized regime demanded by such free zones.1

Most of the zones set up in India from 1965 to 2005 were christened as ‘export

processing zones.’ However, the term now in vogue is ‘special economic zone’

instead. The international labour organization recognizes special economic zones,

export processing zones, free port, information processing zone, financial services

zone, commercial free zone, maquiladoras as different but related typologies of

zones.

The recognition

of the significant role of these zones necessitated streamlining the process of their

establishment, development and management which in turn required consistent, well

planned and authoritative declaration of rules and regulations regarding the same. All

these factors and considerations led to replacement of ad-hoc, dithering initiatives

devoid of well defined objectives with a set of coherent policy measures culminating

in enunciation of Special Economic Zones Scheme in April 2000. This scheme

replaced the old Export Processing Zone regime. Before delving into the features of

the scheme and further developments it is essential to clarify here the nomenclature

used to refer to these special zones.

2 However the common features shared by these zones are as follows3

• They allow duty-free imports of raw and intermediate inputs and capital goods

for export production.

:

• Government red tape is streamlined, allowing “one-stop shopping” for permits,

investment applications, and the like. In addition, labour laws are often more

flexible than for most firms in the domestic market.

1 Ashok Kundra , The Performance of India’s Export Zones: A Comparison with the Chinese Approach 43

(Sage, New Delhi, 2000). 2 http;//www-ilo-mirro.cornell.edu/public/English/dialogue/sector/themes/epz/typology.htm.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 2

• Firms in zones are given generous, long-term tax concessions.

• Communication services and infra-structure are more advanced than in other

parts of the country. Utility and rental subsidies are common.

• Zone firms can be domestic, foreign, or joint ventures. Foreign direct investment

plays a prominent role.

Despite these common features the basic difference between a special economic zone

(hereinafter referred to as SEZ) and an export processing zone (hereinafter referred to

as EPZ) is that the former is an integrated township with fully developed

infrastructure whereas an EPZ is just an industrial enclave.4 As mentioned earlier

since the scheme relating to EPZs in India could not succeed on account of piecemeal

reforms, policy reversals, poor site selection, weak incentives, poor regulation of

zones and failure to provide world class infrastructure,5 it was replaced by Special

Economic Zones scheme in 2000 and later by Special Economic Zones Act, 2005. The

Special Economic Zones Act, 2005 was enacted “in order to give long term and stable

policy framework with minimum regulatory regime and to provide expeditious and

single window clearance mechanism.”6

The authoritative laying down of norms and procedures regarding establishment of

SEZ, the incentives conferred on the same, the rules regarding their management by

the legislature gave impetus to setting up of SEZs in India. As on 17th Jan’ 2013, 579

SEZs stood formally approved out of which 384 have already been notified along with

7 central government and 12 state/Pvt. SEZs.

After the enactment of the said law the

existing EPZs like Kandla Export Processing Zone set up in 1965, Santa Cruz

Electronics Export Processing Zone set up in 1974, four EPZs set up in mid 1980s i.e.

Vishakhapatnam EPZ, Chennai EPZ, Cochin EPZ, Falta EPZ and NOIDA EPZ were

also converted into SEZs.

7

3

The number of operational SEZs as on

30th September’ 2012 is 160 with 17 being multi product SEZs and the remaining

being information technology and information technology enabled services SEZs,

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/TRADE/0,,contentMDK:20540534~pagePK:148956~piPK:216618~theSitePK:239071,00.html

4 Aradhana Aggarwal, “Special Economic Zones: Revisiting the Policy Debate” XLI (43-44) EPW 4534 (2006).

5 Ibid. 6 The Special Economic Zones Act, 2005, Statement of Objects and Reasons. 7 www.sezindia.nic.in.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 3

engineering, electronic hardware, textiles, biotechnology, gems and jewellery and

other sector specific SEZs.8

The establishment and development of SEZs in India however has not been a very

smooth process so much so that zones in Goa have been de-notified and there are

prevailing controversies with respect to many others. The mushrooming of SEZs and

the scale of the same became highly controversial on many accounts. The

contestations with regard to the same relate to land acquisition for the purpose of

setting up SEZs and displacement of people on that account,

9 the impact of acquisition

of fertile land on food security,10 the debate over contribution of SEZs in promoting

exports,11 privileging export production over production directed at meeting domestic

pressing needs and wants for a basic minimum level of living,12 non-transparent and

non-consultative decision making with respect to SEZs,13 exemption from taxes,

duties or cess,14 economic, demographic, ecological changes introduced by SEZs,15

employment generation in SEZs16 and the impact of SEZ law and policy on workers.17

Ever since SEZs or EPZs came to be widely regarded as engines for export oriented

growth there have been many studies conducted with respect to these zones. Out of

many studies pertaining to various aspects of the zones and extending to zones located

in different jurisdictions, one of the issues of concern in these studies has been the

condition of workers in these zones. The studies, reports or papers relating to

conditions of workers in EPZs are of three kinds viz., one pertaining to comparative

Out of the above mentioned this study focuses on two aspects i.e. livelihood of those

displaced on account of establishment of SEZ and degree of realisation of labour

rights within SEZs.

1.2 Review of Literature

8 Ibid. 9 Amit Bhaduri, “Development or Development Terrorism” 6 (2) CL 12 (2007). 10 Abhirup Sarkar, “Development and Displacement: Land Acquisition in West Bengal” XLII (16) EPW 1438

(2007). 11 Ruddar Dutt, “Special Economic Zones” Mainstream 17 (Nov 10-16, 2006). 12 Kamal Nayan Kabra, “Special Economic Zones: A Baneful Package” Mainstream 10 (Oct 20-27, 2006). 13 E.A.S.Sarna, “Help the Rich, Hurt the Poor: Case of Special Economic Zones” XLII (21) EPW 1901 (Nov

21, 2007). 14 The Special Economic Zones Act, 2005, sections 26-30. 15 Malini Bhattacharya, “Nanadigram and the Question of Development” XLII (21) EPW 1898 (2007);

S.H.Iyer, “Carving out Foreign Territory in India, 6 (2) CL 18 (2007). 16 Prabhat Patnaik, “In the Aftermath of Nanadigram” XLII (21) EPW 1894 (2007). 17 Colin Gonsalves, Pragya Freya Mehrotra, “SEZs Spell Doom for Workers” 6(2) CL 14-16 (2007); Ruddar

Dutt, “Special Economic Zones” Mainstream 18 (Nov 10-16, 2006); E.A.S.Sarna, “Help the Rich, Hurt the Poor: Case of Special Economic Zones” XLII (21) EPW 1901 (2007).

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 4

cross country studies on labour conditions in EPZs, second category consists of theme

specific studies pertaining to a certain labour right and the third consisting of country

specific studies with respect to conditions of labour in EPZs. Many of these studies

have been conducted and published under the aegis of the ILO and most of them

pertain to countries other than India. The studies especially with regard conditions of

workers in SEZs in India have been few.

A study by Rudy Maex conducted under the aegis of ILO pertains to EPZs in Asia

with the focus on their role in employment generation and consideration of their

working conditions to a certain extent.18 With regard to the latter the report pointed

out absence of comprehensive data. A report published by ILO in 1998 for discussion

at the tripartite meeting constitutes one of the initial studies conducted by ILO with

respect to labour conditions in EPZs19 which recognised that the absence of credible

and effective labour management relations is a source of instability in zones and also

emphasised that the conditions of women zone workers deserves special attention.

Working paper 21 by Jamie K. McCallum published by ILO,20 based on the reports

commissioned by it in 2009 compares the experiences of export processing zones in

China, South Africa, Honduras and Nicaragua. Impact of EPZs on national

economies, legal regulation of labour, social protection of workers, the state of social

dialogue, impact of global economic crisis and an assessment of similar enterprises

within and outside EPZs constitute the focus of this study. With respect to labour the

study concludes that the EPZs have flourished “as a vehicle for globalised production,

as an employer strategy for low cost exports and (on occasion) as a governmental

strategy to absorb surplus labour and attract FDI, they have failed to create decent

jobs. . . and they rely on labour repression and anti union policies to enhance control

of the workplace.”21 A comprehensive study specifically focussing on labour rights

and working conditions in EPZs was published by International Confederation of Free

Trade Unions in 200422

18 Rudy Maex, “Employment and Multinationals in Asian Export Processing Zones” 26 Working Paper ILO

(1983). 19 ILO, Labour and Social Issues relating to Export Processing Zones (1998). 20 Jamie K. McCallum, “Export Processing Zones: Comparative Data from China, Honduras, Nicaragua and

South Africa” 21 Working Paper ILO (2011). 21 Id., at pp. 16-17. 22 Sarah Perman, Laurent Duvillier, Natacha David, John Eden et Samuel Grumiau, “Behind the Brand

Names: Working Conditions and Labour Rights in Export Processing Zones” ICFTU (2004)

which apart from generally dwelling upon the working

conditions prevailing in EPZs undertook case studies of a number of countries viz.,

Bangladesh, China, Dominican Republic, Haiti, Honduras, Madagascar, Mauritius,

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 5

Mexico, Sri Lanka. Unlike other studies it relied on the primary data to draw the

inferences. A working paper by William Milberg and Matthew Amengual published

by ILO in 2008 undertook a comparison of working conditions inside and outside

EPZs in countries like Bangladesh, Costa Rica, Honduras, Madagascar, Sri Lanka,

Cambodia and Dominican Republic and reported prevalence of comparatively higher

wages in EPZs, excessive and illegal overtime, worse health and safety conditions,

violations of freedom of association.23

Apart from the cross country studies there have been theme specific studies published

by ILO with respect to EPZs. One such study by Ramapriya Gopalakrishnan focuses

on freedom of Association and collective bargaining in EPZs by undertaking an

assessment of the role of ILO supervisory mechanisms with regard to realisation of

these rights and indicates the legislative and practical measures taken by various states

in pursuance of the recommendations of supervisory bodies as well as the need to

make further efforts to ensure better and speedy compliance with the

recommendations.

24 Another study by Helena Perez Vasquez focuses on the labour

inspection practices and puts forth guidelines for effective labour inspections in

EPZs.25 International Confederation of Free Trade Unions conducted a survey of

EPZs across different regions of the world especially probing into the working

conditions like wages, working hours, health and safety issues, unionisation and

repression of unions in the same.26

The third category of studies with respect to EPZs is country specific studies. These

studies broadly identify various arenas with respect to labour in EPZs which need

enhanced attention and improvement. A study pertaining to Indonesia identified lack

of enforcement of labour legislations, weakness of workers organisations

representation at the zone level on labour management issues, employers’ inability to

device mechanism to promote social dialogue at enterprise level in the zones and

absence of national forum to address EPZ issues as major constraining factors.

27

23 William Milberg and Matthew Amengual, ”Economic Development and Working Conditions in Export

Processing Zones: A Survey of Trends” 3 Working Paper ILO 61 (2008). 24 Ramapriya Gopalakrishnan, “Freedom of Association and Collective Bargaining in Export Processing

Zones: The Role of ILO Supervisory Mechanisms” 1Working paper ILO (2007). 25 Helena Perez Vasquez, “Good Labour Practice Compilation of Labour Inspection Practices and Guidelines

for Effective Labour Inspections in EPZs” ILO (2010).

A

26 Jean Paul Marhos, Marcela Szymanski, “Behind the Wire: Anti Union Repression in the Export Processing Zones” ICFTU (April 1996), available at http://actrav.itcilo.org/actrav-english/telearn/global/ilo/frame/epzicftu.htm.

27 A. Sivananthiran, “Promoting Decent Work in Export Promotion Zones in Indonesia” Working Paper ILO, available at http://www.ilo.int/public/french/dialogue/download/epzindonesie.pdf.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 6

study conducted with respect to EPZ regime in Costa Rica though focussed on export

promotion, fillip to foreign direct investment through EPZs, its contribution to

regional development, yet it also observed that EPZ firms hired more young and

uneducated women as compared to other sectors in the Costa Rican economy and

drew attention to the abuse of this segment of the workforce.28 Vincent Nkhoma in the

study of EPZs in Malawi29 has indicated the failure of the regime to stimulate

employment and suppression of trade union activities in EPZ firms to the extent that

workers have no voice. A study undertaken in Nigeria with respect to EPZs focussed

on state of trade unionism and industrial relations practice and revealed prevalence of

longer working hours, lack of job security, workplace violence, non-existent

workplace inspections in EPZs and trade unionism as a constrained phenomenon in

EPZs primarily because of absence of job security.30 A report based on a survey of

EPZs in China submitted to ILO31

Viewing the existing literature in India from the perspective of the issues which this

particular study takes up, it is clear that the impact of SEZs on livelihood of the

displaced has been the primary focus of deliberations rather than the extent and

quality of livelihood generated by SEZs. Many of the studies with respect to

EPZs/SEZs have been undertaken from economic, business or commercial perspective

focussing on the contribution of EPZs/SEZs to economic growth, export promotion,

enhancement of foreign direct investment etc

reveals rarity of social impact assessment of EPZs

in China and the few studies that exist are non-official publications. It also revealed

absence of systematic and comprehensive study on working conditions, labour rights,

social dialogue and corporate social responsibility of firms inside and outside EPZs in

China.

32

28 Mauricio Jenkins, “Economic and Social Effects of Export Processing Zones in Costa Rica” 97 Working

Paper ILO, available at

or relate to general procedure for

http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/---multi/documents/publication/wcms_101038.pdf.

29 Vincent Nkhoma, “Export processing Zones: IS it a Regime Worth the Sacrifice? – The Case of Malawi” 7 Working Paper No.7 (Ministry of Industry, Trade and Private Sector Development, Government of Malawi, (April 2007), available at http://www.trade.gov.mw/pdf/7%20Nkhoma%20-%20Export%20processing%20zones_draft.pdf.

30 ILO, The State of Trade Unionism and Industrial Relations Practice in Nigeria’s Export Processing Zones (2012), available at http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---actrav/documents/publication/wcms_183546.pdf.

31 Xiaolan Fu, Yuning Gao, “Export Processing Zones in China: A Survey” Report Submitted to ILO (2007), available at http://ilo.org/public/french/dialogue/download/epzchineenglish.pdf.

32 Rajiv Kumar, India’s Export Processing Zones (Oxford University Press, Oxford 1989); V.M.Manoharan, Indian Export Processing Zones and CEPZ (Vikas Publishing House, 2000); Ashok Kundra, The Performance of India’s Export Zones: A Comparison with the Chinese Approach (Sage Publications, New Delhi 2000); A.Thothathri Raman, Prof. Parag Diwan Free Trade Zones to Special Economic Zones: the

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 7

setting up of SEZ and getting sanctions for units and operations inside it.33

Reflections on the impact of SEZs on livelihood of the displaced has been done with

reference to law pertaining to land acquisition in general,

As done by

Ashok Kundra, Mayank Mishra has also compared SEZs in India to those in China

with additional grounds of comparison being labour laws and land acquisition

probably also because of the time lag between the publication of the two studies and

gradual emergence of these two issues as primary bones of contention with respect to

SEZs in India.

34 the privatisation and

monopolisation of resources being promoted by SEZs at the cost of the right to life

and livelihood of the displaced,35 struggles against land acquisition for SEZs36 rather

than placing it in the context of the specific aspects entailed in establishment of SEZ

as laid down in SEZs Act, Rules and executive orders. “A Citizens’ Report Card on

Special Economic Zones” analyses the impact of SEZs on the polity, society and

economy by focussing on livelihood and environmental issues specially their

implications for economy, governance and democratic processes.37 Another study

emanating from the initiative of a civil society organisation, National Centre for

Advocacy Studies, analyses both the legislative framework applicable to the Indore

SEZ as well as the impact of the project on livelihood of the marginalised while also

dwelling on the struggles of the project affected people.38

Certain studies have focussed either solely, or along with other aspects, on the

working conditions existing in EPZs/SEZs. As early as 1999 Society for Participatory

Research in Asia (PRIA) undertook a study of the then prevalent seven EPZs with the

primary data collected from three out the seven i.e. Madras Export Processing Zone

(MEPZ), NOIDA Export Processing Zone (NEPZ), Santa Cruz Electronic Export

Processing Zone (SEEPZ).

The above mentioned

studies undertaken by the civil society groups have analysed the impact of SEZs from

the point of view of the broader process of globalisation.

39

Great Indian Dream (Pentagon Press, New Delhi 2002); Tarun Chaturvedi Guide to Special Economic Zones, (Commercial Law publishers, New Delhi, 2007).

33 Jona Aravind Dohrmann, “Special Economic Zones in India: An Introduction” ASIEN 106 60-80 (2008). 34 Arun Kumar Nayak, “SEZs and Displacement” 58 SA 254-261 (July-Sept, 2008); Xavier Jeyaraj, “An SEZ

with a Difference” 58 SA 271-282 (2008). 35 J.Felix Raj, Samrat Roy, “SEZs: Broken Promises in West Bengal” 58 SA 283-290 (July-Sept, 2008). 36 Savio Abreu, “The Struggle against SEZs in Goa” 58 SA 291-302 (2008 July-Sept). 37 Intercultural Resources, Five Years of SEZ Act: A Citizens’ Report Card on Special Economic Zones

(New Delhi, 2010). 38 Madhumanti, A Case Study of SEZ Indore, Madhya Pradesh, (NCAS, 2010). 39 PRIA, Export Processing Zones in India and Status of Labour (1999).

The study revealed large scale absence of trade unions

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 8

except in MEPZ, the difficulties workers face in demanding their rights in the absence

of union, demand for exemption from labour laws being made by investors in these

zones, low priority being given to health and safety in these zones and prevalence of

child labour. Indrani Mazumdar in her study published prior to enactment of SEZs

Act, 2005, focussed on the conditions and framework for promotion of social dialogue

in EPZs in India in general while dwelling on the measures that must be taken to

establish social dialogue in NOIDA Export Processing Zone (as it was then known,

hereinafter referred to as NEPZ).40She emphasised the need for the central trade

unions to evolve a common perspective and initiate joint action on the issues of NEPZ

workers as well as role of Development Commissioner in initiating a regular forum

for tripartite discussion at the zone level. K.N. Ghorude in his study has highlighted

work practices and conditions typically prevalent in EPZs, the trends of employment

generation, gender composition of workforce and increasing feminisation of labour in

SEEPZ.41 In a specific study undertaken in NEPZ in 2004, N.Neetha and Uday kumar

Verma have focussed on employment (across skill categories) and export promotion

in NEPZ, impact of closure and sickness on employment along with the conditions of

employment assessed on the basis of the nature of employment, working hours,

wages, overtime, employees state insurance benefits and maternity leave.42 The study

was based on field survey conducted in 2002 i.e. prior to the enactment of SEZs Act.

A prominent study undertaken after the enactment of SEZs Act is attributed to

Aradhna Aggarwal who pursued it under the aegis of Indian Council for Research on

International Economic Relations.43

40 Indrani Mazumdar, “Export Processing Zones and their Workers in India: Conditions and Framework for

Promotion of Social Dialogue” ILO, (New Delhi, 2001). 41 K.N.Ghorude, “Labour in Export Processing Zones: The Case of SEEPZ, Mumbai” 47 IJLE 1093-

1100(2004). 42 N.Neetha, Uday Kumar Verma (2004) “Labour, Employment and Gender Issues in EPZs: The Case of

NEPZ” 052 NLI Research Study Series , V.V.Giri National Labour Institute, NOIDA. 43 Aradhna Aggarwal, “Impact of Special Economic Zones on Employment, Poverty and Human

Development” 194 Working Paper ICRIER (2007); also see Aradhna Aggarwal, Social and Economic Impact of SEZs in India (Oxford University Press, New Delhi, 2012).

The study focuses on the impact of SEZs on

employment, poverty and human development with the primary data drawn from

MEPZ, SEEPZ and NEPZ. It assesses the conditions of workers on basis of working

hours, overtime practices and compensation for the same, canteen facilities, health

conditions, casual and sick leave, unionisation, grievance redress mechanism, housing

and attrition of workers. In 2009 Sunanda Sen and Byasdeb Dasgupta studied the

conditions of labour in India’s manufacturing industry with one of the components

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 9

being labour in SEZs.44

1.3 Statement of Problem

Though the sample drawn from SEZs was limited the study

did delve into average period of retention of workers in SEZ firms, skill acquisition

during the period of employment, recruitment process and the nature of employment.

Survey of the existing literature especially relating to workers in SEZs indicates

dearth of research with respect to workers specifically from the perspective of

international and domestic labour rights regime (as established by labour law)

comprehensively covering not only collective rights like that of unionisation and

consequent social dialogue, termination of employment but also individual rights

pertaining to different aspects of working conditions as well as mechanisms for

enforcement of both the collective and individual labour rights. The primary

perspective adopted in all the studies is drawn from other social sciences like

economics rather than law. Secondly, none of the studies situates the assessment of

conditions of workers (something loosely and distantly akin to labour rights, the focus

of this study) within the altered labour rights regime established through SEZs Act,

2005 or even the metamorphosed general regime of labour rights brought about

through the change in judicial attitude towards labour in the post reform period. The

above stated aspects which, unlike the existing literature, are integral to this study

clearly establish the broader policy shift of the stance of the state in favour of capital

and adverse to labour. The shift remains garbed on account of absence any major anti

labour amendment in the labour legislations as the shift is affected through executive

and operational alterations in implementation of the laws. Thirdly, the existing

literature pertains to conditions of workers in multiproduct or electronics SEZs

whereas the specific conditions and concerns of IT/ITES SEZ workers are marked by

their absence. Finally, with respect to the literature pertaining to livelihood concerns

of those displaced on account of establishment of SEZs also lacks examination of the

same in the light of the SEZs Act, 2005.

This study intends to investigate the impact of SEZs on labour rights of workers and

livelihood of those displaced on account of establishment of SEZs by focussing on

SEZs in NCR. The establishment and development of SEZs hold the potential of two

mutually conflicting ramifications. On the one hand large scale displacement of

44 Sunanda Sen, Byasdeb Dasgupta, Unfreedom and Waged Labour: Labour in India’s Manufacturing

Industry (Sage, New Delhi, 2009).

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 10

people in order to establish SEZs adversely affects the existing means of livelihood of

those whose land is acquired for the same. On the other it seeks to generate

employment for people in the units set up in SEZ. These twin, and to a great extent,

mutually divergent consequences with respect to livelihood of people necessitate

examination of legal regimes pertaining to both of them and the ultimate outcome of

these zones with respect to livelihood of people. Therefore the study undertakes an

assessment of the following:

• Legal regime concerning livelihood rights of the displaced by dwelling upon the

framework of right to property in India, land acquisition and claims regarding

compensation, rehabilitation and resettlement of such people in order to secure

their livelihood

• The degree of realization of labour rights within the zone because of the special

status of these zones in the economy on account of being viewed as primary

engines of development within the dominant discourse of development, the

specific regime of labour rights applicable in the zones emerging primarily as a

result of the use of spaces already provided within labour law to ensure

continuous production and export promotion in these zones.

Chart No. 1.1 - Link between Livelihood and Labour Rights 45

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 11

1.4 Objectives of the Study

The objectives that this research seeks to achieve are as follows:

• To critically analyse the provisions of the Special Economic Zones Act, 2005

from the point of view of labour rights

• To evaluate the potential of labour rights regime as made applicable in SEZs to

secure labour rights

• To examine the policy of the state towards establishment of SEZs and the

degree to which that policy balances the interests of workers.

• To investigate into the de facto realization of labour rights within SEZs in the

National Capital Region (hereinafter referred to as NCR)

• To delineate the potential of labour rights regime to protect the rights of blue

collar and white collar workers and to suggest measures to improve the same

• To explore measures to strengthen labour rights and their enforcement in SEZs

• To analyse the development of SEZs in the broader context of political economy

and specifically the dominant approach to development

• To appraise the effect of development of SEZs on livelihood rights of the

displaced and to make suggestions for securing the rights of the same

• To assess the legal framework pertaining to right to livelihood as prevalent in

India and the need to revisit the same in the light of development of SEZs

1.5 Limitations of the Study

Seeking to achieve the above stated objectives the study, however as any other study,

is subject to following limitations

• The empirical part of the study is limited to only labour rights within SEZs in

the national capital region and does not extend to the study of livelihood rights.

This is because the territorial focus of the study is the national capital region and

one of the major SEZ in this area is NOIDA Special Economic Zone established

in 1985 i.e. a long time ago and therefore it was not possible to empirically

study the impact of establishment of this SEZ on the people who were displaced

on that account because of inaccessibility of the displaced after more than

twenty years.

45 Straight lines indicate legal entitlement while dotted lines indicate a possibility of the relief indicated.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 12

• The data for the study is not collected from all the SEZs operative in the

National Capital Region but is limited to only two of them i.e. NOIDA SEZ and

DLF, Cyber City IT/ITES SEZ, Gurgaon

• Being an individual study the sample for the study is limited

• Data collection was severely limited on account of inappropriateness (because

of obvious inability of the workers to interact freely at their workplace inside the

zone) of interviewing the workers inside NOIDA SEZ. This limitation resulted

in the following limitations:

o Data collection from the workers working in NOIDA SEZ was territorially

limited to workers residing in village Salarpur, Bhangel, NOIDA

o The ideal method for drawing the sample for such a study i.e. cluster

sampling with probability proportional to size (sample consisting of

workers proportional to the number of workers working in the clusters

constituted by different categories of units in SEZ) had to be departed from

• Since questionnaire method was used for collecting data from white collar

workers and managers of units in SEZs, the drawbacks of this method

automatically constitute a limitation of this study

• The arena of labour rights being vast this study is limited to only certain rights

of workers

1.6 Hypotheses

1. SEZs labour rights regime is supportive of social dialogue

2. Current SEZs labour rights regime has secured decent work for labour

3. SEZs labour law regime establishes an effective mechanism for enforcement of

labour laws

4. Realisation of labour rights by workers is greater inside rather than outside SEZs

5. Development of SEZs through SEZs Act, 2005 without corresponding

legislative protection to the displaced has had a negative impact on livelihood

rights.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 13

1.7 Operationalisation of Terms/Expressions

• Labour rights – For the purposes of this study, labour rights refer to the following

rights at work i.e.

Collective Rights

o Right to freedom of association, collective bargaining

o Right to security of employment indicated through issuance of appointment

letter, protection against unlawful termination of employment, limited to

following kinds of terminations:

retrenchment

termination as a punishment inflicted by way of disciplinary action

termination on account of union activity

Individual Rights

o Right to decent work conditions i.e.

a. right to minimum wages, decent working hours, including breaks and

special payment for working overtime, access to canteen

b. social security in the form of health insurance, provident fund, gratuity,

accident compensation

Mechanism for Enforcement of Collective and Individual Rights

o Right to an effective mechanism for enforcement of the above stated collective

and individual rights

The choice of these specific rights out of the various rights pertaining to different

aspects of work life is based on the specific conditions of the labour market in

India, the basic needs of workers in a developing country like India as well as

drawn from the ‘Decent Work Agenda’ of the International Labour Organisation.

• SEZs Labour Rights Regime means the system of labour rights (constituted by

both substantive and procedural norms pertaining to labour rights) as applicable

to the SEZs

• The term social dialogue in this study has been used interchangeably with

collective bargaining46 which extends to all negotiations which take place

46 Collective bargaining as defined in Collective Bargaining Convention, 1981, (No. 154), Article 2.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 14

between an employer, a group of employers or one or more employers' organisations,

on the one hand, and one or more workers' organisations, on the other, for--

(a) determining working conditions and terms of employment; and/or

(b) regulating relations between employers and workers; and/or

(c) regulating relations between employers or their organisations and a workers'

organisation or workers' organisations.

• Decent work – For the purposes of this study decent work extends to five (out of

ten) substantive elements corresponding to the four strategic pillars of decent

work as recognized by ILO. These are as follows47:

1. Adequate earnings and productive work – Right to minimum wages

2. Decent Working time – Working hours, overtime, leave, keeping the Indian

context in mind bonus is adopted as an additional criteria to determine

existence of decent work in this study

3. Stability and security of work – Precarious employment rate, job tenure,

termination of employment

4. Safe work environment – Employment injury benefits

5. Social security – Apart from healthcare as specific social security measure

enumerated by ILO, measures like Employees Provident Fund and gratuity

have been included in the study of this aspect of decent work

• Livelihood – In this study livelihood refers to rights of those displaced from the

land where special economic zones are established. The spectrum of rights which

are studied in this work range from right to means of subsistence including right

to property, right to adequate standard of living, right to development which in

the context of this study is limited to right to rehabilitation and resettlement

though in other contexts it will also encompass right to self determination and

right to culture.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 15

1.8 Research Method:

The method adopted for the study of the topic stated above combines both doctrinal

and non-doctrinal. Data for the research is first collected from secondary sources.

Investigation into the hypothesis pertaining to livelihood rights is based only on

secondary data. However, four hypotheses mentioned above pertaining to labour

rights in SEZs in NCR are tested on the basis of primary data collected from two

SEZs situated in NCR as well as from non-SEZ workers working in NCR.

1.8.1 Sample

The geographical limit of the study is constituted by NCR. Since the empirical study

pertains to labour rights in SEZs in NCR. The universe for the study with respect to

SEZs consists of all the SEZs, whether developed by the state or jointly developed by

the state and private entrepreneur or those developed by private entrepreneurs only in

NCR.

Further, the other component having a bearing on the constitution of the universe of

the study pertains to the labour rights aspect of the study. Investigation into any right

must necessarily involve delving into three aspects pertaining to any right i.e.

recognition of the right, its enjoyment and exercise. These three aspects determine the

universe to be studied with respect to labour rights. It consists of three entities viz.,

workers (right holders), managers (duty bearers) and the state officials (duty bearers).

The duties of managers relate to implementation of rights i.e. taking steps to secure

the enjoyment of rights by the workers of their establishments by fulfilling the duties

arising corresponding to the rights of workers. Duties of the state relate to

enforcement of rights i.e. taking appropriate measures like inspections and redress in

case of violation of a right. The universe with respect to labour rights thus consists of

all the workers, employers (acting through managers) and state officials entrusted with

the task of enforcement of rights in SEZs in NCR.

Further in order to make comparison of the state of labour rights of SEZ workers with

those working outside SEZs another component gets added to the universe i.e. all the

workers working in NCR but outside SEZs.

47 “Decent Work Indicators: Concepts and Definitions,” Manual 16-17 (ILO, 2012).

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 16

The sample for the study is thus drawn from a combination of the above mentioned

universes. The technique of simple random sampling has been used to collect the data.

1.8.1.1 Sampling Unit

Out of all the SEZs in NCR the following two SEZs are chosen for the purpose of this

study:

• NOIDA SEZ (State developed multiproduct SEZ in NOIDA)

• DLF, Cyber City, Gurgaon (Information Technology/ Information Technology

Enabled Services SEZ in Gurgaon developed by a private entrepreneur)

The sampling unit for the non-SEZ workers consists of workers working outside SEZs

in NOIDA.

1.8.1.2 Size of Sample

The sample drawn from the above stated units chosen out of the universe of study

consists of the following:

S. No. Component of Sample Number of Respondents

1 Multiproduct SEZ workers from

NOIDA SEZ, NOIDA 136

2 IT/ITES workers from DLF SEZ,

Gurgaon 104

3 Non-SEZ workers working in NOIDA 49

4 Managers from NOIDA SEZ 19

5 State Officials 2

6 Total 310

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 17

1.8.1.3 Data Collection

The collection of primary data for the study was spread over a long period of time.

This is especially because of the availability of SEZ workers living in Salarpur village

only on Sundays. Further the collection of data had to overcome the barrier of

apprehensions nurtured by this vulnerable section of people about the antecedents of

the researcher, the purpose and especially concern about confidentiality of the

information and opinion shared etc. Many of them had to be cajoled to talk to the

researcher. Before embarking upon data collection some information was gathered by

the researcher about the residence of workers working in NOIDA SEZ from the

administrative office of NOIDA SEZ. The collection of data with respect to IT/ITES

workers and managers was facilitated by the office of the Development

Commissioner, NOIDA SEZ. The entire process of data collection was preceded by

pilot testing of the tools which were intended to be used for data collection.

1.8.1.4 Tools Used for Data Collection

A combination of a number of tools was used to collect data for this study depending

on the background of people from whom data was to be collected. Structured

interview schedule was used to elicit information and opinions from workers working

in NOIDA SEZ. The data collected from multi product SEZ workers as well as non

SEZ workers consisted of 111 variables.48 For collecting data from IT/ITES workers49

and managers questionnaires50 were used. The questionnaires for IT/ITES workers

consisted of 109 variables whereas that of managers consisted of 122 variables. The

structured interview schedule and the questionnaires were so designed so as to be

susceptible to be anlaysed through the statistical package for social sciences (SPSS)

version 20 used for statistical analysis of the data. Finally data from state officials was

collected through unstructured interviews with the Development Commissioner and

Assistant Labour Commissioner of the NOIDA SEZ.

1.8.1.5 Data Analysis

After the collection of data for the study the data was fed into the computer using

SPSS software. Responses with respect to all the variables were carefully coded. In

case of a few open ended questions the responses were categorized and coded before

48 Appendix 1.1. 49 Appendix 1.2.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 18

feeding them into the computer. After feeding the data frequency tables with respect

to each variable was retrieved with the help of SPSS package, followed by cross tables

pertaining to significant and seemingly related variables for further in depth analysis

of data. Many of these tables were also tested through application of appropriate

statistical tests to determine the degree to which the findings from this set of data can

be generalized. The results of frequency tables and cross tables were interpreted and

then analysed in the light of the broader social, economic and normative context.

1.9 Chapterisation

The study on development of SEZs and its impact on labour rights and livelihood in

NCR is divided into of following chapters:

Chapter 1

Introduction – The chapter introduces the topic, dwells upon the development of

SEZs in India, elaborates the focus of the study followed by the method adopted for

research into the issue chosen along with the details regarding sample, sampling unit,

size of the sample, method of data collection, tools employed for the same. It also

narrates the method adopted for analysis of data.

Chapter 2

Normative Framework of Labour Rights - This chapter lays down the normative

framework against which the realization of labour rights in SEZs is assessed. It

examines the standards, international as well as domestic with regard to the specific

labour rights. It begins with the Constitutional approach towards labour and its

relationship with capital. Thereafter it focuses on the three categories of labour rights

constituting the focus of this study in three corresponding sections, with each section

commencing with the international standards with respect to the said right, followed

by the legislative framework with respect to the same, which in turn encompasses

analysis of the content of the right, the workplaces it extends to and the categories of

workers who are entitled to the respective right.

50 Appendix 1.3.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 19

Chapter 3

Right to Livelihood: Normative Framework, Issues and Concerns –Since law does

not exist as an autonomous realm, but is part of the social totality, therefore any

discussion on displacement of people on account of setting up of SEZs, the

consequent impact of the same on their livelihood, the rationale justifying the same,

the legality of the process, the exclusions that the law masks in the legality is

undertaken in the light of the interface between law and the dominant ideology of

development. Thus the chapter dwells on the ideology of development that has been in

vogue in India since independence, the world view it imbibes and the processes it

entails for achieving the goals, focusing on displacement as an integral part of this

ideology of development. An evaluation of the nuances of the domestic norms

pertaining to right to property as a means for securing livelihood is undertaken with

special reference to the notion of eminent domain, its relationship with the ideology of

development. The issues and concerns relating to land acquisition, rehabilitation and

resettlement, their relationship with the right to livelihood and their potential to secure

the same is undertaken in the light of the development discourse. Finally the chapter

delves into the nature and content of various aspects of the right to livelihood

recognized within the dominant ideology of development viz., right to work, right to

means of subsistence and right to adequate standard of living. It undertakes a

discussion of International and Constitutional norms guaranteeing the same, the nature

of obligations they impose on the state and the potential they hold to protect the

interests of the displaced.

Chapter 4

Labour Rights Regime within SEZ Law - This chapter focuses on the labour rights

regime established under the Special Economic Zones Act, 2005. Since the Special

Economic Zones Act, 2005 lies at the core of this framework, analysis of labour rights

is undertaken with specific reference to the provisions of the Act along with its

interface with the legislations and policies of different states in India. This is done

with a view to appraise the law from the point of view of the normative commitment

to labour rights. Firstly it unravels the ideological basis of the Act and delves into the

implications for labour that are integral to the same. Given the ideological grounding

of the Act, the labour regime established under the Act remains impregnated with

those implications. Comparison of the approach towards labour embodied in the

legislations pertaining to SEZs/EPZs across the world is undertaken thereafter with a

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 20

view to locate the Indian legislation within the broader international trends. Analysis

of the debates that took place in the Parliament of India with respect to the SEZ Bill is

done in order to offer an insight into the evolution of the provisions pertaining to

labour in the said legislation. Finally the approach of SEZs law with respect to labour

is sought to be ascertained through an in depth analysis of the provisions relating to

labour embodied in the central legislation, state legislations and policies.

Chapter 5

The Profile of Respondents with Specific reference to Livelihood Concerns – This

chapter introduces the profile of the respondents who constituted the sample for the

study. It focuses on the profile of both blue collared SEZ and non-SEZ workers and

white collared SEZ workers in order to bring about familiarity with the rest of the

data. The data relating to the profile is also used to draw inferences with regard to the

larger processes at work pertaining to the livelihood concerns of blue collared SEZs

and non-SEZ workers.

Chapter 6

SEZs: The Question of Decent Work - This chapter analyses the data collected from

the respondents with respect to prevalence of decent work in SEZs in NCR. It

specifically focuses on the question of wages, security of employment, working hours,

overtime, its frequency and overtime remuneration, entitlement to leave, nature of

leave and social security measures especially the subscription to provident fund,

health insurance through employees state insurance scheme, gratuity and accident

compensation.

Chapter 7

Unionisation and Social Dialogue in SEZs – Rights and processes geared towards

ensuring cordial labour relations constitutes the focus of this chapter. The processes

analysed from the data collected pertain to unionization among blue collared and

white collared SEZ workers. The approach of the managers with respect to

unionization and effect of the same on the degree of unionization in SEZs is

discussed. The degree of existence of social dialogue in SEZs is also analysed. The

data with respect to blue collared workers working in SEZs is juxtaposed against the

data pertaining to unionization and social dialogue outside SEZs so as to draw

comparison between the two.

Development of Special Economic Zones and its Impact on Labour Rights and Livelihood in NCR

Introduction 21

Chapter 8

Enforcement of Labour Rights in SEZs – Realisation of rights depends heavily on

the rigour with which they are enforced. The data with regard to this issue mainly

pertains to the inspections of the conditions of workers, their frequency and the

opportunities that these inspections offer to the workers to voice their concerns and

the consequences of the same. Analysis of the data with respect to inspections is thus

undertaken in this chapter.

Chapter 9

Conclusion and Suggestions – The broad cumulative findings of each chapter are

collated in this chapter to arrive at the conclusions of the entire study. These

conclusions are then used to test the hypotheses posed in the introduction to this study.

The conclusions are followed by the suggestions put forth by the researcher to address

the issues arising out of the findings of the study.