SEZ’s tryst with agriculture

India has seen a manifold increase in the number of Special Economic Zones during the last few years. The various incentives given to the Special Economic Zones in India are that the units within the SEZ are exempted from paying 100% income tax on the export income for a period of 5 years and after that they have an exemption of 50% income tax for a period of 5 years. Further the various incentives that are given to the Special Economic Zones in India are that the local procurement of goods that are used for the operation, maintenance, and development of the units of SEZ are duty free and exempt from sales tax, mandi tax, turnover tax, and electricity cess.

IFFCO Kisan SEZ has attracted the International & Indian Investors interest to invest in first high productive agricultural production and processing agro-park. The International Investor’s meet held recently was successfully hosted by IFFCO for its first multi-product agriculture-based Agro- Park, christened ‘IFFCO Kisan SEZ’, coming up in Nellore, Andhra Pradesh. Various companies from Netherland, Israel and Italy participated along with many renowned Indian agri-business counterparts.

Speaking at the event, Mr. Rakesh Kapur, Deputy Managing Director, IFFCO said that IFFCO would be investing in the development of world class infrastructure for the park and was open to new and innovative ways of participation. He added that the co-operative would also evaluate the options of investing in specific joint ventures which when actualized, would have a positive influence on the lives of farmers in the region. Investors have shown interest to tap opportunities in areas such as greenhouses, dairy production and processing, high end processing of poultry products, fruit and vegetable processing, processing of paddy and bio-mass based power generation. A renowned domestic fruit and vegetable retailer has expressed interest in setting up a fruit processing unit and is in the advanced stage of the feasibility study. Like wise, a leading Indian conglomerate has proposed to set up a fully integrated dairy farm and is in dialog with international technology partners. Leading Dutch and Israeli business houses are scouting for Indian partners to venture into green house production and integrated poultry production. Under a hub & spoke model, about 108 Rural Transformation Centers (RTCs) will be developed at the village level to enable direct linkage of the farmers to the demand side of the food chain. These centers would act not only as a collection point for supply of raw materials to the AFP but also serve as vehicles for agri-extension and quality control. It is expected to generate employment avenues for more than 5,000 persons apart from large-scale economic development of the region.

Another SEZ in agriculture is of Fresco Foods Pvt. Ltd, a private manufacturer which will commission a gherkin processing facility located in the SEZ for agro and food processing of the Karnataka Industrial Area Development Board in Hassan. The facility is spread across 8 acres of land and has a built-up area of 50,000 sq. ft. The production will commence in July. Fresco has got into contract farming in Davangere, Tumkur and Hassan. They have identified 1,200 farmers. The company has entered into an agreement with the farmers to buy back the produce at pre-agreed prices. It will tap the North America, Australia, New Zealand, South Africa and Korea markets after consolidating its presence in Europe. SEZs are envisioned as an instrument to promote many objectives, especially the export of particular product by simultaneously creating centres of demand for unskilled labour and for a variety of agricultural products needed by the urban centre produced in the SEZ.

Mr. Hanan Ezekiel, Independent Consultant feels that making the land available to the SEZ at subsidized prices may have been independently justified, but it was certainly not justified to impose the burden of this subsidy on the particular farmers whose land happened to be located in the area selected for the SEZ. “In setting up and promoting the SEZ, the government should have made it clear that it bore the cost of the subsidy by paying full price for the land, but making that land available to the SEZ at a lower price”, he said. “What the country needs is clearer thinking on rural development policies and programmes and their effective implementation. Only in this way will India begin to achieve the rapid rural development it has always needed, and still needs so badly right now”, he added.

Abid Hussain