29 September 2011

Andhra Pradesh and Special Economic Zones: economy and territory

(1) Territory
  • Capital city: Hyderabad
  • Polulation: 76,000,000
  • Repatriated workers: tens of thousands every year
  • Between 1969 and 2002, about 42,24,000 acres (1.71 million ha) of government lands have been given to 29,23,000 landless poor; but the government has recalled at least 20,000 ha of this land, and possibly more
  • The idea is that the land not be cultivatable farmland, this is not to exceed 10% of the land assigned to SEZs; but this is not enforced
  • The architectural style of HITEC City and of the large office buildings built by IT firms, the vast landscaped campuses, and the remarkable quality of the roads mark a striking contrast with the surrounding environment, which is generally dry and rocky and poorly equipped in basic infrastructure. In this way, HITEC City is actively contributing to the formation of highly differentiated “mixed spaces” midway between urban centres and rural spaces that characterise peri-urbanisation 
(2) SEZs
  • The 2005 SEZ act does not allow any public hearing or consultative process on the issue of land acquisitions
  • Top-down decision-making practices have effectively excluded many local actors from the policy process, and the creation of special purpose enclaves in suburban areas has weakened prospects for the development of governance institutions at the metropolitan scale 
  • Private sector actors have emerged on the scene, for instance as builders and managers of infrastructure complexes, mainly through public–private partnerships. 
  • In contrast, locally elected representatives have been largely excluded from the policy process, as have civil society groups, learning about major decisions only after the fact
  • The act of 2005 deregulated many aspects of production and trade and was intended to facilitate private investment, including foreign direct investment
  • Economic reforms and political change are redefining relations between the federal government and the states, and have effectively contributed to a form of political decentralisation. From the point of view of the states, one of the trade-offs of decentralisation is that they are required to take on greater responsibilities in resource generation and sound fiscal management. States have reacted differently to these opportunities and constraints and have adopted various approaches with regard to empowering local governments including their largest cities. Most states, including Andhra Pradesh, have been reluctant to cede significant powers to elected municipal councillors, or indeed to include them in decisions that directly affect their constituencies. Economic policies in particular are considered to fall outside the purview of local governments
  • Numerous incentives were designed to attract investment to the IT sector, many granted automatically, such as: exemption from purview of statutory power cuts, exemption from inspections under most labour laws, and permission for three-shift operation.  Incentives for which corporations may apply (and which affect land development in Hyderabad/Andhra Pradesh): a 25% rebate in power tariff, exemption from zoning regulations, and a rebate on the cost of land
  • Approvals are given by a single body
  • A company can set up an STP unit anywhere in India
  • 100% foreign equity is permitted
  • All imports of software and hardware are duty-free
  • Import of second-hand capital goods is permitted
  • Sales within the area are permissible, up to 50% of exports
  • STP units are exempt from corporate income taxes for entire fiscal years
  • Capital invested by foreign entrepreneurs, know-how fees, royalty, dividends, etc., can be freely repatriated after payment of income taxes due on them, if any
  • Repatriation of foreign currency can be done freely

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