An Analysis of the Feasibility of Private Land Assembly for Special Economic Zones in India

Abstract

India has used export processing zones as a development strategy since the mid 1960s. The performance of these zones did not meet expectations and, in 2001, the government changed the rules and the name, and recast them as special economic zones. Indian special economic zone policy was formulated to facilitate the private development of big industrial townships. This is a significant departure from the typical export zone model, where governments usually develop the zone and invite entrepreneurs to start firms within it. However, the zone policy is unlikely to achieve its objective because of land acquisition problems. This paper analyses the effect of land laws such as land ceiling and land use clauses, and the political nature of land dealings in the context of special economic zone development in India, and concludes that private land acquisition is not possible with the current structure of land laws in India, and that this is a primary problem for the private development in special economic zones in India.