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CHAPTER – VI
ROLE OF SEZs IN INFRASTRUCTUREDEVELOPMENT, TECHNOLOGY UPGRADATION
AND SKILL FORMATION
Now the research question is whether SEZs have contributed
towards socio-economic development through infrastructure
development, technology upgradation and skill formation. To
answer this question, the role of SEZs has been studied
analytically. For this purpose, three SEZs, namely, DLF Cyber City
Developers Ltd., Gurgaon Infospace Ltd., and Reliance Haryana
SEZ Ltd. have been surveyed in Haryana state. The response of the
entrepreneurs and the employees was obtained through a well
structured questionnaire by arranging personal interviews with
them.
6.1 SEZs and Infrastructure Development
One of the main objectives of the SEZs is to improve the
infrastructure facilities. Infrastructure means facilities needed for
development, operation and maintenance of the SEZ and includes
industrial, business and social amenities like development of land,
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roads, buildings, sewage and effluent treatment facilities, ports
including jetties, storage tanks and inter-connecting pipelines for
liquids and gases, warehouses, airports, railways, transport
system, generation and distribution of power, telecommunication,
data transmission network, hospitals, hotels, educational
institutions, leisure, recreational and entertainment facilities,
residential and business complex, water supply including
desalination plant, sanitation facility, etc. (Rule 2(s) of the SEZ
Rules, 2006]. Rule 11(10) of SEZ Rules, 2006 provides that
hospitals, hotels, educational institutions, leisure, recreational and
entertainment facilities, residential and business complex are to set
up only in the non-processing area.
The import/domestic procurement for the purposes of setting
up educational institutions, hospitals, hotels, residential and
business complex, leisure and entertainment facilities or any other
facilities in the non-processing area of the SEZ shall be as approved
by the BOA [Rule 11(10) of SEZ Rules, 2006]. It may also be noted
that no duty free material is allowed for operation and maintenance
for such infrastructure facility.
Units can be set up only within the processing area. Rule
11(5) of SEZ Rules, 2006 provides that with the earlier approval of
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the Approval Committee, the developers may grant on lease land or
built up space, for creating facilities such as canteen, public
telephone booth, first aid centres, crèche and other required
facilities for exclusive use of the unit.
The developer in the processing area can allot land area on
lease basis to a person desiring to create infrastructure facilities for
use by the prospective units [Rule 11(8) of SEZ Rules, 2006]. These
facilities would include water supply and other essential public
utilities.
The infrastructure approved by the BOA is eligible for
exemptions for business or social purposes in SEZs. However, in
case of any infrastructure created by the developer in addition to
what has been approved by BOA, no exemption from duty or taxes
shall be available for such additional activity. The Ministry of
Commerce & Industry has notified a list of authorized operations
vide notification dated 27-10-2006 [S.O. 1846(E)] which alone
would be eligible for exemption. In this wide notification, Ministry
of Commerce & Industry clearly mentioned the infrastructure
which is necessary for different types of SEZs. It is given below:
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6.1.1Infrastructure for IT/ITES, Bio-tech and Gems &
Jewellery SEZs
(i) Roads with street lighting, signals and signage;
(ii) Water treatment plant, water supply lines (dedicated
lines up to source), sewage lines, storm water drains
and water channels of appropriate capacity;
(iii) Sewage and garbage disposal plant, pipelines and
other necessary infrastructure for sewage and
garbage disposal, sewage treatment plants;
(iv) Electrical, Gas and Petroleum Natural Gas
Distribution Network including necessary
sub-stations of appropriate capacity, pipeline
network, etc.;
(v) Security offices, police posts, etc. at entry, exit and
other points within and along the periphery of the
site;
(vi) Effluent treatment plant and pipelines and other
infrastructure for effluent treatment;
(vii) Office space;
(viii) Parking including multi-level car parking;
(ix) Telecom and other communication facilities including
internet connectivity;
(x) Rain water harvesting plant;
(xi) Power (including power back up facilities);
(xii) Air conditioning;
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(xiii) Swimming pool;
(xiv) Fire protection system with sprinklers, fire and
smoke detectors;
(xv) Recreational facilities including club house, indoor or
outdoor games, gymnasium;
(xvi) Employee welfare facilities like Automated Teller
Machines (ATMs), Crèche, Medical centre and other
such facilities;
(xvii) Shopping arcade and/or Retail space;
(xviii) Business and/or Convention centre;
(xix) Common data centre with inter-connectivity;
(xx) Housing or Service apartments
(xxi) Playground;
(xxii) Bus bay;
(xxiii) Food services including Cafeteria, Food court,
Restaurants, coffee shops, canteens and catering
facilities;
(xxiv) Landscaping and water bodies;
(xxv) Clinic and Medical centres;
(xxvi) Wi-Fi and/or Wi-Max Services;
(xxvii) Drip and Micro irrigation systems; and
(xxviii) Such other operation specified above from (i) to (xxvii)
which the Board of Approvals may authorise from
time to time.
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6.1.2 Infrastructure for Sector-specific SEZs
(i) Roads with Street lighting, Signals and Signage;
(ii) Water treatment plant, water supply lines, sewage
lines, storm water drains and water channels of
appropriate capacity;
(iii) Sewage and garbage disposal plant, pipelines and
other necessary infrastructure for sewage and
garbage disposal and sewage treatment plants;
(iv) Electrical, Gas and Petroleum Natural Gas
Distribution Network including necessary sub-
stations of appropriate capacity, pipeline network,
etc.;
(v) Security offices and police posts, etc. at entry, exit
and other points within and along the periphery of
the site;
(vi) Effluent treatment plant and pipelines and other
infrastructure for effluent treatment;
(vii) Office space and/or Shopping arcade and/or Retail
space and/or Multiplex;
(viii) Housing;
(ix) Hotel and/or Service apartments;
(x) Clinic and/or Medical centres and/or Hospital;
(xi) School and/or Technical Institution and/or
Educational Institution;
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(xii) Parking including multi-level car parking (automated
or manual);
(xiii) Telecom and other communication facilities including
internet connectivity;
(xiv) Business and/or Convention centre;
(xv) Common Data centre with inter-connectivity;
(xvi) Rain water harvesting plant;
(xvii) Power (including power back up facilities);
(xviii) Rail head;
(xix) Access control and monitoring system;
(xx) Swimming pool;
(xxi) Fire Station, Fire protection system with sprinklers,
fire and smoke detectors;
(xxii) Recreational facilities including club house, indoor or
outdoor games and gymnasium;
(xxiii) Employee welfare facilities like Automated Teller
Machines, Crèche, Medical centre and other such
facilities;
(xxiv) Playgrounds;
(xxv) Bus bays;
(xxvi) Food Services including Cafeteria, Food court,
Restaurants, coffee shops, canteens and catering
facilities;
(xxvii) Landscaping and water bodies;
(xxviii) Wi-Fi and/or Wi-Max Services;
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(xxix) Drip and Micro irrigation systems; and
(xxx) Such other operation specified above from (i) to (xxix)
which the Board of Approvals may authorise from
time to time.
6.1.3 Infrastructure for Multi-product SEZs
(i) Roads with Street lighting, Signals and Signage;
(ii) Water treatment plant, water supply lines, sewage
lines, storm water drains and water channels of
appropriate capacity;
(iii) Sewage and garbage disposal plant, pipelines and
other necessary infrastructure for sewage and
garbage disposal and sewage treatment plants;
(iv) Electrical, Gas & Petroleum Natural Gas Distribution
Network including necessary sub-stations of
appropriate capacity, pipeline network, etc.;
(v) Security offices and police posts at entry, exit and
other points within and along the periphery of the
site;
(vi) Effluent treatment plant and pipelines and other
infrastructure for effluent treatment;
(vii) Office space and/or Shopping arcade and/or Retail
space and/or multiplexes;
(viii) Housing;
(ix) Hotel;
(x) Clinic and/or Medical centres and/or Hospital;
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(xi) School and/or Technical Institution and/or
Educational Institution;
(xii) Parking including multi-level car parking (automated
or manual);
(xiii) Access control and monitoring system;
(xiv) Telecom and other communication facilities including
internet connectivity;
(xv) Rain water harvesting plant;
(xvi) Power (including power back up facilities);
(xvii) Swimming pool;
(xviii) Fire Station, Fire protection system with sprinklers,
fire and smoke detectors;
(xix) Rail head within the Special Economic Zone;
(xx) Port;
(xxi) Airport and/or Air Cargo Complex;
(xxii) Inland Container Depot;
(xxiii) Banks;
(xxiv) Recreational facilities including club house, indoor
and/or outdoor games and gymnasium;
(xxv) Employee welfare facilities like Automated Teller
Machines, Crèche, Medical center and other such
facilities;
(xxvi) Playgrounds;
(xxvii) Bus bays;
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(xxviii) Food services including Cafeteria, Food court(s),
Restaurants, coffee shops, canteens and catering
facilities;
(xxix) Landscaping and water bodies;
(xxx) Wi-Fi and/or Wi-Max Services;
(xxxi) Drip and Micro irrigation systems; and
(xxxii) Such other operation(s) specified above from (i) to
(xxxi) which the Board of Approvals may authorise
from time to time.
6.1.4 Processing and Non-processing Area in Selected SEZs
According to the SEZ Act, 2005, the SEZ comprises of both
processing and non-processing areas. The processing area includes
manufacturing units, trade and commerce, port and port related
activities, godowns and warehousing, airport and related uses, rail,
road and water circulation and spaces for parking, etc.; and the
non-processing area includes industrial township, the residential,
commercial and recreational areas along with social infrastructure
like education, healthcare and socio-culture facilities. The
development of processing and non-processing area in the selected
SEZs is shown in Table 6.1. The table shows that there is 50 per
cent processing area and 50 per cent non-processing area in each
selected SEZ.
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Table 6.1: Development of Processing and Non-processing Area in SelectedSEZs as Percentage of Total Area
Source: Field Survey 2008-09
6.1.5 Infrastructure Facilities Available in the Selected SEZs(Entrepreneur Survey)
Infrastructure within the selected SEZs is, generally, superior
to that available in the wider economy. In order to find out the type
of infrastructure facilities available in these SEZs, a number of
questions during the survey were asked to the entrepreneurs. Their
response to these questions has been summarized in Table 6.2.
As is evident from the table that only those infrastructure
facilities are being developed by the entrepreneurs which are
considered necessary to operate their units in SEZs. But no social
utilities like medical centre, housing facilities, swimming pool,
creche, club house, playgrounds, bus bays etc. are found to be
developed by the selected SEZs.
S.No.
Name of the SEZs ProcessingArea
Non-processingArea
1.M/S DLF Cyber CityDevelopers Ltd. 50 50
2. Reliance Haryana SEZ Ltd. 50 50
3. Gurgaon Infospace Ltd. 50 50
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Table 6.2: Infrastructure Facilities Available in the Selected SEZsS.
No.Infrastructure M/s DLF Cyber
City DevelopersLtd.
RelianceHaryana SEZ
Ltd.
GurgaonInfospace Ltd.
1. Well developed roads Yes yes yes2. Water treatment plant (Water Supply
lines)Yes yes yes
3. Sewage and garbage disposal plant Yes yes yes4. Electrical, gas and petroleum natural
gas distribution networkYes under
constructionyes
5. Security office Yes yes yes6. Effluent treatment plant not required yes not required7. Office space Yes yes yes8. (Car) Parking Multi-level Yes yes yes9. Telecom and other communication
facilitiesYes yes yes
10. Rain water harvesting plant Yes yes yes11. Power (Including power back up
facilities)yes yes yes
12. Air conditioning yes yes yes13. Swimming pool no no no14. Fire protection system / Fire station yes yes yes15. Recreational facilities (Club house,
Indoor and Outdoor games,Gymnasium)
no no no
16. Automated Teller Machines (ATMs) yes yes yes17. Crèche no no no18. Medical centre no under
constructionno
19. Shopping arcade/ retail space no underconstruction
no
20. Business / convention centre yes underconstruction
yes
21. Common data centre yes yes yes22. Housing or service apartments no under
constructionno
23. Playgrounds no underconstruction
no
24. Bus bays no no no25. Food services, Cafeteria, Food court,
Restaurants and/or hotel and/or serviceapartment, Coffee shops, Canteens andcatering facilities
coffee shops,canteen and
cafeteria
coffee shops,canteen and
cafeteria
coffee shops,canteen and
cafeteria
26. Landscaping and water bodies yes yes yes27. Clinic and/or medical centres and/or
hospitalno no no
28. Wi-Fi or/and Wi-wax services yes yes yes29. Drop and micro irrigation system no no no30. School / technical institute / educational
institutenot required no not required
31. Rail head not required no not required32. Access control and monitoring system not required yes not requiredSource: Field Survey 2008-09.
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6.1.6 Respondents’ Views Regarding Infrastructure Facilities(Employees Survey)
In the employees survey, respondents were asked to answer
how satisfied they are on a 6-point scale with the infrastructure
facilities available in the zones. Their responses are summarized in
Table 6.3. It is found that 185 employees (18.4 per cent) were either
most satisfied or very satisfied, while 724 employees (72.1 per cent)
were either satisfied or somewhat satisfied. Only 95 employees (9.5
per cent) were either dissatisfied or totally dissatisfied, It is evident
that an overwhelming proportion of respondents are found to be
most satisfied to somewhat satisfied, leading us to consider them
as satisfied. The infrastructure facilities in the zones are found to
be better than DTA as SEZs are well planned industrial estates.
Table 6.3: Satisfaction Level of Respondents with Infrastructure Facilitiesin the Selected SEZs.
No. ofRespondents
M/s DLF CyberCity Developers
Ltd.
RelianceHaryana SEZ
Ltd.
GurgaonInfospace
Ltd.
Total
Most Satisfied 16(4.4)
05(1.1)
06(3.0)
27(2.7)
Very Satisfied 58(16.0)
56(12.7)
44(22.0)
158(15.7)
Satisfied 223(61.4)
242(54.9)
85(42.5)
550(54.8)
SomewhatSatisfied
40(11.0)
85(19.3)
49(24.5)
174(17.3)
Dissatisfied 26(7.2)
42(9.5)
13(6.5)
81(8.1)
Totally Dissatisfied 0(0.0)
11(2.5)
03(1.5)
14(1.4)
No. of SampledEmployees in theSelected SEZs
363(100.0)
441(100.0)
200(100.0)
1004(100.0)
Source: Field Survey 2008-09Note: The figures given in parentheses denote column-wise percentages.
155
6.2 SEZs and Technology Upgradation
In the global economy, continuous improvement in product,
process, technology and organization is necessary to sustain the
tough competition. Firms, are under huge pressure to innovate and
restructure their operations to achieve efficiencies in production.
But they often lack the resources to do so. SEZs make favourable
situations for technology transfers and learning for firms not only
by promoting interactions, inter-linkages and economies of scale
but also by facilitating the insertion of the firms into global supply
chains. There are three channels through which SEZs are expected
to contribute towards technological development:
1. Technology transfer
2. Technology creation
3. Technology spillover.
6.2.1 Technology Transfer and SEZs
Technology transfer is an important mean by which
developing countries gain access to technologies that are new to
them. SEZs offer a highly conducive investment climate to attract
export-oriented FDI by making up for infrastructural deficiencies
and procedural complexities that characterize developing countries.
Foreign direct investment is associated with the transfer of
knowledge in two forms; one, the ‘hard’ possibly patentable,
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aspects of production technology, like the specification of goods
and the mechanistic details of their manufacture; and two, the ‘soft’
aspects of business processes, such as organization, making and
other type of managerial knowledge and skill (Stewart, 1977), while
the transfer of hard technology may be formal and contractual, the
latter include all the channels by which managerial knowhow and
techniques can be passed on, such as on-the-job learning and
demonstration effect (Ahiakpor, 1990). Technology transfers could
be realized through three mechanisms;
(A)Foreign Direct Investment,
(B)Technology imports, and
(C)Acquisition of capital goods.
Most technology is transferred between developed and
developing countries through these modes of commercial
technology transfers.
6.2.1.1 FDI and Technology Transfer
Literature suggests that FDI is a means for allowing
developing countries to acquire the most advanced production
technologies to allow for infusion of organizational and managerial
skills. Table 6.4 summaries the information collected regarding
the share of FDI in total investment in the selected SEZs.
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Table 6.4: Share of Foreign Direct Investment in Total SEZ Investment inthe Selected SEZs as on 31st March, 2008
(Value in Rs. Crore)
Source: Ministry of Commerce & Industry, Department of Commerce,Government of India.
Table 6.4 reveals that no FDI took place in Reliance Haryana
SEZ Ltd. and Gurgaon Infospace Ltd. up to 31.03.2008. As on 31st
March, 2008, an investment of Rs. 222.52 crore was in DLF Cyber
City Developers Ltd. Out of it, Rs. 2.96 crore was FDI which
accounted for 1.33 per cent of the total investment in the zone.
Total investment that took place in the selected SEZs was Rs.
931.02 crore up to 31.03.2008. Only 0.31 per cent of FDI took
place in these zones out of the total investment. Thus, technology
transfer through FDI is limited as found in the case of Reliance
Haryana SEZ Ltd. and Gurgaon Infospace Ltd. where there was no
FDI.
S.No
Name of SEZs Investment MadeExcluding FDI
FDI MadeTotal
Investment(IncludingFDI) Made
31.03.2008By
DevelopersBy
UnitBy
DevelopersBy
UnitTotal
1.M/s DLF CyberCity DevelopersLtd.
205.54 14.02 0 2.96 222.52
2.RelianceHaryana SEZLtd.
415.00 0 0 0 415.00
3.GurgaonInfospace Ltd. 293.50 0 0 0 293.50
Total 914.04 14.02 0 2.96 931.02
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6.2.1.2 Technology Imports and Technology Transfer
Technology imports are formalized through payments and
controls. Many scholars argue that technology imports have been
the most important factor in explaining the rapid economic growth
of Japan, Taiwan, South Korea and many other industrialized
countries. During the survey, an attempt was made to know from
the entrepreneurs whether they imported technology and
technology related payment during the last one year. Their
response was positive as summarized in Table 6.5.
Table 6.5: Technology Imports by Selected SEZs
S. No. Name of SEZs No. of Units Technology Imports
1. DLF Cyber City Developers Ltd. 11 Yes
2. Reliance Haryana SEZ Ltd. 0 Yes
3. Gurgaon Infospace Ltd. 5 Yes
Source: Field Survey 2008-09.
It is clear from the table that all the selected zones are
importing new technologies. Thus, technology transfer through
technology imports is relatively more common in the selected zones.
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6.2.1.3 Acquisition of Capital Goods and Technology Transfer
The most popular mode of technology imports in the zones is
the use of imported machinery. Technology transfer is the most
common form of technology upgradation. Most of the firms are
updating their technology through imports of machinery. During
the survey, an endeavour was made to know from the
entrepreneurs whether they import machinery. The summary of the
information collected is presented in Table 6.6.
Table 6.6: Import of Machinery by Selected SEZs
S. No. Name of SEZs No. of Units Import of Machinery
1. DLF Cyber City Developers Ltd. 11 Yes
2. Reliance Haryana SEZ Ltd. 0 Yes
3. Gurgaon Infospace Ltd. 5 Yes
Source: Field Survey 2008-09.
Table 6.6 clearly explains that all the selected SEZs are
importing machinery to update their technology. Thus, technology
transfer also takes place through acquisition of capital goods.
6.2.2 Technology Creation and SEZs
Technology transfers cannot help building technical
capabilities. This requires assimilation and adoption of imported
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technology, which highlights the need for having well developed
in-house R&D capabilities. It is, therefore, important to analyze
R&D activities performed by the selected SEZs. The findings are
summarized in Table 6.7.
Table 6.7: R&D Activities in Selected SEZs
S.No.
R&D Activities DLF Cyber CityDevelopers Ltd.
RelianceHaryana SEZ
Ltd.
GurgaonInfospace
Ltd.1. R&D Department in
the zoneNo No No
2. Linkage with anygovt. R&D institution
No No No
3. Foreign technologyagreement
No No No
4. Spending on R&D inzone
No No No
5. Percentage spendingon R&D out of totalturnover
No No No
6. Personnelemployment for R&Dactivities
No No No
Source: Field Survey 2008-09.
Table 6.7 demonstrates that R&D activities find no place in
the SEZs under study.
6.2.3 Technology Spillovers and SEZs
Learning and knowledge created in SEZs is ultimately passed
to domestic firms supplying to the SEZ firms through backward
and forward linkages. There are two main channels of backward
linkages: utilization of domestic raw material inputs and
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subcontracting arrangements with domestic firms. These
arrangements would integrate the zone into the regional and
national economy by allowing domestic firms to step in as suppliers
to the SEZs firms and would, in turn, upift regional development by
creating demand for local products and services, and transforming
technology to the local economy. Ultimately, the domestic supplier
firms would also mature to compete in the international market
(Aggarwal, 2008b). Knowledge spillover and demonstration effects
thus, act as a catalyst for learning and human capital development.
Forward linkages are said to arise if exports are allowed to the local
market. This induces introduction of new products and new activity
in the domestic mainland and thereby promotes industrial
diversification. It is found in the literature that forward linkages are
not relevant in the context of SEZs since these firms, in general, are
not allowed to sell in the domestic market (Warr, 1989).
Furthermore, FDI triggers off technology transfer and spillover first
within the zone and then rest of the country through various
channels such as copying, reverse engineering and movement of
workers and managers between foreign and domestic companies.
Finally, factors such as on-the-job training of the labour, exposure
to opinions of punctuality, quality control and meetings deadlines
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have an effect on how growth of the SEZs translates into skill
upgradation of labour and higher earnings. All these effects
upgrade and widen the domestic knowledge base and upgrade the
sectoral and regional innovative system (Aggarwal, 2008b).
Significant spillovers to the domestic economy are expected to take
place through demonstration effects and labour turnover. These
spillovers take place when;
Labour moves to non-zone areas;
SEZ entrepreneurs set up units in the domestic mainland;
and
SEZ entrepreneurs interact with other SEZ producers and
domestic mainland entrepreneurs in various forms such as
trade bodies, business chambers and export promotion
councils.
All the SEZs in the sample have units in domestic tariff areas
as well. Furthermore, all the units are associated with business
chambers, export promotion councils and trade bodies. Therefore,
the possibility of knowledge and technology spillovers cannot be
ruled out in the selected SEZs.
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6.3 SEZs and Skill Formation
One of the positive impacts expected of SEZ development is
work-force upgrading and skill development both through formal
training and apprenticeship programmes and ‘learning by doing’.
There are various modes by which SEZs can positively contribute to
skill formation.
One is the firm level activity whereby the host country labour
force acquires skills from within the firm through training and
learning by doing on the job (Kusago and Tzannatos, 1998).
So, Zone units can directly affect the skill formation by providing
additional training on-and-off the job to the workers. In some
cases, local employees of multinational corporations (MNCs) are
sent to their headquarters abroad or elsewhere for middle and more
often, higher management training and advanced technician
training.
The second method involves uplifiting of the education system
to fulfil the needs of the zone units. In the Shenzhen SEZ (China),
Sri Lankan SEZs and Mexican Maquiladoras, institutes are set up
to improve technical and vocational skills of workers in the zone. In
Taiwan, some co-operative training programmes between
schools/colleges and the enterprises in the SEZs are being
164
developed. These programmes aim at providing technical education
at the factory rather than at the institution. Zone units may also be
establishing training institutes to give training to the workers to
create the relevant pool of skilled workers.
Skill formation for the poor unskilled workers also occurs
through assimilation of industrial discipline. This might increase
the welfare of poor unskilled workers by providing a lot of job
opportunities available to them. Improved skills and productivity
increase the earning capacity of workers. Given the high labour
turnover rate in the SEZs, domestic firms can benefit from this
training by hiring workers previously employed in the zone firms.
In the long time, the SEZ would lead to the creation of a
macro environment in which returns to education and skill
development are very important and high. It is the main component
of the skill formation effect of SEZs. Through technology transfer
and capital investment, Zone units raise the demand and wages of
skilled workers which, in turn, provide positive incentives for
educational attainment and skill formation.
Finally, SEZs are providing opportunities for a highly
conducive investment climate to attract FDI by making up for
infrastructural deficiencies and procedural complexities that
165
characterize developing countries. FDI brings technology transfer,
managerial and other skills (such as marketing and distribution),
access to markets and training for staff. Foreign entrepreneurs may
set an important example for potential domestic entrepreneurs by
demonstrating that the right combination of managerial, technical
and marketing know-how can allow organizations to profitably
enter world markets (Hoffman, 1991; Rhee and Belot, 1990;
Johansson, 1994). The export knowledge of foreign firms operating
in SEZs is expected to spillover to domestic firms in SEZs and then
to those in the domestic economy. With such linkages SEZs may
capable firms in the rest of the economy to master production,
distribution and marketing skills important for enhancing global
competitiveness. In such a way, SEZs can play a crucial role in
upgrading domestic entrepreneurial skills.
One of the important by-products of SEZs is human
capital formation or skill upgradation. This goal is truly realized
only if zone units provide additional training on-and-off the job. The
following analysis focuses on training of employees in the selected
SEZs.
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6.3.1 The Entrepreneurs’ Perspective
During the survey, an effort was made to know from the
entrepreneurs about the training facilities provided to the
employees and the mode of imparting such training to them. The
response thus obtained is summarized in Table 6.8.
Table 6.8: Training Facilities Provided to the Employees in SelectedSEZs
S. No. Training FacilitiesM/s DLF
Cyber CityDevelopers
Ltd.
RelianceHaryana SEZ
Ltd.
GurgaonInfospace
Ltd.
1.
2.
(a)
(b)
(c)
(d)
(e)
Training for workers
Mode of training
Send employees toforeign countries
Foreign technicianvisited the company
External staff usedfor in-house
Staff with trainingresponsibilities onpayroll
A separate trainingdepartment.
Yes
Sometimes
Yes
Yes
Yes
Yes
Yes
Sometimes
Yes
Yes
Yes
Yes
Yes
Sometimes
Yes
Yes
Yes
Yes
Source: Field Survey 2008-09 .
167
It can be observed from Table 6.8 that the selected SEZs
under study provide the requisite training to their employees. They
use different methods to uplift their skill. It is found that in certain
cases, employees in SEZs receive more substantial training but this
is typically restricted to the higher end of skills. Sometimes, local
employers from these zones are sent abroad for higher management
training and advanced technical courses. But this practice is not so
commen in all the SEZs. In most cases, in-house training is
imparted. The study identified that the selected SEZs have separate
training departments. There is also evidence that foreign
technicians are invited to impart training to the workers in the
selected SEZs.
6.3.2 The Employees’ Perspective
To analyse the impact of SEZs on skill formation, various
questions were put to the employees. Out of total 1004 employees,
826 of them (82.27 per cent) reported that they have undergone a
formal training. The percentage for the female employees acquiring
training was 77.61 per cent, whereas it was 82.99 per cent in the
case of male employees.
It is generally argued in the literature that such training is of
short duration and covers assembly type of activities only. Due to
168
job specific training, workers skill sets and their chances of getting
better jobs are not enhanced. During the survey, an attempt was
made to know from the employees whether they have better job
prospects outside the zone after working in SEZs. Out of the total
1004 employees, 733 of them (73 per cent) feel that their job
prospects are better now. They feel that even without any formal
training their chances of getting better jobs improve due to their
zone experience.
6.4 Summing-up
The previous discussion observed that the contribution of
selected SEZs in infrastructure development and technology
upgradation has been quite limited. All the selected SEZs under
study have developed only those infrastructure facilities which are
mainly for their captive use and they totally neglected social
infrastructure. These SEZs have been able to fetch only a small
amount of FDI, which is acting as a trigger off for technology
transfer and spillover. No R & D activities are taking place in the
selected SEZs to build an innovative atmosphere. The skill
formation also appears to be limited because no educational
institution was set up by the SEZs to improve the education system
in the society, although all the selected SEZs impart on-the-job
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training to their employees and sometimes they also send their
employees to foreign countries to acquire advanced skills. Thus, it
can be said that there is no well-defined infrastructure
development, technology upgradation and skill formation in the
selected SEZs.
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