Sustainable Operation of Special Economic Zones in India: A Comparative Study of Maharashtra and Goa

Abstract

In 2005, the Government of India (GoI) introduced the Special Economic Zone (SEZ) Act, which changed the way India attracted foreign investors who wanted to utilize the country's natural and human capital. Considerable scholarly literature has examined why investment has been located in particular areas of India and described the factors that contribute to initiating economic growth. Yet the observation inspiring this research was that some states have operational SEZs, while other states with approved SEZ plans see investors retreat from their commitments. Why do some states have operational SEZs and other states do not?

Focusing on the states of Maharashtra and Goa, this study explored information about the de-notification of zones in both states, leading to an examination of whether the factors that contributed to de-notification in Maharashtra were similar to those keeping Goa from having operational SEZs. I hypothesized that land acquisition practices, lack of physical infrastructure, and poor social infrastructure were key factors contributing to Maharashtra's de-notification and to Goa's struggle to create operational zones. The findings suggest that in order for SEZs to remain operational, comprehensive legislation must be put in place that addresses land rights, job training, and general education. Such a change would allow the residents in each state to participate more in the SEZ development scheme while mitigating India's endemic poverty.