chapter vi role of sezs in infrastructure...

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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;



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;



(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


(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,


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;



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;



(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


(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),


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


cafeteria


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.

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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


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


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

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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

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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 .

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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

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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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chapter vi role of sezs in infrastructure...

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