Sunday, April 20, 2008

From SEZs to ITIRs.....

Special Economic Zones have come to represent the two faces of a rapidly expanding Indian economy. One hand is the rapid growth of a dynamic, modern economy and on the other is the scarcity of resources and inequity in society. In Kerala, SEZs have been a touchy subject as well as a result of the strong Communist feeling in the State as well as a paucity of land. So far, only 11 SEZs have been notified in Kerala – a fraction of the number achieved by its three Southern neighbours. Of these, only the ones in Technopark and Infopark have started operating as IT/ITES SEZs. With the expected demise of the incentives to IT/ITES firms under the STPI scheme in 2009, the importance of SEZs in attracting investments is only set to increase. (While the STPI benefits may be temporarily extended due to industry pressure, SEZs will be the long term destination.)

A few days ago, the Union Government introduced the idea of Information Technology Investment Regions (ITIRs). These are designated areas with an extent of at least 40 Square Kilometres (10,000 acres) in which a combination of IT/ITES industries, electronic hardware manufacturing facilities and infrastructure facilities. The State Government would ensure that all physical infrastructure and utilities including power, water, roads, transportation, sewerage and effluent treatment facilities are provided. The Central Government would facilitate the development of national highways, airports and rail link to the ITIRs. Such regions could include integrated townships, SEZs and industrial parks, amongst others. The availability of social infrastructure in the integrated townships would allow these regions to attract investment, create employment opportunities, propel economic growth and simultaneously reduce the pressure on existing urban centres.

The ITIRs would not offer any tax sops or fiscal incentives per se, but provide an excellent infrastructure and investor-friendly policies. These regions would be developed in a phased manner through the Public-Private Partnership (PPP) route, and the State Governments would select the developers and co-developers of such projects.

The Union Government seems to have realised that creating hundreds of small SEZ scattered across the nation is not an efficient option in terms of land use, infrastructure or even urban planning. Consider for example, two IT/ITES SEZs which are 50 Kms apart. To ensure that the projects take off, land connectivity and utilities have to be provided for both separately. Both projects will have to have independent electricity sub-stations, water and sewage treatment plants etc, all of which waste precious land. Now consider if the two SEZs were right next to each other, if not as one project. The facilities including road access could be unified. Not only would the cost be lower but less land would be needed for utilities and other non-processing facilities. Another aspect is the debate about the cost-benefits of SEZs where it is argued that the Government is foregoing immediate returns (taxes) for expected long term benefits (employment, development etc). Both these issues are being addressed by the ITIRs where all the processing facilities are being brought together in one region and served by common social and supporting infrastructure. The hope is that the mere availability of quality infrastructure and investment-friendly policies will attract investors, even in the absence of monetary sops.

40 percent of the area of the ITIR – about 4000 acres – needs to be developed into processing areas. It might be possible to have this seemingly massive area in several parcels, all of which lie inside the boundary of the ITIR. By having social infrastructure – in the form of residential units, shopping malls, hotels, hospitals and schools – located within the ITIR, through the development of integrated townships, the idea is to avoid creating copies of the congestion now being experienced in Bangalore, Chennai or Gurgaon. And using the PPP route ensures that most of the initial investment is made by private developers.

The Government of Kerala already owns nearly 1000 acres of land – already developed as or to be developed as IT parks – in Trivandrum. This is made up of the three phases of Technopark along with the Technocity project. The latter is the largest IT project in Kerala, with investment estimated at upwards of Rs 6000 Crores and a projected 100,000 employment opportunities generated by 2012. Technopark and Trivandrum account for over 70% of Kerala's IT industry. A National Highway and main State Highway – both 4-lane – and a main railway line pass through the area, while an International Airport and deepwater sea port are only a few kilometers away. And all this within the suburbs of a metropolitan city. It doesn't take rocket science to realise that the perfect place in Kerala for an ITIR lies in the north-western suburbs of Trivandrum.

Ideally, the ITIR can extend along the National Highway from Technopark Phase II till the Mangalapuram Junction which marks the Northern boundary of Technocity. The central axis will then deviate along the Mangalapuram – Pothencode road and then onwards to join the M.C. Road at Venjaramoodu, stretching for about 20 kilometers overall. This will encompass all of the existing IT developments as well as areas along the Mangalapuram – Pothencode – Venjaramoodu axis which have large, relatively uninhabitated plots which can be aggregated to provide the 3000 Acres of land needed for the ITIR. Rather than extend the ITIR all the way along the National Highway to Kollam, this approach ensures that it never lays more than 20 Kms from the International Airport or from the core urban areas of the city. With the development of the NH and the M.C. Road already in progress, the State Government only needs to enhance the interlinking roads. Planning further ahead, the Mangalapuram – Venjaramoodu link road can be extended via Nedumangad to Balaramapuram or Neyyatinkara to form the Outer Ring Road for Trivandrum. As facilities like electricity and water supply and sewage treatment are already planned for the Technocity project – which is an integrated township – it will only be required to scale up these plans to meet the demands of the first phase of the ITIR.

View Larger Map

Thankfully, this seems to be one wave that Kerala seems intent not to miss. The Government has already decided to develop an ITIR at Trivandrum, according to reports quoting Dr. Ajay Kumar, the IT Secretary. No prizes for guessing where it will come up. Trivandrum is already the leader among Tier – II IT/ITES destinations (like Chandigarh, Bhubaneshwar, Jaipur and Mysore). Unlike the existing IT hubs, it is still free of congestion and can offer an attractive swathe of land, free of major habitation yet close to the city and its facilities. Morever, Kerala's relative paucity of existing SEZs can be used as a strength, to justify an ITIR to speed up the pace of development. If the current tempo set by the Government is kept up, there is a very good chance that one of the first ITIRs in India could indeed be set up in Trivandrum.

(The article was written for and will be published shortly in the first e-newsletter of the Trivandrum Development Front.)


  1. First of all appreciation for the effort to release a newsletter for TDF.

    ITIR seems to be a groundbreaking idea, especially since we now have in India, urban agglomerations which are disintegrating due to infrastructural glitches. I think the present area of interest in Trivandrum, the Kezhakkuttam-Mangalapuram superstructure harbours more than enough area for the ITIR. This area will encompass >150 sq km, from which 40 sq km for the ITIR wouldn't be a big deal, especially we have virgin stretches of earth in the corridors you have mentioned.

    So hopefully with the ITIR we would be taking a giant step forward in establishing a Gurgaon for Trivandrum. Kudos!

  2. The entire project seems tempting; but misses the sustainability principle that natural resources of land (including water, air, minerals, fuels etc.), which are gift of nature need to be used very carefully to maintain ecological balance and for use of future generation.

    1. Kerala being the most congested state after Pondicherry can not be compared with other states. Its per capita land holding is 0.13 hectre with cropable land at <0.10 hectare and cropping % at 125. Pondicherry has large barren land.
    2. The area identified and projected as unpopulated area has lush green coconuts and paddy fields. For every 1000 acres of cultivated land acquired 1,00,000 -1,25,000 coconut and other trees are cut down. That would permanently reduce coconut production by 8-10 lakh annually [even if half the land is coconut field Kerala will lose 40-50 Lakh coconuts annually]*. Kerala already is losing coconuts due to diseases, rubber cultivation, civil work and industrialization. Coconut is staple food, means to livelihood for small holders providing ancillary opportunities like production of coir, oil, coconut cake for export and cattle feed etc.
    3. The tender coconut sale initiated by government to promote coconut cultivation would be seriously affected by ‘en masse’ felling of coconut trees.
    4. The poorest of the poor still depends on coconut leaf for thatching roof and its residues for fodder, firewood, broom making etc.
    5. Carbon clearance: Trees contain stored carbon, that when cut down, release carbon dioxide. ‘The ‘greenhouse effect’ is a natural phenomenon in which certain gases, notably water vapor and CO 2, reduce the radiation of heat from the earth into space. This process causes the earth to be warmer than it would otherwise have been making, life more difficult. Forests and tree plantations are seen as part of the solution since they store carbon at rate 20 to 100 times more per acre than lawns and garden lands. The absence of canopy provided by trees too increases heat and evaporation considerably.
    (75% of the Carbon dioxide (C) emissions, the principal component of the green house gases are caused by Industrial processes. Tree cutting due to demand of land is responsible for 6.4 billion metric tons Carbon emissions annually.)
    6. Leveling of wet land and paddy fields has already affected water table around Kazhakoottam where well water was available at 10-15 feet depth, thus increasing demand for drinking water from main city.
    7. Along with the wetland destruction a number of vegetations and organisms supporting life are being destroyed. This and can never be recovered in future.
    8. The energy demand for the techno-park including street lighting, water use and transport is bound to cut into power-starving Trivandrum and Kerala.
    9. Food and human waste would complicate the waste disposal of Vilappilsala and Parvathyputhanar. Air pollution and dust rising may further it.
    10. Though the IT is being showcased as a futuristic and non-polluting enterprise, fine reading of the project indicates plans for industries, real estates, shopping malls, schools, business centres etc.
    Natural resources maintain ecological balance and support development in future.
    • "The most striking feature about modern industry is that it requires so much and accomplishes so little. Modern industry seems to be inefficient to a degree that surpasses one's ordinary powers of imagination. Its inefficiency therefore remains unnoticed."
    • "Ever bigger machines, entailing ever bigger concentrations of economic power and exerting ever greater violence against the environment, do not represent progress: they are a denial of wisdom that demands a new orientation of science and technology towards the organic, the gentle, the non-violent, the elegant and beautiful."
    • Though 1,00,000 jobs by 2012 is projected in project, national statistics show that less than 3% of India’s population is in salaried jobs, most being in government jobs and the share of private employment is 0.7% ie. 70 lakhs. Adding I lakh more jobs, if at all, would make it 71lakhs. The project outlay of 6000 crores in a term deposit may elicite 60 crores per month. This is enough to pay @Rs.6000/- per month to 1 lakh unemployed and employ them on sustainable developments.
    • In spite of States like Delhi identifying green belt and red belt areas for industry and agriculture, concentration of industry has generated congestion, effluence and migration of unidentifiable people from rural areas where agriculture can not engage them for more than 100 days spread in two cropping seasons. Being daily wagers, skilled and semi-skilled labour dwell in slums around the factories/ work shops often by the side of effluence.
    • Slums are nidus for all health and social problems

    There is a directive by the supreme court of India that State Governments and the statutory authorities must consider preventing further damage or injury to environment, irreparable human suffering and denial nature’s benefits to the future generation for halting unsustainable development projects. The hon’ble supreme court has also ruled that,-
    .. . We are, however, of the view that 'The Precautionary Principle' and 'The Polluter Pays' principle are essential feature of ‘Sustainable Development'. The 'Precautionary Principle' - in the context of the municipal law – means
    (i) Environmental measures - by the State Government and the statutory authorities - must anticipate, prevent and attack the causes of environmental degradation.
    (ii) Where there are threats of serious and irreversible damage, lack of scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation.
    (iii) The 'onus of proof' is on the actor or the developer/industrialist to show that his action is environmental benign. '
    None of these guidelines issued seems to have been followed by the authorities of the project or the collector of Trivandrum who supervises the land acquisition while discharging the statutory responsibility and therefore their action may not stand the test of law

  3. While appreciating the efforts of bloggers to project the needs of Trivandrum, and Kerala, one must balance the priority to all the routine sector classifications viz. the production sector (agriculture, fisheries, animal Husbandry, mining etc.) manufacturing (processing, fabrication etc.) and service sector (marketing, soft-ware, sales etc). If the production is unable to cope with the capacity of the manufacturing sector or its growth prospects, the latter it will be unable to keep pace with the demand created by service sector through aggressive marketing efforts. A supply constraint is bound to send price, spiraling, thus reducing its access to end user. Policy of “plenty production” must also focus on sustenance “plenty access” that must go beyond physical access or availability.
    While manufacturing and service sectors depend primarily on production, production requires inputs from nature / environment. Incidentally this is the sector where the poor and under – privileged mainly seek livelihood. As per Mr. Agyemang Amo, DG Poverty Guide, “As the poor earn their livelihood essentially from the environmental resources (from forest, pastures, fisheries and land), environmental degradation threatens them most. Sustainability and bio – diversity holds the key to equitable social security viz. food security, energy security and emotional security. The eminent scientist and parliamentarian Dr.M.S.Swaminathan suggested to “convert agricultural dark spots into industrial hot spots”
    The area identified and projected as unpopulated area has lush green coconuts and paddy fields. One has to see if there is the availability of land for the purpose. Kerala is already dependent on other sates for food and consumer needs. Kerala is the most congested state after Pondicherry and its development can not be compared with that of other states. Its per capita land holding is 0.13 hectre with cropable land at <0.10 hectare and cropping % at 125. In his publication entitled, Disasters of distorted urban development, former Supreme court judge and a legal luminary, Justice V.R. Krishna Iyer, remarked, “The purpose of development should not be to develop things, but to develop Man”. He further went on to add. “Urban development ignores the spread of hill-high garbage and chemicals in food and drink. This is a death sentence on hygiene and sanitation, humanity and destiny. Commenting on the mindless deevlopemnt craze of Kochi, he said, “Beyond the creative potency of our Constitution lies ubiquitous corruption that is at the root of bureaucratic barbarity. Contractors bribe those in office, deluge every cell of public business with graft and nepotism, and make money. Even the judiciary is slowly succumbing.”

  4. Prof. Jayakumar, I admire the level of detail in your arguments. But in a rapidly developing world, we cannot afford to be a coconut-farming backwater. The tens of thousands of high-paying jobs created by these projects will mean a massive infusion into the local economy and as many as 3 times the number of indirect jobs. As you said, Kerala cannot afford heavy industry given its density of population and ecological sensitivity. The only alternative is the service sector.

    If we loiter any longer, Kerala will end up as a State of unemployed people on State support, which has proven itself to be unsustainable as witnessed by our alarming deficit.

    Kerala has no future as an agrarian society with the density of population that we already have. Irrespective of whether an ITIR takes up a few square kilometers or not, this is an inescapable conclusion.

    Thanks for your inputs, looking forward to more.


Thanks for your comment, I will take a look at it and put it up at the earliest.