Special Economic Zones (SEZs) date back to 1929 when these were set up in Spain with the intention of increasing exports by adding value to the raw material available in the country. In the 1960s, the International Monitory Fund (IMF) and the World Bank identified SEZs as a tool for penetrating Third World economies. Shenzhen, the first SEZ established by China in 1979, was a small village. At present, it is a city with a population of over 6 million. The advent of SEZs in India in 2000, with the conversion of Export Processing Zones (EPZ) in Kandla, Surat, Cochin, Santa Cruz, Falta, Chennai, Visakhapatnam and Noida, ushered in a new era.

The main objectives of the SEZ policy include (a) generation of additional economic activity (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; and (e) development of infrastructure facilities. Despite being part of the neo-liberal agenda for industrialisation and development, SEZs are currently a matter of public concern and intense debate, primarily on the question of land acquisition and the displacement of the agrarian community. 

With respect to labour administration, the most significant aspect of the overall policy to implement SEZs is the relaxation of most of the fiscal and executive powers vested in the state, transmitting these powers to Development Commissioners (DCs) appointed by the centre without any defined accountability.

The function of the DC has been defined in Section 12 of the Act. The Act does not directly address labour-related issues, which are governed by the existing labour laws under designated agencies as per the relevant Act. However, Rules 5(5)(e), (f) and (g) call upon the state governments to endeavour to delegate power to DCs under the Industrial Disputes Act 1947 (No 14 of 1947), with relation to the units in the SEZs, the workmen employed by the developer and the declaration of SEZs as public utility services. Such a delegation, however, is inconsistent with the parent Act.

In enacting the state-level SEZ Acts, the state governments of Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh and Maharashtra have proposed to seek relaxation in some provisions of the central laws, so as to facilitate the setting up of SEZs and Special Enclaves in their respective states. These proposals broadly relate to regulating the working hours, empowering the DC to fix minimum wages, making provisions for allowing women workers to work night shifts, etc. The views of the central government on these bills are generally based on the following principles: (a) the provisions framed for ensuring safety and health aspects of the workers need not be relaxed; (b) the provisions of the central Acts, which are mostly implemented by the central machinery, need not be relaxed by state governments; (c) the provisions in the state Bill should not be in contravention to the provisions in the central Bill on the same subject, at present under consideration, such as the provisions for the employment of women in night shifts under the Factories Act 1948; (d) the principles enshrined in the National Common Minimum Programme with regard to hire-and-fire, and the amendment of labour laws through consensus should be scrupulously observed; and (e) the powers and functions of the state government, in which there is no provision to further delegate such powers and functions, should not be allowed to be delegated further.

In addition to the functions of the DC specified in the Act, the Rules provide colossal power to him disproportionate to the functions assigned. The DC has been given overall authority of the `deemed foreign territory` in the name of the SEZ, where even the fundamental right to movement of an Indian citizen has been curbed. Apprehensions have been expressed that such unbridled power without accountability will be utilised by the developers/ management to squeeze out all democratic movement, including the right to form associations and unions, and the right to move freely as mandated under Article 19 of the Constitution.