The Lok Sabha on Tuesday passed the special economic zones Bill, 2005 after the government succumbed to pressure from the Left parties and deleted a clause giving powers to states to put in place a special labour law dispensation for units and developers of designated areas.
The Bill will now be sent to the Rajya Sabha for its approval, where the Left parties intend to seek further watering down of certain provisions of the Bill.
Commerce and Industry Minister Kamal Nath agreed to delete Section 50 (b) of the Bill that proposed to vest the powers with states to exempt SEZs from provisions of state laws related to trade unions, working conditions, provident fund, employers' liabilities, maternity benefits and invalidity and old-age pensions.
The clause also proposed that states could provide special legal benefits to SEZs.
The Left parties had opposed the flexibility on the ground that it would adversely affect job security of the workers.
Representatives of the CPI(M) parliamentary party had met Pranab Mukherjee, the Union Defence Minister, and Nath on Monday to seek for deletion of certain clauses from the Bill.
Commerce department officials said the deletion of the clause will not affect the flexibility given to SEZs as the states can on their own bring about legal changes.
In fact, in an attempt to woo investment, some states are in the process of enacting special labour laws for SEZs.
CPI(M) sources said that the Left MPs would seek deletion of section 49 which empowers the Centre to exempt SEZs from the application of the proposed law or any other Central law.
In addition, the Centre can provide a special dispensation under the laws to any SEZ. The Left parties also wanted another amendment to section 3 to ensure that the state governments were not bypassed while setting up SEZs in their respective areas.
Winding up the discussion on the Bill, which was passed by a voice vote, Nath assured that the government would not allow any violation of labour laws within SEZ and the umbrella legislation was aimed at stepping up investment, both domestic and foreign, besides employment generation.
Nath said even though the Bill provided the mandatory sovereign right to set up SEZs anywhere in the country, the Centre would always consult and collaborate with state governments while setting up the zones.
Left leaders, however, said that the assurances from the minister were not sufficient indicators of the government's intention to protect the interests of the workers.
'We support the idea of SEZs but we do not want any dilution of the legal safeguards available to them. We also don't want any law to affect the federal structure of governance in the country,' the CPI(M) sources said.
Nath said the new law would provide a 'big push' to exports and foreign direct investment. The government is hopeful of achieving a foreign direct investment of $2 billion during the next three years and an additional employment of 50,000 over the next one year.
'This landmark legislation will provide a long-term and stable policy and expeditious single-window clearance facilities for setting up SEZs,' Nath told reporters after the Bill was cleared by Lok Sabha.
At present, there are 11 functioning SEZs in the country, of which seven have been set up by the Centre.
Though approvals for 35 greenfield projects have been granted none of them have taken off due to uncertainty over the policy regime in the future. The Bill seeks to address these concerns.