Stiff political opposition and violent protests against special economic zones in several parts of the country could not deter the Centre from going the whole hog to clear such enclaves as almost all the well-known industrial houses joined the bandwagon in 2007.

Nandigram remained in headlines throughout the year despite the West Bengal government cancelling the SEZ project of Indonesia's Salem Group in January following violence and political pressure on Chief Minister Buddhadeb Bhattacharjee.

While the fire in Nandigram could not be doused and farmers' protests erupted in other states such as Maharashtra, Orissa and Haryana, the board of approval in the commerce

Ministry picked up pace of clearing the SEZ proposals, especially after the Uttar Pradesh elections early this year.

As the number of such enclaves approved was about to touch 600, the United Progressive Alliance government at the Centre did take damage control measures to convey an impression that it was sensitive to farmers' outcry over land acquisition.

Separate ministerial panels examined the issues at the heart of controversies. An Empowered Group of Ministers, headed by External Affairs Minister Pranab Mukherjee, decided to impose a ceiling of 5,000 hectares on multi-product zones, while the one headed by Rural Development Minister Raghuvansh Prasad Singh came out with proposed changes in the Land Acquisition Act and Resettlement and Rehabilitation Policy.

The government recently introduced in Parliament separate bills for amending the Land Acquisition Act and giving a statutory back-up to the R&R policy. The proposed changes in law and policy provide for paying market related prices to land owners displaced by the zones.

According to new norms, states will be prohibited from compulsory acquisition for bulk of the land which the promoters would need to acquire by negotiating mutually-agreed price with the farmers. "The changes also provide for making the farmers stakeholders in the project," Commerce Secretary and BoA Chairman Gopal Pillai had said earlier.

The impact of these changes has started showing in pockets where promoters are paying market-linked price to farmers. As the price shot up on heavy demand for land, those farmers selling their land seem to be laughing all the way to the banks. A recent case in point is villagers in Khed-Shirur taluqas of Pune district where as many as 1,269 of them are awaiting a total payment of Rs 212 crore (Rs 2.12 billion) for 1,249 hectares of non-cultivable land sold for an SEZ project.

The moves aimed at placating farmers followed not only protests from them but also strong resentment by a Parliamentary Standing Committee over the way the SEZ policy was being implemented.

"The Committee feels that undue haste in approving SEZ proposals and the consequent proliferation of SEZs have contributed to resistance against the policy," chairman of the panel, Murli Manohar Joshi, had said.

Despite the Centre showing its resolve to go ahead with the policy of SEZ promotion, backed by an Act of Parliament, several state governments either completely shunned SEZs or sent only a few proposals fearing a backlash. Uttar Pradesh, Bihar and Punjab fell in this category.

On the other hand, Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra and Haryana went all out to promote the zones both in the private sector as also joint ventures between the state industrial development corporations and private parties.

The resentment to the controversial zones was not limited to opposition political parties. There was enough murmuring within the Cabinet with Finance Minister P Chidambaram raising concern over the revenue losses, estimated by his ministry at more than Rs 100,000 crore (Rs 1,000 billion) over the next few years.

The commerce ministry has, however, maintained that the 'notional revenue loss' would be more than made up by the projected investment and the resultant employment generation.

The ministry expects investment of the order of Rs 2,85,279 crore (Rs 2,852.79 billion) and 21 lakh new jobs by December 2009.

While Commerce Minister Kamal Nath seemed to have had the last laugh as the government went ahead with SEZ policy, his junior minister Jairam Ramesh took a dig at the way SEZs were promoting a 'digital divide' in the country.

"SEZs appear to be increasing the digital divide. I have always felt that the true value of SEZs must be judged by the extent to which they help promote labour-intensive manufacturing," Ramesh had said.

His comment was based on some hard facts about the way IT firms were making a beeline to get into tax-free zones so that they can continue enjoying tax benefits even after 2009 when the Software Technology Parks of India scheme expires.

Of the 172 SEZs notified, as many as 118 have been cornered by the IT firms mostly in and around the software hubs of Bangalore, Chennai, Hyderabad, Pune and Gurgaon.

Most top IT firms, including Wipro [Get Quote], Infosys [Get Quote], Satyam [Get Quote] and TCS [Get Quote] have all lined up investments in SEZs. Billionaires Mukesh Ambani and K P Singh-promoted DLF lead the pack of business houses rushing for the zones. Both have planned mega SEZs in Maharashtra and Haryana, but were forced to rework their plans after the government imposed the ceiling of 5,000 hectares.

India's great rush for SEZs