The Centre expects investments to the tune of Rs 300,000 crore (RS 3,000 billion) to flow into special economic zones with a potential to generate 3-4 million jobs, both directly and indirectly, by 2009 once all SEZs get notified, according to G K Pillai, commerce secretary, government of India.

"We have more or less stabilised the SEZ policy though there were some controversies,"he said, addressing a seminar on SEZs, organised by Industrial Economist and Observer Research Foundation.

There are 133 notified SEZs in the country now which have attracted investments to the tune of Rs 43,133 crore ($10 billion). Over 35,000 people have been employed directly in these SEZs, besides generating double the number of jobs indiretly to support SEZ operations .

We expect the investment to go up to Rs 100,000 crore (Rs 1,000 billion) creating 1 lakh jobs by the end of the year in the 133 notified SEZs, he added.

The government has formally approved 362 SEZs, of which 229 SEZs are yet to be notified. But all of these have procured lands and the documentation processes including non-encumbrance certification by the revenue department, and verification by development commissioners are underway for all of these SEZs.

However, the SEZ policy will require some changes. The major concern is the  management of multiproduct SEZs. These are like townships suitably changed to manage the SEZs effectively.

Pillai said bulk of the 362 SEZs have already acquired land -- measuring a little over 48,000 acres -- and these lands have already been acquired majorly by state industrial development corporations and private players.

"Considering the percentage of arable and cultivable land, the occupancy of SEZs in total agricultural land area will be 0.12 per cent and these 48,000 acres of land were vacant and dry land lying idle for several years," he added.

Noting that SEZs were a key driver for creating jobs and facilitating an environment for business, Pillai said that there would be a huge indirect tax revenue for the government by way of consumption by those employed in the units and high economic activity in SEZs would offset tax revenue loss. "A couple of studies were being done on SEZs by independent organisations," he added.

Welcoming the SEZ model of growth, S Narayan, former economic adviser to Prime Minister, pointed out that SEZs often create an arbitrage opportunity for the developer that needs to be shared with the farmers.

He called for an integrated approach incorporating  rehabilitation measures for promoting SEZ model of growth.

India's great rush for SEZs