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Challenges Faced by Workers in SEZs in India

Special Economic Zones (SEZs) are regions that have been set aside in India with the goal of increasing foreign investment, encouraging export-oriented growth, and creating job opportunities. SEZs have the ability to increase economic growth and provide employment, but they can also present serious difficulties for employees.

Some of the challenges experienced by employees in India's SEZs are:

  • Poor working conditions:
    Many people who work in SEZs are employed in manual labour-intensive businesses like manufacturing. These sectors can have difficult conditions for working, including long hours, few breaks, poor housing arrangements, a lack of enforcement of occupational health and safety laws, and limitations on employees' ability to join or establish independent trade unions. Ironically, there is now no official report on the salary and social security situation for employees in SEZ enterprises.
  • Low wages:
    Low salaries that are frequently insufficient to cover workers' essential requirements are paid in SEZs. Many employees only have temporary contracts; thus, they are not covered by pensions or health insurance. The Minimum Wages Act is applied on paper in SEZs; however, workers are never paid, according to a number of empirical and existing research on SEZs. Only permanent employees receive the minimum pay in the majority of SEZ units; the remainder of the workforce, which is primarily made up of contract workers who do not receive the minimum wage, lives on less than the poverty line. Wage payments to employees may be made on a daily, monthly, or piece-rate basis. Companies minimise costs by hiring cheap labour, intensifying work, and putting more pressure on employees to meet higher production objectives as they compete in the global market.
  • Lack of job security:
    Many employees in SEZs have low job security since they are engaged on a temporary or contract basis. This translates to less job security for employees than for those in permanent roles. SEZs sometimes have significant turnover rates as companies relocate their operations to other regions or nations in pursuit of more advantageous labour or incentive packages. This causes employment instability for workers who could lose their jobs as a result of a company closing down or moving. Without warning, employees may be let go or fired, which can cause stress and a lack of financial stability.
  • Limited access to social services:
    As a result of the location of many SEZs in outlying locations, employees have little access to social amenities including transportation, healthcare, and education. For employees, especially those with families, this might pose serious difficulties.
  • Lack of representation:
    The labour market in India, especially in special economic zones (SEZs), is significantly influenced by trade unions. In order to encourage investment and exports, India has established SEZs that provide specific incentives and tax benefits to enterprises. Due to a number of variables, including low union density, flexible labour regulations, and the presence of multinational businesses that are less inclined to accept union action, trade unions have historically been weak in SEZs. However, in certain SEZs, trade unions have been instrumental in promoting employees' rights and obtaining improved pay and working conditions.

    In India, trade union organisation, registration, and operation are governed under the Trade Union Act of 1926. The same laws that apply to trade unions functioning in other areas of India also apply to those working in SEZs. The 2012 strikes at the Maruti Suzuki plant in Manesar, Haryana, are one significant instance of trade union involvement in SEZs. The unionised workers went on strike in favour of greater pay and job security.

    A senior manager died as a result of the violent demonstrations, and other workers were detained and accused of murder. Overall, trade unions' power and participation in SEZs in India are limited, and the government's and these zones' enterprise policies and practices frequently make it difficult for them to organise and represent employees.
  • Exploitation:
    There have been instances of child labour, forced labour, and human trafficking among the forms of exploitation of employees in SEZs. This is a serious worry, especially for groups who are already at risk, including women and children.
  • Gender-Based Discrimination:
    Women employees in SEZs frequently face discrimination in terms of compensation, job responsibilities, and promotions. The majority of women work as contract workers. The legal protection to which these employees are entitled under numerous social security legislation is not provided to them. Studies on SEZs in India show that single females are preferred for low-paying professions like cutting, checking, and packing as well as for assistance positions.

    According to research on working conditions in several Indian SEZs, many women in Indian EPZs also experience sexual harassment. According to a fact-finding report on the Falta SEZ in West Bengal, which is about 55 kilometres from the centre of Calcutta city and has an impact on both the environment and workers, there are no mechanisms in place to address the grievances of these female workers. Instead, these workers must endure a life of low pay, ongoing job insecurity, and hazardous working conditions.
  • Inability to organize Strikes:
    By implementing a policy that classifies economic activity within an SEZ as a "public utility service," a strike in SEZ units is deemed to be illegal conduct (according to Section 2 of the Industrial Disputes Act, 1947), which restricts the capacity of workers to organise strikes. States (such as Uttar Pradesh) have argued that SEZs are exempt from Section 22 of the Trade Union Act of 1926, which prohibits or excludes outsiders from holding office in labour unions.

    The creation of trade unions is prohibited, and the New Delhi administration has exempted SEZs from the majority of labour legislation. The labour department has been discouraged from inspecting SEZs in Andhra Pradesh. Employees worry that those who demonstrate will be fired right away. Workers in the Noida EPZ have been fired for calling for the application of labour regulations.
  • Shift of Power:
    The Ministry of Commerce and Industry in India is responsible for the creation and management of special economic zones (SEZs). A Development Commissioner may be appointed by the SEZ Act of 2005 to supervise the creation and administration of SEZs. To guarantee that labour rules are followed in SEZs, the Act also allows for the appointment of labour commissioners.

    The authority in SEZs has, however, shifted in recent years from labour commissioners to development commissioners. Concerns concerning the preservation of workers' rights in SEZs have arisen as a result of this change. Businesses operating in SEZs must abide by labour rules governing minimum pay, working hours, and health and safety requirements. Labour Commissioners are in charge of guaranteeing this.

    There is concern that employees' rights may be in jeopardy as a result of their authority being reduced. Conflict of interest has resulted from the power transition from Labour Commissioners to Development Commissioners. The promotion of commercial interests and luring of investments to SEZs is the responsibility of development commissioners, which may be done at the expense of employees' rights.
  • Jurisdiction of courts curtailed:
    The current criminal and labour courts no longer have as much authority. Instead, a Special Court established under the SEZ Act will also have authority under the labour laws. According to Section 23 of the SEZ Act, the state government has the authority to choose one or more courts to preside over any civil cases that arise in the SEZ and to announce evidence obtained there. No court other than the appointed court has the authority to hear any case or evaluate any evidence.

The operation of special economic zones (SEZs) in India depends heavily on labour. SEZs are intended to encourage economic growth by luring foreign investment, creating jobs, and boosting exports. However, worries about labour laws, worker rights, and social justice have also accompanied the expansion of SEZs.

In order to ensure that SEZs continue to support economic development in the nation, it is critical for policymakers, corporations, and civil society to address these issues, promote fair labour practises in SEZs, ensure the protection of workers' rights, and give workers access to channels for representation and collective bargaining. Additionally, it's critical to foster an atmosphere that fosters career advancement and upskilling while giving employees a sense of stability in their positions.

  1. Aggarwal, Aradhna. (2007). Impact of Special Economic Zones on Employment, Poverty and Human Development., Working Papers.
  2. Dr. Priyadarshini Sharma Dr. Rameshwar Jat, "SPECIAL ECONOMIC ZONES AND EMPLOYMENT GENERATION" Inspira-Journal of Commerce, Economics & Computer Science (Volume 07, No. 03, July-Sept., 2021, pp. 122-125)
  3. Douglas Zhihua Zeng, Global Experiences with Special Economic Zones  With a Focus on China and Africa
  4. Jaivir Singh, Labour Law and Special Economic Zones in India, WORKING PAPER SERIES Centre for the Study of Law and Governance Jawaharlal Nehru University, New Delhi April 2009
  5. Parwez, Sazzad. (2016). Labour and Labour Welfare in Special Economic Zones in India with Special Reference to Gujarat. South Asian Survey. 23. 135-157. 10.1177/0971523118765826.
  6. Paul, Saine, Special Economic Zones and the Exploitation Underneath (November 25, 2013). Available at SSRN: or

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