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Impact of Trade Unions on Labor in the Special Economic Zones in India

The name "Special Economic Zones" or SEZ refers to a wide variety of zones, including business zones, industrial parks, free ports, and export processing zones. SEZ is a fully constructed infrastructure-integrated township. The SEZ Act was passed by the government in 2005, and the SEZ Rules were released in February 2006.

The government first launched the SEZ program in April 2000. The fabric of labor relations as it currently exists is being altered by these zones, nevertheless. Along with the significant investments being made in SEZs, instances of rights violations and unplanned labor outbursts are becoming more prominent.

The zones' labor laws are becoming more flexible, but the effects on actual labor have not been investigated. This article aims to highlight the current position of trade unions in these SEZs, the issues faced by them and how they work towards solving the issues faced by both, the workers as well as the internal conflicts of the trade union itself.

What are Trade Unions?

Trade unions are social organizations that work in order to protect and advance employees' economic and non-economic interests at work and in society at large. They contend for the rights and entitlements of the workers while also defending actual incomes through a range of tactics (industrial, legislative, political, etc.). They have given workers "voice" in the workplace and in society at large as well as established a variety of labor rights, such as employment security.

According to Section 2(h) of the Trade Unions Act, 1926:

Trade union means: "any combination, whether temporary or permanent, formed primarily for the purpose of regulating the relations between workmen and employers or between workmen and workmen, or between employers and employers, or for imposing restrictive conditions on the conduct of any trade or business, and includes any federation of two or more Trade Unions"[1]

Position of Trade Unions in the Indian Scenario

Unions have made safeguarding the interests of the workforce a top priority in India. Together with the unions, the government enacted labor laws. In India, unions haven't often been created to increase output and effectiveness. They were established, as in other countries, to eliminate labor exploitation and demand greater wages. But in contrast to governments in other countries, neither the Indian government�due to its socialistic leanings until 1991�nor the private sector businesses�thought of them as a way to increase worker productivity.

As a result, unions grew into formidable forces that began to make their presence felt, not by strengthening the economy, but by planning many national and corporate strikes. Furthermore, the employer relishes disparaging unions, opposing union formation, and taking a tough posture during collective bargaining. As a result of the government's delay and management's unjust practices, unions are upset. However, due to the lesser organizational structure, management is effectively expressing itself alongside the government.[2]

Trade Unions in Special Economic Zones

Economic reforms and the proliferation of Special Economic Zones are expected to create job opportunities for millions. But, it is seldom clear what kind of working conditions have emerged in these economic zones. The government offers substantial tax advantages and financial incentives to encourage industry, which may lead to the creation of jobs for millions of people both directly and indirectly.

Literature on SEZs from all throughout the nation demonstrates a common pattern: trade union activity is frequently outlawed and non-existent in economic zones. Studies on SEZs in India have shown a trend where trade union participation is severely restricted and almost non-existent.

Workers must put in long hours for no minimum pay to achieve tight criteria. Employees are fired from their jobs without reason or pay, suffer from illnesses connected to their jobs, and are not given maternity or paternity leave. Trade union activity has frequently been restricted under SEZ restrictions, in addition to enticements for potential investors such as reductions from import duties on machinery and temporary tax exemptions.

The Trade Union Act has been amended, limiting the ability of unions to establish them. Section 22 of the Act has been amended to allow up to 50% of a union's officers to be hired by the sector they represent. Because of this guideline, the national trade union leadership was able to establish unions in a variety of industries throughout time.

In the case of SEZs, however, the states have contended that it is exempt from Section 22 of the trade Union Act of 1926, which prevents or restricts outsiders from holding office in trade unions. The formation of trade unions is forbidden, and the New Delhi administration has exempted SEZs from most labor laws.

The Trade Union Act of 1926 and the Industrial Disputes Act of 1948 legalize workers' freedom to organize unions and bargain collectively, despite restrictions on certain jobs, particularly those in the government sector. In practice, however, SEZs limit the right to organize.[3]

Issues of the Trade Unions in the SEZs:

  1. Restrictions on entry in the SEZ premises:
    The primary impediment to trade union activity is trade union officials' admission to SEZ premises. According to trade union leaders, there have been instances where management has asked trade unions to visit the industrial facilities in the SEZ, then called the police and filed trespassing accusations. Some of these occurrences have been reported in Chennai. This restricted access is also utilized very effectively against employees in order to terminate them.

    Due to physical barriers, trade union access to workers was limited. In order to create rapport, trade unions attempted to meet workers in places other than their workplace. To further restrict worker contact with outsiders, manufacturers provide workers with transportation in corporate vehicles and drop them off at their work areas.

    The plight of migrant workers is far worse. The firm offers lodging for teenage migrant employees in several SEZs, who are strictly supervised even during non-working hours. These personnel are from the state's outskirts. The management takes advantage of their lack of familiarity with the location
  2. Rivalry among Trade Unions:
    On the ground, trade unions have rivalries because they are the workers' wings of diverse political views and ideologies. There are certain autonomous unions and unions that declare their independence from any political philosophy or conviction. Political party rivalry has an impact on labour unions in numerous fields, such as elections. Even on the job, trade unions strive for workers' trust, which is ultimately assessed by the number of enrolments and positions won in union elections. The challenge for trade unions is to overcome their own outdated beliefs and rivalries with other trade unions.
  3. Globalization Issues:
    As a result of the globalised world and their internal operations, trade unions face several obstacles today. The former has resulted in management's substitution of labor for capital; changing forms of employment resources, including the use of contract labor; management's hostile attitude and quest for downsizing; strong opposition to union formation at the enterprise level by management; and the government's indifferent attitude towards workers.[4]

Overcoming the Issues faced by the Trade Unions in SEZs:

  1. Trade unions developed an area:
    or region-based union strategy in SEZs because admission of unions is forbidden and employees in contact with unions face retaliation. These local or regional unions also promote communication between employees from various units. Such engagement fosters solidarity in times of need, and any unfair treatment of employees of one SEZ should ideally be met with resistance by the workforce as a whole.
  2. A breach between the workers and the locals of a particular industrial region or SEZ has occasionally been caused by management. Employers leveraged these distinctions to their advantage in order to quell workers' protests. Trade unions are therefore seeking to end this competition and foster peaceful ties.
  3. Increasing platforms of solidarity with societal forces that support workers is vital, according to the trade unions. These networks of support strengthen workers' confidence. Some labor leaders talked about building comparable networks of solidarity with the aid of youngsters, students, and other pro-worker organizations. Trade unions should harness the support of international institutions and agencies to denounce unfair labor practices at manufacturing plants.

In India, unions are still important now, just as they were in the early 20th century. Varied challenges have varied shapes because of internal trade union problems and governmental policies promoting globalization. Internally, unions have been split along political lines and are not a unified force. Due to their incapacity to defend workers' rights and lack of initiative in boosting the economic performance of the companies, some employees and management do not consider them as being useful.

Despite the severe suppression of the trade union movement, the trade unions have developed certain techniques throughout time to unite dispersed workers. To organize employees in production processes, whether they are in SEZs or not, there is no one set formula or method, and trade union strategies have thus far evolved in reaction to the particular circumstances they have come across while working among the workers.

  • [1] (Nov. 19, 2018),
  • Sodhi, J. S. (2013). Trade Unions in India: Changing Role & Perspective. Indian Journal of Industrial Relations, 49(2), 169�184.
  • Parwez, S. (2015). Modified Labor Welfare Measures for Special Economic Zone & Implications. Indian Journal of Industrial Relations, 50(3), 386�396.
  • Montesano, EPZ_India.vp, (Sept. 27, 2012),

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