Special Economic Zones: Operational Adjustment of Labour Law

AuthorAmita Punj
Published date01 July 2018
Date01 July 2018
Subject MatterArticles
Special Economic Zones:
Operational Adjustment
of Labour Law
Amita Punj1
Labour law regimes worldwide have undergone a metamorphosis on account of
their inextricable relation with the labour market which in turn is influenced by the
prevailing economic thought. The mid-eighties witnessed a marked shift in the domi-
nant economic thought from demand side to supply side economic theory. Export
processing zones or special economic zones established with a view to promote
export oriented economic growth constitute an overzealous expression of this shift.
In tune with this trend, labour law, as operationalised in special economic zones
in India manifests adjustment of workers’ rights to the need of economic growth
euphemistically called ‘development’. The intention to exclude application of labour
law in these zones reflected in the Bill introduced by the then minister of Commerce
and Industry is being realised despite the outright rejection of such exclusion by the
legislature and its substitution by a norm upholding the applicability. The following
piece presents the saga of normative ways and mechanisms adopted for such a struc-
tural adjustment of labour law within special economic zones.
Special Economic Zones, Labour Law, Export oriented growth, Neo-liberalism,
Parliamentary debate on SEZ Act
The Special Economic Zones Act, 2005, a legislative embodiment of the neo-
liberal approach to development, epitomises the clandestine adjustment of the
labour rights regime to the needs of development. For this purpose varied meth-
ods were adopted at different stages viz., labour rights regime reflected in the
government Bill proposed in the Parliament, the nature of provisions relating to
labour laws finally approved by the Parliament, the rules made under the Act by
the executive and finally the methods adopted by state governments in general in
Journal of National
Law University Delhi
5(1) 78–98
2018 National Law
University Delhi
SAGE Publications
DOI: 10.1177/2277401718787955
Associate Professor of Law, National Law University Delhi, India.
Corresponding author:
Amita Punj, 403, Faculty Housing, National Law University, Delhi, Sector 14, Dwarka, New Delhi, India.
E-mail: amita.punj@nludelhi.ac.in
Punj 79
operationalising the special economic zones (hereinafter referred to as “SEZs”).
All these together severely affect the realisation of labour rights by workers in these
zones. This article seeks to delve into all these processes in order to examine the
peculiar labour rights regime that stands established in these zones. Part I of the
article offers an insight into the varied labour law regimes prevalent worldwide in such
export zones (SEZs and Export Processing Zones (hereinafter referred to as “EPZs”)
taken together). Part II focuses on the Bill1 presented in the Parliament, the debates
around the same and analysis of the provisions in the Act to determine the degree of
legislative commitment to securing labour rights within SEZs. The operationalisation
of SEZs is examined in part III highlighting the contrivances used to specifically adjust
the operation of labour rights to the requirements of export led growth.
Part I: Labour Laws in SEZs/EPZs:
Inter-Country Comparison
Three categories of SEZ/EPZ labour law regimes can be discerned from inter
country comparison of the special legislations with respect to these zones or
the general interface between labour law and SEZ/EPZ law in a particular
country (Figure 1). These are as follows:
• Inclusionary Regime – It encompasses those systems where the national
labour laws are fully applicable to SEZs as well.
Exclusionary Regime – It encompasses those systems where the application of
national labour laws or particular provisions is completely and expressly
excluded with respect to SEZs.
Special/Altered Regime – It refers to those systems where a separate labour law
regime is established for governing labour relations in SEZs or changes are
introduced in the existing national regimes and that altered regime governs
labour relations in SEZs. It may also be a combination of inclusionary and
exclusionary regimes where certain legislations are applicable whereas applica-
bility of certain others is excluded from the zones or it may be a regime which
secures altered conditions of work for labour in SEZs not by altering the law but
by taking advantage of the spaces available in the national regimes within the
substance or the procedure established for realization of rights.
A survey of available data with respect to labour laws applicable currently in EPZs
across the globe indicates that most of the countries fall within first and the third
categories. However, this was not the case a little more than a decade ago when a
number of countries expressly excluded application of entire labour codes or parti-
cular enactments to EPZs.2 This change was not a smooth one but was an outcome of
incessant struggles of labour like in the Philippines, Dominican Republic,3 though in
1 The Bill was introduced by the Minister of Commerce and Industry, Shri Kamal Nath in the Lok Sabha on
9 May 2005 <> accessed 4 October 2017.
2 Dominican Republic, Costa Rica, Philippines, Bangladesh, Zimbabwe, Namibia have over the last
decade moved from exclusionary to modified or inclusionary regimes on account of labour struggles
and/or international pressure.
3 ILO, Labour and social issues relating to export processing zones (1998) 23–24.

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