P 251244Z NOV 08
FM AMCONSUL MUMBAI
TO SECSTATE WASHDC PRIORITY 6746
INFO AMEMBASSY NEW DELHI PRIORITY 
AMCONSUL CHENNAI PRIORITY 
AMCONSUL KOLKATA PRIORITY 
AMCONSUL MUMBAI PRIORITY 
DEPT OF COMMERCE WASHINGTON DC
DEPT OF TREASURY WASHINGTON DC
NSC WASHINGTON DC
CIA WASHDC

UNCLAS MUMBAI 000544 
 
 
E.O. 12958: N/A 
TAGS: ECON EIND EINV PGOV SOCI IN
SUBJECT: GOANS EXPLAIN DECISION TO SCRAP SPECIAL ECONOMIC ZONES 
 
REF: New Delhi 644 
 
 
¶1. Summary: In early 2008, the Government of Goa scrapped plans 
to construct Special Economic Zones (SEZ) after months of 
protest from various local stakeholders.  On a recent visit to 
Goa, political, religious, and business leaders in Goa described 
the cancellation of the SEZs in much the same way: as a swift 
and well-received government response to grassroots public 
pressure, and viewed the government's prompt action as a 
positive development for the state.  Overall, SEZ opponents were 
concerned about the diversion of productive agricultural land 
for questionable SEZ projects, the influence of overzealous 
property developers in politics, and the erosion of "Goan 
culture" by unplanned development.  While the diversion of 
agricultural land for industrial purposes is seen as a 
controversial issue between farmers and industry almost 
everywhere in India, this episode demonstrates that diverse 
local factors and interest groups can also play an important 
role.  End Summary. 
 
 
¶2.  In December 2007, Goa Chief Minister Digambar Kamat 
announced plans to scrap 15 SEZ projects that were either 
already approved or at different stages in the approvals 
process.  In June 2008, 12 SEZs were finally cancelled after 
some wrangling with the central government Board of Approvals 
(BoA) for SEZs.  The status of the remaining three SEZs, which 
had already received final approval and cannot be withdrawn 
retroactively, is still to be settled.  The BoA is not willing 
to cancel these three SEZs for fear that it would send a 
negative signal to investors; however, the Goan government 
remains persistent in its demand to scrap these three SEZs as 
well. 
 
 
¶3.  In a meeting with the Consul General and the Deputy Chief of 
Mission, the Chief Secretary of Goa J.P. Singh admitted that 
mounting public pressure at the grassroots level forced the 
government to withdraw approval for all SEZ projects.  He said 
that Goan residents viewed the SEZs as "land scams" in which 
outside (non-Goan) buyers could purchase land at 
concessional/non-market prices, with no real intent of 
developing them as industrial parks.  Goans were also concerned 
that the existing infrastructure -- such as power, water, and 
sewage -- was not sufficient to support the planned SEZ 
projects.  Overall, the SEZs were deemed to have a negative 
environmental impact on Goa, he continued.  In such a situation, 
Singh does not forsee future SEZ development in Goa.  The Chief 
Secretary pointed out that not much work had started on the 
approved SEZ projects.  Only leveling and road development work 
had begun before the projects were halted, he claimed. 
 
 
¶4.  Goan Archbishop Filipe Ferrao agreed with the Chief 
Secretary's assessment that the SEZs were cancelled after 
widespread public opposition.  He praised the current 
government, led by Kamath, for being responsive to widespread 
local sentiments, and addressing concerns that developers were 
paving over large parts of Goa which was destroying the local 
culture.  Aside from this concern, Ferrao said that once the SEZ 
plans became clearer, people questioned whether the locals who 
had sold their land would find suitable employment to replace 
their lost livelihoods.  The Archbishop also agreed that the 
opposition to the SEZs was largely at a grassroots level, as 
locals opposed what Goans perceived as a "real estate mafia." 
These developers had been allowed to use power and money to 
pursue uncoordinated, unplanned, and sometimes illegal building 
projects.  In a separate meeting, the Bharatiya Janata Party 
(BJP) leader of the opposition, Manohar Parrikar, agreed with 
this assessment, acknowledging that widespread local opposition 
- and not just one or two aggressive NGOs - prompted the 
government to cancel the SEZ projects. 
 
 
¶5.  Interlocutors from the Goa Chamber of Commerce claimed that 
Goan residents did not "trust" the decisions of the previous 
BJP-led government to approve SEZ projects.  The national SEZ 
policy allows developers to set aside only 35 percent of the 
land for industrial activity, while the remaining 65 percent of 
the land can be used for infrastructure or housing.  Local 
residents and displaced farmers were, therefore, concerned that 
the SEZ projects would devote much more space to residential 
housing and commercial real estate, limiting the creation of 
industrial jobs.  Chamber of Commerce leaders - who also 
expressed opposition to the SEZ projects - argued that had 
developers focused on job creation and attracting industry, the 
projects would not have been so controversial.  Chamber of 
Commerce leaders told the DCM that since the land had already 
been purchased from farmers in case of the three projects not 
yet scrapped, the state government would re-christen the SEZs as 
industrial parks aimed at job creation. 
 
 
¶6.  Comment:  In contrast to SEZ politics elsewhere in India, 
where political leaders attempt to represent farmer concerns and 
grievances - real or fictitious - for political gain, there 
appears to have been widespread concern about the development of 
SEZs in Goa from diverse interest groups, including the business 
community.  After decades of unplanned growth in the tourist and 
real-estate sectors, many Goans are concerned about the balance 
between increased prosperity and the preservation of a 
cherished, if perhaps imagined, lifestyle.  After analyzing the 
economic and social impact of the SEZs on Goa's tight knit 
communities, policy-makers paid heed to their concern that SEZs 
as currently structured and administered were not right for Goa. 
End Comment. 
 
 
FOLMSBEE