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SMZ after SEZ?

June 9, 2009 Leave a comment

ASSOCHAM — the Associated Chambers of Commerce and Industry of India — has recommended that states rich in minerals, like Jharkhand, Orissa, Chattisgarh etc be declared SMZ — Special Mining Zones, like the special economic zones (SEZ) in the news so much these days. Their point is that this will bring in lots of foreign money, and along with it foreign technology far superior to what is currently available in India.

Their argument is correct, but I think that their demand should be opposed for the long term benefit of India. It is necessary to develop engineers and technicians in India, and allow Indian inventors to grow, so that we don’t need to borrow foreign technologies every time we need something.

If foreign companies invest, most of the profits will go abroad — although there will be some for their Indian collaborators and agents. In addition, the technology, and  its upgrades, will remain with the foreign companies (probably developed by Indians working abroad), so India will have no hope of utilizing these mines fully.

On the other hand, if the industrialists and investors of ASSOCHAM invest in mining education and research, in less than one generation India will have the technology that we need. And all the profits from these mines can stay in India. Since there is no legal requirement to allow foreign companies to take charge of our mines, we ought to take the path of preparing ourselves to take charge.

The other issue is that if the SMZ is like the SEZ, Indian law will not be applicable in these areas. That is dangerous. For the same reasons it is dangerous for SEZs.