Special Economic Zone (SEZ) is one of the most controversial issues in India in recent times. There is no doubt that it will spawn rapid industrial and economic growth. But the process of development is under question as local agitations against acquisition of land for the purpose have turned violent. In this paper, we propose a model for land acquisition which provides for rehabilitation of those displaced outside the perimeter of the SEZ, so that the appreciation of land price accrues to them and the land owner becomes a part of the prosperity that the project generates.