Industrialization through SEZ is a boon to the Indian poor

Industrialization through SEZ is a boon to the Indian poor

National Economic Planning

For the motion

What is Industrialization

• A process of socio-economic change whereby a human group is transformed from a pre-industrial society into an industrial one.

• A part of a wider modernization process, where social change and economic development are closely related with technological innovation, particularly with the development of large-scale energy and metallurgy production.

• Industrialization also introduces a form of philosophical change, where people obtain a different attitude towards their perception of nature.

NEP - Industrialization through SEZ is a boon to the Indian poor

What is SEZ

“A specifically delineated duty free enclave & shall be deemed to be foreign territory for the purpose of trade operations , duties & tariffs.”

- Foreign Trade Policy (2004-09)


Benefits of SEZ

• Generates additional economic activity.• Promotes exports of goods & services.• Encourage investment from domestic & foreign sources.• Creates employment opportunities.• Develop infrastructure facilities.


SEZ Act

• EPZ , 1965• SEZ Policy , April 2000• SEZ Act 2005 , May 2005


SEZ approvals & activities• 303 approved , acquired land, 1400 sq. km.

• 126 enclaves already operating.

• Presidential assent on ,23rd of June, 2005.

• Job generation= 32578.

• ROI 1.5 million$ by December 2009.

• 2007- 2008,531 formally approved & 143 are operating.


Successful Projects• TATA’s steel project , in bhilai.• Lifeline Pvt. Ltd , biotechnology project based in

Chennai.• L&T shipbuilding ltd. Of heavy engineering, based in

Tamil Nadu.• Ansal Properties & Infrastructure Ltd.

Biotechnology, based in U.P.• Textile Park in Punjab.


Recent development

Total projected exports from all SEZ 2007-2008Is 67088 crore.


SEZs: A boon To The Indian Economy

• Influx of huge amounts of investment to the tune of $ 3 b in the very first year of implementation; accounting for about 60% of total FDI routed to India

• Commerce Secretary Projects creation of more than 8 lac jobs over the next three years

• SEZs will ensure high growth and removal of regional imbalances as the government can develop them according to the economic and regional requirements

• Inflow of globally competitive technologies, procedures and expertise from the foreign participants attracted to SEZs


SEZs: A boon To The Indian Economy• Creation of an internationally competitive and hassle-free environment for exports

• Development of world-class infrastructure in and around the SEZ by the participating enterprises

• Simplification of procedures and other bureaucratic clearances

• SEZs spell wider, stronger linkages with the economy compared to the other industries elsewhere

• Truly a panacea for all ills of the ailing Indian Economy


SPECIAL ECONOMIC ZONES (SEZs) INCHINA

SEZs in China

Development over the years

- Four SEZs started in 1979 – three in Guangdong adjacent to Hong Kong and one at Xiamen in Fujian (See Map in Annexure 1)

- Established principally to test the effectiveness of alternative market-based export-led growth strategy, as in East Asian countries.

- Heavy government investment in infrastructure. Each zone could introduce its own Regulation to growth investment, approvals and tax concessions.

- Based on the success, in 1984, the SEZ benefits were extended to 14 coastal open cities.- Economic & Technology Development Zones (ETDZ) and High Tech and New Technology Industry

Development Zones encouraged in coastal open cities.- In 1985, three development triangles – Pearl River Delta (PRD), the Yangtze River Delta (around

Shanghai) and Minum Delta (around Xiamen) were designated as coastal open areas.- Hainan Island was declared as fifth SEZ in 1988- Since then, 52 cities (including all provincial capitals) have become open cities


Comparison of SEZ policies of China and India

Issue China IndiaSize Very big. Typically in hundreds of hectares. Even 10 hectares will do.

Location Well thought out and located only on coasts. To facilitate exports and imports easily.

Anywhere. No restriction.

Labour laws Relaxed in the SEZs. Flexibility is totally absent.Policy regime Experimentation of liberal policies in the specified areas while

insulating them from the rest of the country.Based on fiscal sops.

Investors Basically foreigners who are wooed with sops and promise of stability in policy.

Basically locals. Not foreign investor driven; which should have been the case.

Commencement In 1979 In 1969 with the export processing zone concept. But failed to muster courage in giving these regions foreign territory status

till the year 2000 when Murasoli Maran announced the SEZ policy.

Number Only six: Shenzhen, Zhuhai, Shantou, Xiamen, Hainan and Pudong

Any where and any number. So far 126 operational. About 303 received approvals.

Tax holidays Present. Longer and steeper than in China.


IndustrializationWith SEZs• Development of supporting industries• Planned utilization of resources• Planned location of industries• No requirement for separate

documentation• Single window clearance• Tax exemption during nascent years• Labour intensive laws for employments• Social development of the area –

compulsion for building schools, houses, hospitals

Without SEZs• Beaurocratic allocation of

licenses• Inefficient utilization of

resources• Low employment

generation


Agricultural Land• 51% of the land in India is cultivable.• 90% of the land in West Bengal is cultivable.• Improper utilization of resources.• Rain fed agriculture.• With current low levels of productivity Indian granaries are full of food grains.• Food grains imported from USA.• Seasonal Unemployment.• Growth in agriculture’s share in GDP is not as fast as GDP’s growth.• Company farming• Consolidate small farms

We had a green revolution , now is the need for evergreen revolution.


• Out of the total agricultural land only 0.1% is used by SEZ• China’s Sez Shenzhen is spread over 34,000 Sq. km.• Total non agricultural land is 14,39,204 Sq. km.• Do not sacrifice agriculture , and also don’t stick to it.• Employment to unorganized six sector which amounts to

52%.• In 1999 – 2000 agriculture accounted 60% share in

employment but 25.3% of GDP. Since then it has fallen to 20% with no change in rate of employment.


• SEZ initiative provides impetus to and scope for planned growth of not just business , but also living , learning ,healthcare and recreation

• For rural poor land is a lifelong asset.• Iffco to set up first agriculture sez in Andhra

Pradesh.


Employment Generation through Sez

• Nokia and Flextronics electronics hardware Sez in Sriperumbudur

• Hyderabad Gems Sez for Jewellery.

• Apache SEZ being set up in Andhra Pradesh.

• Brandix Apparels, a Sri Lankan FDI project .

• In the services sector, 12.5 million sq meters space is expected in the IT/ITES Sez 12.5 lakh jobs.


• Marpady Veerappa Moily – ARC (Administrative Reforms Commission )

• Land Acquisition Act 1854• Rehabilitation and resettlement policy


Conclusion• Betterment of poor lies in a positive and very optimistic approach towards the development of SEZs.• Warding off misconceptions regarding SEZs

– Land acquisition– Food security– Employment

• Employment multiplier effect:• Sub contracting of Businesses• Skill enhancement of Indian farmer


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Industrialization through SEZ is a boon to the Indian poor