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Special Economic Zones Engines of Growth Sanjeet Singh, Director (SEZ) Dept of Commerce, Govt. of India

Special Economic Zones Engines of Growth Sanjeet Singh, Director (SEZ) Dept of Commerce, Govt. of India. Rationale for Special Economic Zones in India. T o overcome the hurdles to export oriented investment on account of: multiplicity of controls absence of world-class infrastructure, and

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Special Economic Zones Engines of Growth Sanjeet Singh, Director (SEZ) Dept of Commerce, Govt. of India

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  1. Special Economic ZonesEngines of GrowthSanjeet Singh, Director (SEZ)Dept of Commerce, Govt. of India

  2. Rationale for Special Economic Zones in India To overcome the hurdles to export oriented investment on account of: • multiplicity of controls • absence of world-class infrastructure, and • an unstable fiscal regime ….was not possible to achieve immediately on a country wide basis.

  3. Evolution of SEZs Evolved from the Export Promotion Zones initiative of the 70’s Special Economic Zones (SEZs) Policy was announced in April 2000. Parliament passed the Special Economic Zones Act, 2005 which supported by SEZ Rules, came into effect on 10th February, 2006.

  4. Key Objectives of SEZ Policy

  5. The SEZ Policy

  6. Fiscal Incentives Regime

  7. SEZ Administrative Structure

  8. SEZs at a Glance (As on 25.10.2012)

  9. Exports from SEZs

  10. Major Sector-wise Exports from SEZs(2006-07 to 2011-12) (export figures in crores)

  11. Employment and Investment in SEZs (as on 30.6.2012)

  12. The Imperative for Enhanced Exports and FDI Growth • India’s Balance of Trade is in deficit, which is a fairly high proportion of GDP. • While exports have growth over the past decade, imports have also risen sharply, resulting in a growing adverse balance of trade position. • This gap is financed in part through net services income and net remittances. • The Current Account remains in deficit, the remaining gap is covered through net inflows on the Capital Account • There is no option other than promoting enhanced export and FDI growth. • The SEZ program is a promising instrument for achieving both these objectives .

  13. Impact of SEZs Studies commissioned by the Department of Commerce have indicated that SEZs have had a positive local area impact in terms of

  14. Some Significant Trends in SEZ Sector Growth • Geographical Concentration of SEZs: Six States, Andhra Pradesh, Kerala, Maharashtra, Gujarat, Karnataka and Tamil Nadu, account for a major proportion of SEZs and 92% of total exports from them. • Urban centric growth of SEZs – Even within these six States, SEZs are largely concentrated around existing urban agglomerates, leaving the hinterland virtually untouched. • Sectoral Dispersion of SEZs: There is a pre-dominance of IT SEZs in the sector, and multi sector SEZs are few and far between. Of the 153 operational SEZs, only 17 are multi product SEZs. • Skewed Export Pattern: IT/ITES SEZs and Petroleum sector contribute to the roughly two-thirds of SEZ exports. Non-petroleum manufacturing contributes the balance minority share. • Inadequate progress of Manufacturing activity: As reflected above, the SEZ sector has not fully addressed the concern of boosting the manufacturing sector in India. • Limited number of Operational SEZs: While 589 SEZs have been formally approved as on 31st May 2012, only 389 have been notified, of which only 153 SEZs are exporting i.e. only 39.33 % of the approved SEZs.

  15. Distribution of SEZs in the Country

  16. State wise Approved, Notified and Operational SEZs(as in Aug, 2012)

  17. Some Success Stories in SEZs New generation SEZs which have made significant progress in terms of Exports, Employment and Investment generation: • Apache SEZ Development India Private Ltd, Andhra Pradesh (Footwear SEZ) • Nokia Special Economic Zone in Tamil Nadu (Telecom equipments SEZ)

  18. Some Success Stories in SEZs • Mahindra City SEZ, Tamil Nadu • (Apparels and fashion accessories; IT / Hardware; auto ancillary) Sri City, Nellore/Chitoor, Multi Product SEZ

  19. Some Success Stories in SEZs • Brandix Apparel, SEZ, Vizag Serum Bio Pharma Park, Pune

  20. Some Success Stories in SEZs • Reliance Jamnagar SEZ, Refinery Quark City, Mohali, Punjab

  21. Challenges facing the SEZs

  22. SEZ Policy and Operational Framework Reform Initiative

  23. Major Areas of Reform • Minimum Land Area Required For SEZ • The Issue of Broad-banding – Revision definition of Sector: •  Contiguity Norms: • Vacancy Issues: • Non-Processing Area of SEZ • Free Trade and Warehousing Zone Issues

  24. Major Areas of Reform • IT and ITES SEZs – Special Dispensation • Exit Policy for Developers and Units: • Advance Ruling: • Shifting / Relocation of Units in a SEZ : •  Operational Issues to be addressed through amendments to the SEZ Rules: • Towards more meaningful State Govt Recommendations (SGRs) • Defining Consumables -allowing benefits under SEZ Policy: • Benefits and exemptions under Rule 27 for sub-contractors of Units

  25. sezindia.nic.in Apache SEZ, Nellore Brandix SEZ, Vizag Nokia SEZ, Sriperumbudur Mahindra World City, Chennai Quarkcity, Mohali

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