5 Oct 2016 | GS3 | Countries such as China have used SEZ’s to develop manufacturing zones and promote exports. What has India’s experience been with SEZ’s? What are the reasons for their success or failure?

GS3 (Indian economy)

Countries such as China have used SEZ’s to develop manufacturing zones and promote exports. What has India’s experience been with SEZ’s? What are the reasons for their success or failure?

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Although India was the first country in Asia to set up an export processing zone in Kandla.But, various reasons like multiplicity of control ,red tapism ,absence of world class infrastructure led to its failure which made us adopt a special economic zone policy . Indias SEZ have been inspired by China’s SEZ model ,with features like –
1.Duty free import along with domestic procurement of goods for development
2.100% income tax exemption on export income for first 5 years
3.Exemption from minimum alternate tax (MAT) and central sales tax
4.single window cleared every at central and state level
Although ,SEZ can help in
a.Generating employment
b.promoting exports
c.developing infrastructure
d. Additional economic activity aiding in growth .
But, it has been observed that less then half of allotted SEZ are operational ,employment generation has been incremental (10 lakh in 10 years ) and CAG report last year found out that more than 50% of allotted land is idle .Thus,it’s a failed policy as far as India is concerned .
What needs to be done is –
1. Strategic locations to be chosen (e.g. Near ports )
2. Land clearances to be speeded up
3. Rather than increasing the number of SEZ ,focus should be on the size ,like China .
4. Further Improve on ease of doing business
5. Amend labour laws to make them more flexible

A continuous overhaul of the stalemates in policy ,smart and visionary planning along with a strong political will can guide the future of SEZ from failure to success .

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