Special economic zones: India’s new growth hubs
August 10 2009
A silent revolution is taking place at India’s special economic zones (SEZs). These have not only shrugged off the global meltdown, but also emerged as major job generators, apart from attracting billions of dollars in investments and pushing exports. The government notified new rules for such zones in February 2006. As many as 253,000 new direct jobs have been created in them since. Double that number enjoy indirect benefits by extending logistical support.
Exports generated in these zones present an even brighter picture. Official data with the commerce ministry, that oversees the country’s export and import policy and frames related strategies, reveals an impressive 36 percent growth in rupee terms over one year.
Physical exports from these special zones increased from Rs.666.38 billion ($13.32 billion) in 2007-08, to Rs.904.16 billion ($18.08 billion) in 2008-09.
This is in sharp contrast to the country’s overall merchan- dise exports that logged a mere 3.4 percent growth. They were $168.7 billion last financial, against $163.13 billion in 2007- 08, missing the $200 billion target by a wide margin. Investments in SEZs, too, have risen at an impressive pace, and now top Rs.1,000 billion ($20 billion) “These figures speak for themselves and reflect the kind of potential that the model of special economic zones hold in India,” said Amit Mitra, secretary general of the Indian Chambers of Commerce and Industry (Ficci), a leading industry lobby. “Special economic zones can be a big driver of investment - both from India and overseas. They can also create quality infrastructure and give a boost to exports and employment generation,” Mitra told IANS.
Commerce ministry officials said the SEZ performance was the result of a host of incentives such as duty free import, 100 percent income tax exemption on export income for five years, and 50 percent exemption for the next five years. These units also have an automatic nod for external borrow- ing worth $500 million a year, exemptions from central sales tax and service tax, and single-window clearance for all regu- latory approvals.
Vikram Doshi, executive director of the global accounting consultancy firm KPMG, shared his view. “It is the whole enabling environment in place - single-window clearance and tax breaks, incentives - that has supported the growth,” he said.
Officials said India was also among the first countries in Asia to recognise the importance of exclusive zones for external trade. The region’s first export processing zone, in fact, came up in 1965 at Kandla in the western state of Gujarat. Since then several policies have been announced and updated. The latest revision in the special economic zones policy was in 2006, following which permission has been given to 558 such projects.
Out of these 315 have been notified in the official gazette. A total of 91 zones, with 2,263 units working inside them, are the ones making significant contribution towards exports. Of them, 43 are in information technology and related indus- tries, 13 cater to multiple products, and 35 function for specif- ic sectors.
Listed below are some specific success stories over the past three years:
“I feel the policy support can also be improved. But the government should also give some time for the growth to sus- tain with consistent policy and should not tweak it frequently. There is scope for improvement and performance then will be better,” Doshi said.
--
Indo-Asian News Service.
Article supplied by High Commission of India, New Zealand
Exports generated in these zones present an even brighter picture. Official data with the commerce ministry, that oversees the country’s export and import policy and frames related strategies, reveals an impressive 36 percent growth in rupee terms over one year.
Physical exports from these special zones increased from Rs.666.38 billion ($13.32 billion) in 2007-08, to Rs.904.16 billion ($18.08 billion) in 2008-09.
This is in sharp contrast to the country’s overall merchan- dise exports that logged a mere 3.4 percent growth. They were $168.7 billion last financial, against $163.13 billion in 2007- 08, missing the $200 billion target by a wide margin. Investments in SEZs, too, have risen at an impressive pace, and now top Rs.1,000 billion ($20 billion) “These figures speak for themselves and reflect the kind of potential that the model of special economic zones hold in India,” said Amit Mitra, secretary general of the Indian Chambers of Commerce and Industry (Ficci), a leading industry lobby. “Special economic zones can be a big driver of investment - both from India and overseas. They can also create quality infrastructure and give a boost to exports and employment generation,” Mitra told IANS.
Commerce ministry officials said the SEZ performance was the result of a host of incentives such as duty free import, 100 percent income tax exemption on export income for five years, and 50 percent exemption for the next five years. These units also have an automatic nod for external borrow- ing worth $500 million a year, exemptions from central sales tax and service tax, and single-window clearance for all regu- latory approvals.
Vikram Doshi, executive director of the global accounting consultancy firm KPMG, shared his view. “It is the whole enabling environment in place - single-window clearance and tax breaks, incentives - that has supported the growth,” he said.
Officials said India was also among the first countries in Asia to recognise the importance of exclusive zones for external trade. The region’s first export processing zone, in fact, came up in 1965 at Kandla in the western state of Gujarat. Since then several policies have been announced and updated. The latest revision in the special economic zones policy was in 2006, following which permission has been given to 558 such projects.
Out of these 315 have been notified in the official gazette. A total of 91 zones, with 2,263 units working inside them, are the ones making significant contribution towards exports. Of them, 43 are in information technology and related indus- tries, 13 cater to multiple products, and 35 function for specif- ic sectors.
Listed below are some specific success stories over the past three years:
- The zone set up by Finnish telecom giant Nokia for equip- ment and mobile handsets in Tamil Nadu has attracted invest- ment worth Rs.22 billion (nearly $500 million) in the past three years, exported goods to the tune of Rs.103 billion (over $2 billion), and directly employs 14,859 people
- The Mahindra World City, also in Tamil Nadu, has attract- ed investment worth Rs.14 billion (nearly $300 million) in the past three years, exported goods worth Rs.15 billion (over $300 million) and directly employs 9,383 people
- The Reliance Jamnagar zone in Gujarat has attracted investment worth Rs.320 billion ($6.5 billion) in the past three years, exported goods to the tune of Rs.99 billion ($2 billion) and directly employs 2,385 people.
- The Adidas zone for footwear in Andhra Pradesh has attracted investment worth Rs.2.27 billion (over $45 million). Looking ahead, the Ficci secretary general said there was need to focus on what are called clusters. Here units belonging to similar industries in the special economic zones can share common infrastructure and logistics.
“I feel the policy support can also be improved. But the government should also give some time for the growth to sus- tain with consistent policy and should not tweak it frequently. There is scope for improvement and performance then will be better,” Doshi said.
--
Indo-Asian News Service.
Article supplied by High Commission of India, New Zealand
A silent revolution is taking place at India’s special economic zones (SEZs). These have not only shrugged off the global meltdown, but also emerged as major job generators, apart from attracting billions of dollars in investments and pushing exports. The government notified new rules for such...
A silent revolution is taking place at India’s special economic zones (SEZs). These have not only shrugged off the global meltdown, but also emerged as major job generators, apart from attracting billions of dollars in investments and pushing exports. The government notified new rules for such zones in February 2006. As many as 253,000 new direct jobs have been created in them since. Double that number enjoy indirect benefits by extending logistical support.
Exports generated in these zones present an even brighter picture. Official data with the commerce ministry, that oversees the country’s export and import policy and frames related strategies, reveals an impressive 36 percent growth in rupee terms over one year.
Physical exports from these special zones increased from Rs.666.38 billion ($13.32 billion) in 2007-08, to Rs.904.16 billion ($18.08 billion) in 2008-09.
This is in sharp contrast to the country’s overall merchan- dise exports that logged a mere 3.4 percent growth. They were $168.7 billion last financial, against $163.13 billion in 2007- 08, missing the $200 billion target by a wide margin. Investments in SEZs, too, have risen at an impressive pace, and now top Rs.1,000 billion ($20 billion) “These figures speak for themselves and reflect the kind of potential that the model of special economic zones hold in India,” said Amit Mitra, secretary general of the Indian Chambers of Commerce and Industry (Ficci), a leading industry lobby. “Special economic zones can be a big driver of investment - both from India and overseas. They can also create quality infrastructure and give a boost to exports and employment generation,” Mitra told IANS.
Commerce ministry officials said the SEZ performance was the result of a host of incentives such as duty free import, 100 percent income tax exemption on export income for five years, and 50 percent exemption for the next five years. These units also have an automatic nod for external borrow- ing worth $500 million a year, exemptions from central sales tax and service tax, and single-window clearance for all regu- latory approvals.
Vikram Doshi, executive director of the global accounting consultancy firm KPMG, shared his view. “It is the whole enabling environment in place - single-window clearance and tax breaks, incentives - that has supported the growth,” he said.
Officials said India was also among the first countries in Asia to recognise the importance of exclusive zones for external trade. The region’s first export processing zone, in fact, came up in 1965 at Kandla in the western state of Gujarat. Since then several policies have been announced and updated. The latest revision in the special economic zones policy was in 2006, following which permission has been given to 558 such projects.
Out of these 315 have been notified in the official gazette. A total of 91 zones, with 2,263 units working inside them, are the ones making significant contribution towards exports. Of them, 43 are in information technology and related indus- tries, 13 cater to multiple products, and 35 function for specif- ic sectors.
Listed below are some specific success stories over the past three years:
“I feel the policy support can also be improved. But the government should also give some time for the growth to sus- tain with consistent policy and should not tweak it frequently. There is scope for improvement and performance then will be better,” Doshi said.
--
Indo-Asian News Service.
Article supplied by High Commission of India, New Zealand
Exports generated in these zones present an even brighter picture. Official data with the commerce ministry, that oversees the country’s export and import policy and frames related strategies, reveals an impressive 36 percent growth in rupee terms over one year.
Physical exports from these special zones increased from Rs.666.38 billion ($13.32 billion) in 2007-08, to Rs.904.16 billion ($18.08 billion) in 2008-09.
This is in sharp contrast to the country’s overall merchan- dise exports that logged a mere 3.4 percent growth. They were $168.7 billion last financial, against $163.13 billion in 2007- 08, missing the $200 billion target by a wide margin. Investments in SEZs, too, have risen at an impressive pace, and now top Rs.1,000 billion ($20 billion) “These figures speak for themselves and reflect the kind of potential that the model of special economic zones hold in India,” said Amit Mitra, secretary general of the Indian Chambers of Commerce and Industry (Ficci), a leading industry lobby. “Special economic zones can be a big driver of investment - both from India and overseas. They can also create quality infrastructure and give a boost to exports and employment generation,” Mitra told IANS.
Commerce ministry officials said the SEZ performance was the result of a host of incentives such as duty free import, 100 percent income tax exemption on export income for five years, and 50 percent exemption for the next five years. These units also have an automatic nod for external borrow- ing worth $500 million a year, exemptions from central sales tax and service tax, and single-window clearance for all regu- latory approvals.
Vikram Doshi, executive director of the global accounting consultancy firm KPMG, shared his view. “It is the whole enabling environment in place - single-window clearance and tax breaks, incentives - that has supported the growth,” he said.
Officials said India was also among the first countries in Asia to recognise the importance of exclusive zones for external trade. The region’s first export processing zone, in fact, came up in 1965 at Kandla in the western state of Gujarat. Since then several policies have been announced and updated. The latest revision in the special economic zones policy was in 2006, following which permission has been given to 558 such projects.
Out of these 315 have been notified in the official gazette. A total of 91 zones, with 2,263 units working inside them, are the ones making significant contribution towards exports. Of them, 43 are in information technology and related indus- tries, 13 cater to multiple products, and 35 function for specif- ic sectors.
Listed below are some specific success stories over the past three years:
- The zone set up by Finnish telecom giant Nokia for equip- ment and mobile handsets in Tamil Nadu has attracted invest- ment worth Rs.22 billion (nearly $500 million) in the past three years, exported goods to the tune of Rs.103 billion (over $2 billion), and directly employs 14,859 people
- The Mahindra World City, also in Tamil Nadu, has attract- ed investment worth Rs.14 billion (nearly $300 million) in the past three years, exported goods worth Rs.15 billion (over $300 million) and directly employs 9,383 people
- The Reliance Jamnagar zone in Gujarat has attracted investment worth Rs.320 billion ($6.5 billion) in the past three years, exported goods to the tune of Rs.99 billion ($2 billion) and directly employs 2,385 people.
- The Adidas zone for footwear in Andhra Pradesh has attracted investment worth Rs.2.27 billion (over $45 million). Looking ahead, the Ficci secretary general said there was need to focus on what are called clusters. Here units belonging to similar industries in the special economic zones can share common infrastructure and logistics.
“I feel the policy support can also be improved. But the government should also give some time for the growth to sus- tain with consistent policy and should not tweak it frequently. There is scope for improvement and performance then will be better,” Doshi said.
--
Indo-Asian News Service.
Article supplied by High Commission of India, New Zealand
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