What is meant by SEZs / advantages and disadvantages of SEZs / conditions of SEZs in India and china.
Special Economic Zones (SEZs)
Special Economic Zones (SEZs) are specifically delineated duty-free enclaves and are deemed to be foreign territories for the purpose of trade operations, duties and tariffs. A scheme of setting up the SEZs in India was announced in the Export and Import (EXIM) Policy in March, 2000. But the implementation of this policy and the task of setting up SEZs on a large scale has gathered momentum only recently after the rules and regulations were clearly laid and amendments wherever required, duly made.
Objectives: The main objective of SEZs is to develop an integrated world-class infrastructure for exports, including carrying out of manufacture of goods and rendering of services in connection therewith. The component of an SEZ shall include roads, airports, ports, generation, and distribution of power, telecom, hotels, hospitals, educational institutions, leisure and entertainment units, industrial and commercial complexes, water supply, and any other facility required for the development of the zone.
The SEZ enclaves are meant to showcase the country’s manufacturing prowess and its fast developing services sector-especially its world class enterprises in the area of Information Technology (IT), Computer Software and Hardware skills. However, SEZs go beyond the concepts of industrial concentrations as they have a mix of both industrial and human settlements. Conceptually, they are akin to Free Trade Zones (FTZs) which also offer similar incentives and benefits of trade and commerce within the regions.
China & SEZs- The Special Economic Zones are considered to be a part of former Chinese Premier Deng Xiaoping’s economic modernization programme. China’s highly successful four SEZS are located at Shenzhen, Zhuhai, Shantou and Xiamen and are based on the four principles: (i) construction primarily relies on attracting and utilizing foreign capital; (ii) primary economic firms are sino-foreign joint ventures, partnerships as well as wholly foreign enterprises; (iii) products are primarily export oriented; and (iv) economic activities are primarily driven by market.
Encouraged by the grand success of China’s SEZs, the Indian. Government has envisaged the SEZs to be the new mantra for the country’s export-oriented economic activity. Thus, the Special Economic Zones Act was brought in the year 2005 with a view to providing an internationally competitive and hassle-free environment for exports.
Benefits of SEZs- If we consider the benefits of setting up SEZs we will certainly say they are a boon. The Foreign Trade Policy clearly states that SEZS are growth engines that can boost manufacturing, increase exports and generate sizeable employment. The SEZ Policy also gives an impetus to private sector to overcome the country’s infrastructure problems which are considered to be a roadblock to attracting Foreign Direct Investment (FDI). While foreign investors are attracted towards India’s low-cost labour and strong domestic market, they are apprehensive about moving their products through the country’s poor network of roads, overburdened airports and clogged ports.
Power cuts can force business to a grinding halt or at least waste sizeable number of working hours each month. The SEZ developers are likely to create necessary infrastructure which would facilitate manufacturing, transportation, distribution and shipments to importing countries.
Manufacturing in the industrial units set up within the SEZs will give a tremendous boost to various types of industries. There will be adoption of latest technologies in all the industries covered under the SEZs. The Foreign Direct Investment will be received in large amounts in various sectors because of tax and tariff exemptions to be given to the SEZs under the policy. The shortage of capital will be more than met by the FDI inflow. The big names in Private Sector like Reliance, Tata, Infosys, and Wipro are likely to participate actively in setting up and operating SEZs. The tremendous impetus given to exports shall make the balance of payment favourable to India.
Foreign exchange will be earned by millions through SEZ exports, with which the country can import modern technology, machinery in various sectors including services, transportation, health care, heavy industries. There is a proposal to convert the Agriculture Export Zone (AEZs) into
These land-brokers are already making a huge amount of money by buying land from poor landowners at cheap rates and selling the same to SEZ developers at much higher rates. In conditions of poverty and dire need and against the organized land-brokers, these landowners hardly have any bargaining power.
Then there is the problem of rehabilitation. The Central as well as the State Governments have been talking about rehabilitation of the uprooted families whose land has been acquired, but nothing concrete has been done in this regard. People’s past experience in case of various projects wherein several people were promised adequate compensation and rehabilitation packages, has not been particularly good.
Then there are environmental concerns. The SEZs which are to be hubs of manufacturing are likely to cause huge amount of air pollution and water pollution. The experience of China in this regard has also been very bad, where the areas around the SEZs are always covered with thick smoke. Our own SEZs are likely to do the same. The chemicals released from the SEZs will pollute the nearby water sources creating acute shortage of clean water. All these factors point towards the dark side of the SEZs and these Zones can be called a bane.
SEZs have been established in many countries as testing grounds for implementation of liberal market economy principles. They can bring about a great transformation through opening up of the economy in the globalised world. Considering the enormous success of China’s SEZs, and given the fact that both India and China have a similar socio-economic set up and are evenly matched in human and other resources, the SEZ model of development can lead to higher growth in India too. But we need to remove the bottlenecks and address the key issues that are closely connected with this model of development.
