Planning and implementation of SEZ policy in India: a critical analysis

Abstract

The Report presents critical appraisal of Special Economic Zones (SEZ) framework in India. SEZs in China and other developed countries have been analysed as their success has been the motivation and the bedrock of SEZ Policy in India. Policy framework of these countries have been suitably modified to meet situation as economic liberalisation had already matured in India and it did not have the luxury of complete state control over land or larger contiguous land blocks available for SEZ provinces. With the aim of mobilising private funds and inviting Foreign Direct Investments (FDI) norms have been relaxed and number of incentives given to make fresh investment attractive. Choice of location and specific sector has been left to the Developer. Government of India (GoI) has established a three tier administrative set up to give approval on fast track along with single window clearance. Incentives have been designed to boost exports and bring in fresh investments in high growth areas giving employment to local population. SEZ framework existing has been analysed and in particular SEZ Policy of Andhra Pradesh which is frontrunner in SEZ establishment has been presented in detail. The gains from SEZ have been tremendous and till now total incremental investment of Rs1,04,868 Crore has been brought in along with incremental employment to 2,52,735 person in 344 notified SEZ. Exports have increased 620% in five years since 2004 to Rs 99,689 Crore. On critical appraisal of the existing framework it is felt that there is need to tweak the system to meet its goals. There is need to focus on underdeveloped states and underdeveloped areas of developed states to have equitable growth. Financing of the huge requirement of funds has to be supported by RBI policies for local and foreign borrowing. Land acquisition requires new model between the Developer and the local owner population with Government role being limited to facilitator and ensuring rehabilitation is done as promised. Recommendation for improving the SEZ Policy and Ecosystem, financing and human angle have been suggested.