Many economies have used the concept of SEZ in one or the other form to promote exports and boost economic growth. The Indian experiment, started in 1965, did not yield the expected results till 2000. The reasons are many. However, it became imperative to remove the shortcomings and reframe the policy and rules in the post-liberalization era of Indian economy to achieve and maintain high growth rates and to uplift the living standards of Indian population. Inspired by the visible success of China, which started setting up SEZs in the 1980s, the Indian government ventured to revamp its policies regarding FDI, exports, etc. so as to create an atmosphere that is attractive for investors, introduce new technology and give a boost to exports. Due to lack of funds of the requisite order and need to move forward quickly, the government decided to involve private investors (domestic and foreign), unlike in the past.
The policy was formulated in 2000 and given shape in the form of an act in June 2005. The rules and guidelines were formulated and made effective in February, 2006. Since the implementation of these rules began, there has been a spate of bitter criticism from different sections of the society, such as the intellectuals, sociologists, politicians from ruling and opposition parties, and environmentalists against the government's SEZ policy. The government has responded to this criticism, both in deeds (amendments) and words (arguments). This paper takes a look at the current SEZ policy and brings out the grave shortcomings, that are feared to have led to increased disparity in the country. It also suggests immediate action to prevent further damage.
Special economic zone (SEZ) is a specifically delineated duty-free enclave, deemed to be a foreign territory for the purpose of trade operations and duties and tariffs. SEZ differs from the Export Processing Zone (EPZ), since it is an integrated township with fully developed infrastructure compared to an industrial enclave of EPZ era.
The idea of establishing special zones to boost exports is an international phenomenon. Over 140 countries have used this concept, including India. In fact, India was the first Asian country to take up the free-zone initiative way back in 1965 when it established the first zone at Kandla. It was at the government's initiative. The efforts continued over the years, leading to the establishment of such zones in different parts of the country. |
