sez scenarion in india.. and suggesstions..

1. SEZ (Special Economic Zones)
Wind of Change…

2. Introduction
• Special Economic Zone (SEZ) is defined as "a specifically delineated duty free
enclave and shall be deemed to be foreign territory for the purposes of trade
operations and duties and tariffs".
• SEZs
 an engine for economic growth
 supported by quality infrastructure
 complemented by an attractive fiscal package
 with the minimum possible regulations.
• Government of India have notified Special Economic Zones (SEZs) Act 2005 and
notified Special Economic Zone Rules 2006 with a view to augmenting infrastructure
facilities for export.

3. Chronology of SEZ framework
Export In 1990s, as a
Processing part of
Zone (EPZ) Special
reforms, Full law and
policy 1965. New Policy in Economic
powers rules effected
April 2000 Zones Act MAY
1st EPZ was set delegated to February 2006.
2005.
up in Kandla zone
(Gujarat) authorities.
SEZ Categories
» Free Trade Zones (FTZ)
» Export Processing Zones (EPZ)
» Free Zones (FZ)
» Industrial Estates (IE)
» Free Ports
» Urban Enterprise Zones

4. History of SEZ’s in India
• During the past four decades many developing countries have been
creating special zones to promote their exports and earn foreign
exchange.
• The term Export Processing Zone (EPZ) was first coined to identify the
Shannon zone set up in Ireland in 1958.
• India established its first EPZ in 1965 in Kandla (Gujarat)
• In 1984 EPZs were established in Cochin (Kerala), Falta (Calcutta,now
Kolkata), Madras (now Chennai) and NOIDA (Uttar Pradesh).
• The Visakhapatnam EPZ (Andhra Pradesh) was established in 1989 and the
Surat EPZ (Gujarat) in 1997.

5. SEZ Act, 2005
With a view to overcome the shortcomings experienced on
account of the multiplicity of controls and clearances; absence of
world class infrastructure, and an unstable fiscal regime and a
view to attract larger foreign investments in India,
the Special Economic Zones (SEZs) Policy was announced in
April 2006.
• The main objectives of the SEZ Act are:
 generation of additional economic activity
 promotion of exports of goods and services
 promotion of investment from domestic and foreign sources
 creation of employment opportunities
 development of infrastructure facilities

6. Status Of State SEZ Act/Policies
States where SEZ Act has been enacted & is in force
States where SEZ Policy has been enacted & is in force

7. Economic Benefits
SEZ policy has directly benefited economy in following ways:
1. Employment Generation : SEZs generate direct employment for skilled and unskilled labour ;
indirect employment and employment for women workers.
2. Skill Formation: Formation of SEZs and new job requirements increase firm level activity whereby
the labour force acquires skills from within the firm through training and learning.
3. Attract investors:: SEZs offer a highly conducive investment scenario for developers. No tax
during development and operational stage. At profit stage 100% income tax exemption for Ist 5 yrs,
50% for next 5 yrs.
4. Technology Upgrading: SEZs attract export-oriented FDI and promote other forms of
collaboration between local firms and MNCs.
5. Exports: EPZ exports registered an impressive growth rate over the period 1966 to 2002. EPZ
exports increased in India from less than Rs.1 million in 1966 to over Rs. 97727 million in 2002.
6. Manufacturing Sector: Share of manufacturing industry in the exports grew from negligible
percentage in 1970 to above 6 % in 2005.
(Sources: Ministry of Commerce, Economic Survey)

8. SEZs as vehicle for Job Creation
Reaping the demographic dividend
India’s demographic profile is a boon for creating
productive jobs for rising work force with higher
savings and eventually investments for economic
growth.
India’s median age is just under 25 years with
over 500 million people below 25 years of age.
Two-thirds of these are supported by the
agricultural sector which contributes just 21
percent to the GDP.
These people have rising aspirations and must
find jobs in manufacturing and services sectors,
failing which there would be serious social and
economic implications for the country.
SEZs are job creators - it is estimated that close
to 15,00,000 jobs by end of 2010 would be
created by SEZs.

9. SEZs Typology
• SEZs can be categorized on basis of sector, function or location
and required to have processing as well as non-processing
area.
Sector – Specific Manufacture goods or render services in a
particular sector.
SEZ
SEZ
Manufacture multiple goods in one
Multi – Product sector or across multiple sectors.
SEZ Trading and warehousing included
SEZ in a port or SEZ in an existing port or airport for
manufacture of goods falling in two or
airport more sectors .
Trading and warehousing included

10. SEZ LAYOUT
Processing Area Non- Processing Area
•Processing area is the demarcated area in SEZ Non-processing area is intended to provide
where units can be located for manufacture of support facilities to SEZ processing area and
goods or rendering of services may include:
•Minimum processing area has been uniformly • Educational institutions
fixed at • Hospitals
50% for Multiproduct SEZs • Hotels
Upto 90 % for product specific SEZs • Recreation and entertainment facilities
• Residential and business complexes
Land Use Distribution (%) Multi Product Sector Specific ( IT/ITES ( Min. 10 Ha)
( Min. 1000 Ha) Min. 100 Ha)
Residential 35 50 50
Public Utility 15 10 10
Recreational 10 15
Transport & Communication 15 15
Green Belt 10

11. Area Allocation in terms of use.

12. Sector specific SEZs
• Pharma • Telecom Equipments
• IT/ITES • R& D
• Gems & Jwellery • Processed food & Bio eqp.
• Bio Technology • Entertainment & Recreation
• Chemicals
• Consumer appliances
• Medical equipments
• Engineering Based
• Apparel & Readymade
• Automotive components

13. Development Norms for Non Processing
Areas in SEZs.
Permissible FAR and land area is based on the following assumptions
• The area permissible for the non processing use is Max 50%
• The norms are based on 100 FAR on total area under non processing zone
• Min area for Sector Specific SEZ – 100 ha
• Min area for IT/ITES, Biotechnology, Gems and Jewellery SEZ- 10 ha
• Min area for Multi Product SEZ – 1000 ha.

14. Development Norms for Non Processing Areas in SEZs.
Development guidelines – Multi Product SEZ
FAR – 100
Total Floor Space – 50,00,000 sqmts
Floor Space utilization
Activity Percentage of floor Area in Sqmt
space
Residential – All types of housing typologies like villas, plotted housing 50 250000
apartments, condominiums etc as per the demand and need
Commercial – This includes retail commercial, hotels, service apartments, 25 125000
multiplex etc
Facilities – This includes schools college, social cultural institutes, 25 125000
hospitals, medical centers etc
Land Utilization
Activity Percentage of land Land in Ha
Area
Residential, commercial and facilities 55 27.5 (ground coverage 30%)
Open spaces 20 100
Circulation 25 125
Note: The overall ceiling in each category will be revised upwards in
proportion with the available FAR and area.

15. Development Norms for Non Processing Areas in SEZs.
Development guidelines – Sector Specific SEZ
Maximum area permissible for Non Processing Zone 50 Ha.
FAR – 100
Total Floor Space – 5,00,000 sqmts
Activity Percentage of floor Area in Sqmt
space
Residential – All types of housing typologies like villas, plotted housing 50 250000
apartments, condominiums etc as per the demand and need
Commercial – This includes retail commercial, hotels, service apartments, 25 125000
multiplex etc
Facilities – This includes schools college, social cultural institutes, 25 125000
hospitals, medical centers etc
Land Utilization
Activity Percentage of land Land in Ha
Area
Residential, commercial and facilities 55 27.5 (ground coverage
30%)
Open spaces 20 10
Circulation 25 12.5
Note: The overall ceiling in each category will be revised upwards in
proportion with the available FAR and area.

16. Development Norms for Non Processing Areas in SEZs.
Development guidelines – IT/ITES, Biotechnology, Gems and Jewellery SEZ
Maximum area permissible for Non Processing Zone 5 ha.
FAR – 100
Total Floor Space – 50,000 sqmts
Activity Percentage of floor Area in Sqmt
space
Residential – apartments, condominiums etc as per the demand and need 60 30000
Commercial – this includes retail commercial, hotels, service apartments, 15 7500
multiplex etc
Facilities – This includes schools social cultural institutes, medical 25 12500
facilities such as dispensary nursing home etc
Land Utilization
Activity Percentage of land Land in Ha
area
Residential, commercial and Facilities 75 3.75 (ground coverage 30%)
Open spaces 10 0.5
Circulation 15 0.75
Note: The overall ceiling in each category will be revised upwards in
proportion with the available FAR and area.

17. Area Requirements

18. Entities in SEZ

19. SEZs in India
At present there are Eight
functional SEZs located at:
• SantaCruz (Maharashtra),
• Cochin (Kerala),
• Kandla and Surat
(Gujarat),
• Chennai (Tamil Nadu),
• Visakhapatnam (Andhra
Pradesh),
• Falta (West Bengal) &
• Nodia (Uttar Pradesh)
Further a SEZ at Indore
(Madhya Pradesh ) is now
ready for operation.

20. Sector Allocation
FORMAL IN PRINCIPAL
Source: SEZ India *(As on 29.08.2007)

21. Sectoral Focus
As many as 439 SEZs have been approved
in principle, out of which 198 have been
notified till 8 March, 2008.

22. SEZ’S India vs China
• By the end of the 1990s, it was found that India’s EPZs were
not performing as well as China’s SEZs.
• Major reasons behind poor Indian SEZ’s performance w.r.t
China.
Limited scale and overcrowding.
Inadequate logistic supports.
Poor infrastructure.
Governments indifference and red tapism in matters of foreign direct
investment.
Lack of clarity in incentive packages.
Poor coordination between state and municipal governments with central
government, in the design, set up, and functioning of the zones.

23. SEZ’S India vs China
Issue China India
Size Typically in hundreds of Even 10 hectares will do
hectares.
Location located only on coasts. Anywhere. No restriction
Labour laws Relaxed Flexibility is totally absent
Policy regime Experimentation of liberal Based on fiscal sops
policies in the specified areas
Investors Basically foreigners who are Basically locals. Not foreign investor
wooed with sops and promise of driven
stability in policy.
Commencement In 1979 In 1969 with the export processing zone
concept, but it failed
Number Only six: Shenzhen, Zhuhai, So far 28 operational. About 200
Shantou, Xiamen, Hainan and received approvals
Pudong
Tax holidays Present Longer and steeper than in China

24. Falta SEZ
• Set up by the Government of India in the year 1984.
• Subsequently, two other SEZs were set up. They were
MANIKANCHAN SEZ for gems and jewellery and WIPRO SEZ
for IT and ITES, located at Salt Lake, Sector-V, Kolkata.
– It is about 55 kilometres from Calcutta city and 45
kilometres from the southern suburbs.
– It is well connected by a developed network of roads
including a State highway, two ports at Calcutta and
Haldia and International airport at Dumdum.
• Infrastructural Facilities available at FALTA SEZ
 Gross area 280 acres (acquired 87acres and transferred
from CPT 193acres).
 Location - Panchayat area.
 Area Developed- 253 acres (full infrastructural facilities)
 Area under development 27acres
 Built - up space - SDF-15570 sq.m.(2nos.) - fully allotted.
 Industrial shed- 15350sq.mtr.(7 nos) - fully allotted.
 1 million liters per day water supply with drainage
facilities.
 Electric sub-station for dedicated power supply for all
categories, supplemented by local sub-stations.

25. Falta SEZ
Total Valid Approvals – 182
Units in operation – 101
Units under implementation -30
Investment by Govt. of India - Rs 60.50 Crores
(cumulative).
Revenue Expenditure - Rs 02.27 Crores. (FY 2005 - 06)
Revenue Earned - Rs 4.19 Crores (FY 2005 - 06).
Investment
Units - Rs. 317.45 Crores
NRI - Rs. 8.89 Crores.
Foreign - Rs. 13.71 Crores.
STRENGTHS
 Effective investment host for the industry in the traditional manufacturing sector.
 Foreign trade profile consistent with local factor endowments.
 High rate of growth and rising share of this sector in the overall exports from the states of
W. B. as well as the Country.
 Low cost of operation.
 Ease of entry and lower cost of operation for commodity / volume driven products.
 ease of operation for niche products.
 Resource efficient scheme for export enhancement.
 Strong linkage with industrial capacity in the command and catchment area.

26. Falta SEZ
Social and Economic Infrastructure
• Telecommunication services, Post office including Courier
Services.
• Residential accommodation for Staff
• Container Handling Jetty - Capacity 5 containers per hour.
• Community Polytechnic for skill development and
training.
• Inland Container Depot (ICD).
Infrastructural Facilities
• Developed land & Built-up area at affordable and
attractive rates.
• Quality and Stable Power Supply
• Efficient road network
• Container Handling Jetty

27. Indore SEZ
Indore SEZ was notified prior to
the enactment of the SEZ Act
2005 and became operational
W.e.f. 15.08.2003.
This SEZ is the only Green Field
multi product SEZ of India as on
date and is spread over an area
of more than 1100 hectares
of land in Phase I & II
Industries of various sectors
such as Plastic, Engineering,
Pharmaceutical, Metal, Textile &
Food processing etc. are located
in the Zone.

28. Indore SEZ
Location
Adjacent to the Pithampur/Kheda industrial growth central complex which is one of the
leading growth centers of India and is situated near Indore the most advanced and developed
industrial town of M.P
Indore provides all the social infrastructure, civic facilities and other benefits to the growing
centers.
Connectivity of Indore to all major parts of the country is also a boon to the industries.

29. Indore SEZ
Salient features
Land is allotted on lease. The
lease is renewable. Allotment is
done by MPAKVN Indore Ltd.
The power is made available by
the developer. MPAKVN (I) Ltd.
has a direct power purchase
agreement with NTPC. The
provisional tariff is presently Rs.
2.70 per unit, plus Rs. 124 per
KVA as fixed charges.
ISEZ has a Customs wing, so that
on-site Customs clearances etc.
are available. Formalities for
Customs clearances for imports
& exports are completed within
the zone.

30. Indore SEZ

31. Conclusion
• SEZ policy has no doubt given a boost to the Indian Economy but comparison of implementation
with other countries brings out lacunas in India’s SEZ Policy.
• The reasons for disparities can be attributed to many reasons as listed below.
Improper SEZ policy
Irresponsible planning while locating SEZ
Ineffective Land Acquisition Policies
Improper Rehabilitation Policy
• Key challenges in the SEZs programme will be
• Due exercise of control while approving and locating SEZ’s.
• Compensation for acquisition shall be on the basis of market prices .
• Give share of acquired land in the developed area to the owners.
• Provision of employment for Landless labourers .
• Provision of revenue for ULBs on sharing basis to compensate their withdrawal once the area
is notified as SEZ.
• Development of SEZs needs to be integrated with existing Master Plans and Regional Plans.
• There is need to develop regional/sub regional plan around the SEZ areas.