SPECIAL ECONOMIC ZONES UNDER FIRE

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SPECIAL ECONOMIC

ZONES UNDER FIRE


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CASE DETAILSO The concept of free zone - Export Processing

Zone (EPZ) -emerged during the 1960s

O

The basic objectives of these zones were topromote exports and employmentopportunities

O Various concessions offered by the

Government

O A conscious attempt on the part of policymakers to replicate such models in manyregions, especially in countries such as China.


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CASE DETAILSO SEZs in China vs India

O

Key concerns in Indias SEZ policy.


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State/Union TerritoryNumber of operational Special Economic

Zones (June 2012)Number of SEZs formally

approved (June 2012)

Andra Pradesh 36 116

Tamil Nadu 28 77

Karnataka 20 62

Maharastra 18 119

Gujarat 13 53

Kerala 7 29

Uttar Pradesh 6 35

West Bengal 5 24

Rajasthan 4 11

Haryana 3 49Chandigarh 1 2

Madhya Pradesh 1 17

Odisha 1 10

Punjab 0 8

Goa 0 7

Chhattisgarh 0 3

Delhi 0 3

Dadra and Nagar Haveli 0 2

Nagaland 0 2

Puducherry 0 2

Uttarakhand 0 2

Jharkhand 0 1


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Evaluate critically the salientfeatures of Indias SEZ policy.


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O Location and size of SEZs

O Displacement , Compensation &

Rehabilitation

O Land acquisition & Impact on communities

O Goods and Service Tax

O Lack of coordination

O Shifting of existing manufacturing units to

SEZs


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Key differences in the

approach to develop SEZs inIndia vis--vis China


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India China

IntroductionScheme on SEZ was introduced

in 2000

First SEZ was set up in

1980 with an eye on luring

dollars back into China

Size

Largest SEZ being developed by

Relience at Navi Mumbai is only

5000 hectares

Chinas largest SEZ is the

one at Shenzhen which is

49,300 hectares

InvestorsCan be set up by the public,

private or joint sectors

Developed mostly by the

government

LocationSEZs in India are across the

length and breadth

SEZs are strategically

located; mostly on the

coastal areas

Tax incentives Incentives are offered to all SEZsIncentives depend on

various conditions


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SEZs are likely to cause moreharm to India rather than

benefit the society as a whole-Discuss


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Positive ImpactO Employment generation

O Contribution to respective States GDP

O Creation of world class self containedinfrastructure

O Increase in States revenues from VAT(Value added tax), Property taxes, StampDuty etc


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Negative ImpactO Shrinking Agricultural Area

O Inadequate compensation to farmers

O Decrease in crop production- leading to water andfood crisis

O A substantial loss of revenue- with manufacturingand service moving to these tax free havens

O Fertile lands being used for establishing industrialunits


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ConclusionO SEZ can become a dangerous tool

O A well defined strategy required for SEZsto be successful

O Rehabilitation and resettlement schemes

must be formulated so that the process ofindustrialization is not hampered


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Explore the SEZ strategy usedby any four developingcountries and carry out acritical evaluation.Suggest a strategy for your own

country to promote exportproduction.


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BANGLADESHO There are currently eight zones. Businesses

from 32 countries have so far invested in theexisting zones.

O The primary objective is to provide specialareas where potential investors would find acongenial investment climate, and locationfree from cumbersome procedures.

O In 2010, FDi magazine ranked ChittagongEPZ as one of best competitive specialeconomic zones in the world.


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PHILLIPINESO As of 31 May 2010, there were more

than 200 Ecozones in the Philippines

O Business establishments operatingwithin Ecozones from all taxes

O Business establishments are only

required to pay five percent (5%) of their

gross income to the nationalgovernment.


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O Activities Eligible for PEZA Registration

and Incentives include but are not limitedto

(1) Export Manufacturing;

(2) Information Technology Service

Export;(3) Tourism;

(4) Medical Tourism;

(5) Agro-industrial Export

Manufacturing;(6) Agro-industrial Bio-FuelManufacturing;

(7) Logistics and WarehousingServices


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RUSSIAO Russian legislation outlines four types of

special economic zones:

Industrial and development zones

Technological implementationzones

Tourist and recreational zones

Port zones.

O Russia has two industrial and developmentzones, four technological implementationzones ,seven tourist and recreational zonesand three port SEZs


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JAMAICAO Designed to encourage foreign investment

and international trade

O Businesses operating within these zoneshave no tax on their profits, and areexempted from customs duties on importsand exports (capital goods, raw materials,construction materials, and officeequipment) and import licensing

requirements.O Companies outside of the zones can apply

for free zone status as Single Entity FreeZones


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Strategy For India

O Expansions of the Port SEZ

O

Increased investment in Medical TourismSEZ

O Proper implementation of the SEZ policy


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SPECIAL ECONOMIC ZONES UNDER FIRE

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