SEZs can provide growth push

It was late Murasoli Maran who, as Minister of Commerce and Industry in the BJP-led NDA government, in the 200 Exim Policy allowed the setting up of Special Economic Zones with a view to providing an internationally competitive and hassle free environment for exports.


Special Economic Zone is a good concept in order to increase the growth of the economy. Basically SEZs are granted to manufacturing units which are export oriented. China has started its SEZ decade back and now it is contributing a good amount to its GDP.

China has only five economic zones but all of these are spread over a large area (150 sq. k.m.). Till now India has 14 functional SEZs and many more have been approved. The tragedy is that these zones are very small in area compared to the China’s SEZs. So it will be difficult to give the extra facility to the industries in SEZs as they are spread across the whole country.

The labor law has to be liberalized in order to make the SEZ a success. Our Industrial Dispute Act needs changes and the labor law needs to be reformed. But the political situation in India will not allow these changes to happen.

The main difference in India and China’s economy is export related growth. China was able to maintain its export growth through the special economic zone in which it was allowing duty free capital goods import, liberal hire and fire policies, tax holidays, assured quality infrastructure. But in India we are just granting the special economic zones but not doing much to help the organizations to get benefit out of that. As a result some companies are not going for special economic zones. Recently HP decided not to go for the SEZ even it had got the permission from the government.

Source: This is an analysis of an article by Mr. Nirupam Bajpai wchich came in Business Line on 10th November.