Special Economic Zones (SEZs) were established in many countries as testing grounds for implementation of liberal market economy principles. SEZs are viewed as instruments enhancing the acceptability and credibility of transformation policies, attracting domestic and foreign investment and also for boosting the economy.
Countries around the world initiated Free Trade Agreements (FTAs) which eventually led to a spurt of investments in infrastructure developments for Free Trade Zones (FTZs) and SEZs. Countries with economies similar to that of India eg; China, Iran, UAE and Jordan are good examples of success stories in SEZs. The Shenzhen SEZ in China is a perfect example of a SEZ success story.
The concept of SEZs in India was initiated to promote the value addition component in exports, generate employment as well as mobilise foreign exchange. In India, the government has been proactive in the development of SEZs. They have formulated policies, reviewed them occasionally and also ensured that ample facilities are provided to the SEZ developers as well as the companies setting up units in SEZs. These favourable conditions resulted in the biggest ever corporate rush for the development of SEZs in India. Over 234 companies received formal approval, 162 companies received in-principle approval and 100 companies received notification to set up SEZs. The Indian government is expecting an investment to the tune of Rs.53,561 crore (USD 13274 million) and an additional job creation for 15,75,452 individuals in SEZs by December 2009.
Though the projected figures and expected revenues in SEZs estimated by the government and industry experts are buoyant, the ground realities reveal a different story. Despite all the efforts to promote this concept, SEZ development has become the most controversial issue for India today. The recent uprisings, protests and closure of some enormous projects have demonstrated that the concept though very lucrative was not given enough thought before its implementation. It is very important to understand all aspects of SEZs like basic concepts, its various models and the life cycle of its business before initiating any policy or investments for these projects. Though the existing SEZ Act and FDI Policies for SEZs are very tempting and promise high returns; the rationale behind the rapid economic and industrial growth of the Indian SEZ policy is being questioned today. With the unending list of trouble shooting problems in India, it becomes crucial for the Government to understand the business of SEZs in India before embarking on any new approvals.
Countries around the world initiated Free Trade Agreements (FTAs) which eventually led to a spurt of investments in infrastructure developments for Free Trade Zones (FTZs) and SEZs. Countries with economies similar to that of India eg; China, Iran, UAE and Jordan are good examples of success stories in SEZs. The Shenzhen SEZ in China is a perfect example of a SEZ success story.
The concept of SEZs in India was initiated to promote the value addition component in exports, generate employment as well as mobilise foreign exchange. In India, the government has been proactive in the development of SEZs. They have formulated policies, reviewed them occasionally and also ensured that ample facilities are provided to the SEZ developers as well as the companies setting up units in SEZs. These favourable conditions resulted in the biggest ever corporate rush for the development of SEZs in India. Over 234 companies received formal approval, 162 companies received in-principle approval and 100 companies received notification to set up SEZs. The Indian government is expecting an investment to the tune of Rs.53,561 crore (USD 13274 million) and an additional job creation for 15,75,452 individuals in SEZs by December 2009.
Though the projected figures and expected revenues in SEZs estimated by the government and industry experts are buoyant, the ground realities reveal a different story. Despite all the efforts to promote this concept, SEZ development has become the most controversial issue for India today. The recent uprisings, protests and closure of some enormous projects have demonstrated that the concept though very lucrative was not given enough thought before its implementation. It is very important to understand all aspects of SEZs like basic concepts, its various models and the life cycle of its business before initiating any policy or investments for these projects. Though the existing SEZ Act and FDI Policies for SEZs are very tempting and promise high returns; the rationale behind the rapid economic and industrial growth of the Indian SEZ policy is being questioned today. With the unending list of trouble shooting problems in India, it becomes crucial for the Government to understand the business of SEZs in India before embarking on any new approvals.
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