Dr. Manoj Pant, Professor at the Centre for International Trade and Development, JNU(Jawhar Lal Nehru University), New Delhi said in his report not to have any SEZ. Considering the recent spat between Finance Ministry and Commerce Ministry over loss of revenue, Land grabbing cases, and finally the SEZ approval process biased towards the first few applicants by capping and then removing the cap on SEZs have all embrolied the SEZ into a big controversial legislation which needs to be straightened out.
I feel that the economic policies in the 1990s were better with the government extending tax holidays and other concessions to develop the underdeveloped remote areas of India. While in case of SEZs the concentration has mainly been in the metros and developed industrial areas plus more benefits than in the 1990s.
What are India’s principal exports of manufactures and services? These are gems and jewellery, textiles and clothing, automobiles and parts and IT services.
Yet, all these exports are coming out of naturally developed clusters in areas like Chennai, Bangalore, Tirupati, Delhi and Surat. In IT, for example, there is no evidence that the government did anything special to develop the Bangalore or Delhi clusters.
Prof. Pant adds that,
A good trade policy is one which is trade neutral: it gives no special preference to either exports or imports. The SEZ incentive scheme violates this provision. A survey of incentives for FDI in South Asia done by this author (International Studies, vol.43,no.1,2006) illustrates this point. No country in this region has calculated the cost-benefit of giving incentives to FDI and these incentives might often cost more than the benefits from the activity.
There is an additional problem. Given the enormous economic incentives available to units in SEZs, there would be an incentive for existing units to switch locations. The government move to prevent this makes no sense: why should incremental exports be given preferential treatment?
Absolutely Correct!!! Look at how our neighbors opened their SEZs, sure we need not copy, but can you read this - "In 1984, China further opened 14 coastal cities Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai to overseas investment" They had a much better policy in place on developing under served regions by attracting foreign investments. How many of the SEZs cleared in India have FII or overseas industrial participation ? Where is the cost advantage in setting up an SEZ for a MNC like Apple Computers or Ford Motors? They are getting tax benefits, duh! Hope our FM is listening ;-)
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