MACRO ECONOMICS
SEZs
HIGHWAY TO INDIAN ECONOMIC GROWTH?
SUBMITTED BY:
DEEPTI MITTAL
INTRODUCTION
There has been much debate about the role Special Economic Zones (SEZs) play in the economic growth of a country, and whether they should be the first option, or the next best policy.
The promise of Special Economic Zones (SEZs) has captivated entrepreneurs of all hues and sizes. At last count, 263 SEZs had been sanctioned, while another 169 had received in-principle approvals.
The SEZs hysteria is almost similar to what happened with dotcoms in the late 1990s- a hasty rush into sector that held out promise of untold gains. What came next is business folklore.
Are we seeing something similar in making over here as well? The best thing that goes in favour of SEZs is that the creation of infrastructure will shift into the hands of Private players. But are we realizing the serious implications of setting up SEZs and underestimating the risks involved with them. In the two instances where SEZs have worked globally, the Jebel Ali Free Zone in Dubai and Shenzhen in China, the government made the initial investments. The primary motive wasn't profits, but to create world-class infrastructure that would attract capital.
In contrast, In India it is Private sector who is putting in all the money. According to Industry estimates, Indian SEZs will soak up anywhere between Rs 330000 crore to Rs 550000 crore. This is more than what the entire industry has invested in the past five years- Rs 320000 crore. That is equivalent of pumping 15-175 of India's GDP into one grand reality development plan.
Along with Puerto Rico, India was one of the first countries in the world to set up an Export Processing Zone (EPZs) in ...