Since early childhood, I have always been a dreamer at heart. In 1978, during a train ride from Bombay to Jabalpur enroute to Mandla, my maternal hometown, I imagined what it would be like having a 100km by 10km industrial corridor between Pipariya and Jabalpur on the lines of the famous Ruhr Valley of Germany. Ruhr valley is famous for its industrial history, originally based on coal mining and steel production and now benefiting from its industrial mix of energy production, environmental technologies and modern service industries. Ecological and economical problems, mainly the traumatic coal crisis in the 1960s, destroyed confidence and optimism. Most coal mines in the Ruhr Valley were shut down and the number of jobs was halved. Unemployment and social unrest were just some of the more pressing problems.
In the past decades considerable effort has lead to modernization and diversification of the economic base at the Ruhr. Nowadays, the 'Ruhrpott' is once more a thriving region and an enormous urban area. Bochum, Dortmund, Duisburg and Essen form an inter-connecting metropolis. The old industrial ruins have been converted into cultural venues. Ancient mine 'Zeche Zollverein' and can-like 'Gasometer Oberhausen' are just some of the highlights of the modern Ruhr Valley area. One of the things Germany has done right in the Ruhr is to invest heavily in higher education and research. Until 1965, the Ruhr had no universities. Now it boasts five universities and seven advanced schools of applied sciences. In addition, 13 cutting-edge research institutes have sprung up in the Ruhr since the early 1990s, including Frauenhofer and Max-Planck, thanks to $110 million a year in federal and state funding.
State and local governments also are channeling funds into cleaning up the smokestack industry graveyards and seeding new technology parks with startups in fields such as medical technology, computer services, biotech, renewable energy, e-logistics, and environmental technology. Bochum's growing talent pool drew Finnish mobile phone maker Nokia to locate its only German factory nearby, creating 2,300 jobs.
SEZs in India Are Powering Growth
India’s new SEZs are precisely aimed at creating this employment and exports. Some of them are already making news, like Dahej. The Special Economic Zone (SEZ) at Dahej has earned a pride of place among the top 25 best global economic zones, as per a global survey of 700-odd ‘free economic zones of the future' by ‘Foreign Direct Investment bimonthly magazine published by the Financial Times Group. The multi-product SEZ at Dahej on a fast trajectory growth for the last five years is ranked 23rd and is the only one from India. Situated on the coast of Gulf of Cambay, Dahej SEZ is spread over 1,700 hectares having attracted investment of nearly Rs.20,000-crore and providing employment to 22,000. When fully functional, Dahej PCPIR, falling on the Delhi-Mumbai Industrial Corridor (DMIC), is likely to touch export target of Rs.62,000-crore.
The even greater success story that has been reported is the doubling and more of exports from the new special economic zones. Exports from 111 such zones totalled $49 billion in 2009-10, up 123 per cent from the $22 billion earned in the previous year. Total exports last year, at $176 billion, were about 5 per cent lower than in the previous year. If you take out the SEZ numbers for the two years, then non-SEZ exports fell from $163 billion to $127 billion — a sharp drop of 22 per cent. Continuation of tax exemptions for SEZ units would undermine the effectiveness of the new direct tax laws. Defenders of the SEZ scheme, on the other hand, point out that the cost of preventing the exports sector from a virtual collapse in 2009-10 was a paltry Rs 5,200 crore by way of income-tax revenues, and Rs 3,200 crore of indirect tax revenues, which is what the government lost on account of the tax concessions given to SEZ units.
In view of this, the Central Board of Excise and Customs (CBEC) recommended an overhaul of the Special Economic Zone (SEZ) Act 2005 saying it has detected gross violations of duty and tax concessions causing it to suffer a revenue loss of Rs 1,75,000 crore to date. Broadly, the CBEC report has sought the removal of numerous exemptions, drawbacks and concessions that have turned SEZs into tax-avoidance conduits for importers and exporters without any genuine business to back them. The CBEC’s revenue loss estimate Rs 1,75,000 crore has been derived from concessions extended for capital goods and raw material procured by functioning SEZs developers and those that have been approved and are being set up (SEZs in the process of starting operations have to provide import estimates). The CBEC had estimated an overall revenue loss of Rs 3,50,000 crore involved in the creation of all SEZs since 2006, when the Act was passed.
The basic motive behind developing a special economic zone (SEZ) in India or in China, primarily in the developing countries is to attract mass foreign investments in the country. India Real Estate Investments have attracted huge foreign funds and thus the special economic zones in India have increased by and large. The SEZ norms and rules vary from country to country and region to region. SEZ land involved also decides the SEZ policy for the SEZ approvals. The SEZ Act 2005 announced the SEZ policy in India for setting up of any special economic zone in India. This Special Economic Zone Act 2005 set the guidelines and procedures for acquisition of SEZ land and SEZ development following the proper SEZ laws. Further amendments were made through SEZ Act 2006 and SEZ policy 2007.
The SEZ history dates back to 1965 when the first export processing zone was set up in Kandla, Maharashtra. That was the instigation for SEZ's in India. The SEZ Act in 2005 established India Special Economic Zones formally. SEZ notification as mentioned in the SEZ Act includes:
* To augment additional economic activity by attracting foreign direct investments
* To promote exports of goods and services
* To promote investment from domestic and foreign sources
* To create more employment opportunities
* To develop infrastructure facilities of global standards
SEZ India Benefits
* SEZ's offer economic progress to the area, the local inhabitants and the country as a whole
* Exemption from payment of stamp duty and registration fees on the lease/license of plots to the SEZ developer.
* External commercial borrowings of upto $500 million a year without any restriction of maturity to the SEZ developers.
SEZ Disadvantages
Special economic zones and the SEZ projects have instigated certain SEZ controversy and a SEZ debate regarding the SEZ Disadvantages:
* Revenue losses due to various tax exemptions and tax benefits awarded to the India special economic zones.
* Most Real Estate Developers In India are interested in setting up a SEZ to cash in the India real estate bubble by acquiring SEZ land at cheap rates and creating a land bank for themselves
Presently around 14 major special economic zones are functional in India:
* Santa Cruz, Mumbai, Maharashtra
* Cochin, Kerala
* Kandla And Surat in Gujarat
* Chennai, Tamil Nadu
* Vishakhapatnam, Andhra Pradesh
* Falta And Salt Lake in West Bengal
* Noida, Greater Noida in Uttar Pradesh
* Indore, Madhya Pradesh
* Jaipur, Rajasthan
Owing to the mass attraction of SEZ's in terms of the SEZ benefits or advantages, major Indian conglomerates are jumping into the SEZ development bandwagon. Some of the names that deserve mention here are Mahindra & Mahindra with Mahindra World City in Chennai and Reliance Industries along with Haryana Government and coming up Special Economic Zones by leading real estate builders and developers in India like Unitech India and DLF. The newer areas attracting SEZ development are Navi Mumbai, Manesar, Gurgaon, Noida, Indore, Dehradun, Kanpur, Kochi, Nandigram, Surat, Nagpur, surrounding areas of Pune, Goa, Bangalore, Hyderabad, Jaipur, and Karnataka.
SEZs in India Are Powering Growth
India’s new SEZs are precisely aimed at creating this employment and exports. Some of them are already making news, like Dahej. The Special Economic Zone (SEZ) at Dahej has earned a pride of place among the top 25 best global economic zones, as per a global survey of 700-odd ‘free economic zones of the future' by ‘Foreign Direct Investment bimonthly magazine published by the Financial Times Group. The multi-product SEZ at Dahej on a fast trajectory growth for the last five years is ranked 23rd and is the only one from India. Situated on the coast of Gulf of Cambay, Dahej SEZ is spread over 1,700 hectares having attracted investment of nearly Rs.20,000-crore and providing employment to 22,000. When fully functional, Dahej PCPIR, falling on the Delhi-Mumbai Industrial Corridor (DMIC), is likely to touch export target of Rs.62,000-crore.
The even greater success story that has been reported is the doubling and more of exports from the new special economic zones. Exports from 111 such zones totalled $49 billion in 2009-10, up 123 per cent from the $22 billion earned in the previous year. Total exports last year, at $176 billion, were about 5 per cent lower than in the previous year. If you take out the SEZ numbers for the two years, then non-SEZ exports fell from $163 billion to $127 billion — a sharp drop of 22 per cent. Continuation of tax exemptions for SEZ units would undermine the effectiveness of the new direct tax laws. Defenders of the SEZ scheme, on the other hand, point out that the cost of preventing the exports sector from a virtual collapse in 2009-10 was a paltry Rs 5,200 crore by way of income-tax revenues, and Rs 3,200 crore of indirect tax revenues, which is what the government lost on account of the tax concessions given to SEZ units.
The basic motive behind developing a special economic zone (SEZ) in India or in China, primarily in the developing countries is to attract mass foreign investments in the country. India Real Estate Investments have attracted huge foreign funds and thus the special economic zones in India have increased by and large. The SEZ norms and rules vary from country to country and region to region. SEZ land involved also decides the SEZ policy for the SEZ approvals. The SEZ Act 2005 announced the SEZ policy in India for setting up of any special economic zone in India. This Special Economic Zone Act 2005 set the guidelines and procedures for acquisition of SEZ land and SEZ development following the proper SEZ laws. Further amendments were made through SEZ Act 2006 and SEZ policy 2007.
The SEZ history dates back to 1965 when the first export processing zone was set up in Kandla, Maharashtra. That was the instigation for SEZ's in India. The SEZ Act in 2005 established India Special Economic Zones formally. SEZ notification as mentioned in the SEZ Act includes:
* To augment additional economic activity by attracting foreign direct investments
* To promote exports of goods and services
* To promote investment from domestic and foreign sources
* To create more employment opportunities
* To develop infrastructure facilities of global standards
SEZ India Benefits
* SEZ's offer economic progress to the area, the local inhabitants and the country as a whole
* Exemption from payment of stamp duty and registration fees on the lease/license of plots to the SEZ developer.
* External commercial borrowings of upto $500 million a year without any restriction of maturity to the SEZ developers.
SEZ Disadvantages
Special economic zones and the SEZ projects have instigated certain SEZ controversy and a SEZ debate regarding the SEZ Disadvantages:
* Revenue losses due to various tax exemptions and tax benefits awarded to the India special economic zones.
* Most Real Estate Developers In India are interested in setting up a SEZ to cash in the India real estate bubble by acquiring SEZ land at cheap rates and creating a land bank for themselves
Presently around 14 major special economic zones are functional in India:
* Santa Cruz, Mumbai, Maharashtra
* Cochin, Kerala
* Kandla And Surat in Gujarat
* Chennai, Tamil Nadu
* Vishakhapatnam, Andhra Pradesh
* Falta And Salt Lake in West Bengal
* Noida, Greater Noida in Uttar Pradesh
* Indore, Madhya Pradesh
* Jaipur, Rajasthan
Owing to the mass attraction of SEZ's in terms of the SEZ benefits or advantages, major Indian conglomerates are jumping into the SEZ development bandwagon. Some of the names that deserve mention here are Mahindra & Mahindra with Mahindra World City in Chennai and Reliance Industries along with Haryana Government and coming up Special Economic Zones by leading real estate builders and developers in India like Unitech India and DLF. The newer areas attracting SEZ development are Navi Mumbai, Manesar, Gurgaon, Noida, Indore, Dehradun, Kanpur, Kochi, Nandigram, Surat, Nagpur, surrounding areas of Pune, Goa, Bangalore, Hyderabad, Jaipur, and Karnataka.
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