SEZ
AND NORTH-EAST INDIA – ECONOMY
News:
North-east India's
struggle with Special Economic Zones (SEZs)
What's
in the news?
● The
Northeast region's journey with SEZS has been marked by challenges and missed
opportunities.
● Despite
the approval of five SEZs in the region between 2007 and 2021, none have become
operational.
Key
takeaways:
Unoperational
SEZs in North-east:
1.
Unrealized IT SEZS:
● The
report underscores the delay in establishing IT SEZs in Manipur and Sikkim,
both of which were approved in 2013 and 2021 respectively.
2.
Nagaland's Unfulfilled Promise:
● Despite
approvals dating back to 2007-9, the SEZs in Nagaland remain dormant,
representing a missed opportunity for economic growth.
3.
Pending Agro-Products Zone:
● The
agro-products zone approved in Tripura in 2019 is yet to materialize,
indicating the need for coordinated efforts to overcome hurdles.
Special
Economic Zones (SEZ):
1.
Distinctive Zones:
● A
Special Economic Zone is an area characterized by distinct trade and business
regulations set apart from the rest of the country.
2.
Economic Objectives:
● SEZs
aim to enhance trade balance, encourage investments, generate employment,
facilitate efficient administration, and amplify economic growth.
3.
Favourable Financial Policies:
● SEZs
offer tailored financial policies that encompass investment, taxation, customs,
trading, quotas, and labour regulations.
4.
Tax Incentives:
● Businesses
within SEZS may benefit from tax holidays, a designated period of reduced
taxation upon establishment within the zone.
Inception
of SEZs in India:
1.
EPZS Pioneering:
● India
embraced the concept of Export Processing Zones (EPZS) with Asia's inaugural
EPZ established in Kandla in 1965.
2.
Genesis:
● India's
SEZ policy was inaugurated on April 1, 2000, with the intent of bolstering
foreign investments and creating a globally competitive environment for
exports.
3. Objectives:
● The
policy aimed to boost exports, level the playing field for domestic
enterprises, and provide a comprehensive legal framework for SEZ development
and operation.
4.
Regulatory Framework:
● The
SEZ Act of 2005 furnished the regulatory umbrella covering crucial aspects of
SEZS and the units operating within them.
Distinct
Characteristics of SEZs:
1.
Diverse Zone Types:
● SEZs
encompass various categories such as free-trade zones (FTZS), export processing
zones (EPZS), industrial estates (IES), free ports, and more.
2.
Enhanced Foreign Investment:
● SEZs
attract foreign direct investment (FDI) by multinational corporations (MNCs)
and international businesses, spurring economic growth.
Setting
up SEZs in North-east:
1.
Open to All:
● Any
private, public, joint sector, state government, or its agencies can establish
an SEZ.
2.
Foreign Participation:
● Foreign
agencies are also permitted to establish SEZs in India.
3.
States Role:
● State
government representatives within inter-ministerial committees on private SEZS
offer consultations on proposals.
4.
Infrastructure Provision:
● State
governments must ensure the provision of essential resources like water and
electricity before SEZ proposals are recommended.
5.
Labor Laws:
● SEZs
adhere to normal labour laws, enforced by respective state governments, with a
focus on simplification of procedures and introducing single-window clearance.
Significance:
1.
Economic Boost:
● SEZs
aim to streamline business processes, improve infrastructure, and offer tax
benefits, propelling FDI and export growth.
2.
Trade Growth:
● SEZs
contribute significantly to India's exports by providing a conducive
environment for production and export-oriented activities.
3.
Investor Attraction:
● The
relaxation of regulations and access to advanced infrastructure in SEZs
encourages international investors seeking to capitalize on export-driven
opportunities.
By leveraging the unique strengths of the Northeast,
the government has the chance to not only rectify the current situation but
also contribute to the inclusive economic growth of the entire nation.