Is the present SEZ policy appropriate? Yes, it is!   Prithujit Biswas Arpit Agarwal
Background <ul><li>Foreign lands within a country for taxing purposes </li></ul><ul><li>Started by India </li></ul><ul><ul...
Need for SEZs in India <ul><li>Poor infrastructure </li></ul><ul><li>Bureaucratic labyrinth </li></ul><ul><li>Inflexible l...
Advantages of SEZ <ul><li>Employment </li></ul><ul><li>Export </li></ul><ul><li>Infrastructure development </li></ul><ul><...
SEZ success stories in India <ul><li>First EPZ in asia in kandla in 1965. </li></ul><ul><li>SEZ policy first started in ap...
Advantages of SEZ <ul><li>Employment </li></ul><ul><li>21,00,000 jobs in total in SEZ  by the end of 2009. </li></ul><ul><...
Adv of SEZ <ul><li>Foreign investment </li></ul><ul><ul><li>SEZ investment constitutes 70% of total FDI in India. </li></u...
Success stories <ul><li>Infrastructure development. </li></ul><ul><li>Remote village turns to a developed town. </li></ul>...
Success stories <ul><li>Enhancement in the value of land. </li></ul><ul><li>Adanis are bringing a Port, railway lines, and...
Success stories <ul><li>Export </li></ul><ul><li>Single – Window Clearance in SEZs </li></ul><ul><li>Due to hassle free EX...
Export <ul><li>Exports from the functioning SEZs during the last four years: </li></ul><ul><li>YearValue  (Rs. Crore)  Gro...
Better living standard  <ul><li>Survey reports say that workers enjoy better working environment and wages in SEZ than out...
SEZ success stories <ul><li>Success story of a farmer. </li></ul><ul><li>In Gems and Jewelry park Hyderabad, 700 girls and...
SEZ success in China <ul><li>Shenzhen, Pudong, Xiamen, etc contribute nearly $100B in export. </li></ul><ul><li>Shenzhen s...
Not much revenue loss <ul><li>Most Export Oriented Units are given sops </li></ul><ul><li>Software companies are exempted ...
Farmers are gaining <ul><li>Most land acquired from subsistence farmers </li></ul><ul><li>SEZs skyrocket land prices – Far...
SEZs are NOT for land grabbing  <ul><li>Minuscule percentage of farm land to be used: </li></ul><ul><ul><li>Total cultivab...
Issues that remain un-resolved <ul><li>Rehabilitation and compensation policy unclear </li></ul><ul><ul><li>Land acquisiti...
Alternate models <ul><li>Pune’s Magar Patta City </li></ul><ul><ul><li>A sprawling ultra modern town-ship  </li></ul></ul>...
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Is The Present Sez Policy Appropriate

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Is The Present Sez Policy Appropriate

  1. 1. Is the present SEZ policy appropriate? Yes, it is!  Prithujit Biswas Arpit Agarwal
  2. 2. Background <ul><li>Foreign lands within a country for taxing purposes </li></ul><ul><li>Started by India </li></ul><ul><ul><li>Kandla EPZ - First SEZ in the world </li></ul></ul><ul><li>Chinese struck gold </li></ul><ul><ul><li>Shenzhen is the size of Kerala </li></ul></ul><ul><ul><li>38% CAGR </li></ul></ul><ul><ul><li>Contribution of $100B in $700B exports </li></ul></ul>
  3. 3. Need for SEZs in India <ul><li>Poor infrastructure </li></ul><ul><li>Bureaucratic labyrinth </li></ul><ul><li>Inflexible labor laws </li></ul><ul><li>Growing imbalance of trade </li></ul><ul><li>Need of investment </li></ul><ul><ul><li>Resounding success of NHDP model </li></ul></ul><ul><li>Desperate need to attract FDI to support growth </li></ul>
  4. 4. Advantages of SEZ <ul><li>Employment </li></ul><ul><li>Export </li></ul><ul><li>Infrastructure development </li></ul><ul><li>Foreign investment </li></ul><ul><li>Enhancement in the value of land </li></ul><ul><li>Better working enviroment </li></ul>
  5. 5. SEZ success stories in India <ul><li>First EPZ in asia in kandla in 1965. </li></ul><ul><li>SEZ policy first started in april 2000. </li></ul><ul><li>SEZ act with SEZ rules came into effect from 10 th Feb, 2006. </li></ul>
  6. 6. Advantages of SEZ <ul><li>Employment </li></ul><ul><li>21,00,000 jobs in total in SEZ by the end of 2009. </li></ul><ul><li>9,00,000 jobs in the next three years. </li></ul>
  7. 7. Adv of SEZ <ul><li>Foreign investment </li></ul><ul><ul><li>SEZ investment constitutes 70% of total FDI in India. </li></ul></ul>
  8. 8. Success stories <ul><li>Infrastructure development. </li></ul><ul><li>Remote village turns to a developed town. </li></ul><ul><li>An SEZ may be set-up in the public, private, or joint sector and/or by a state government. The policy requires the minimum size of an SEZ to be 1000 hectares. </li></ul><ul><li>Min 50 lakh worths of plant & machinery. </li></ul>
  9. 9. Success stories <ul><li>Enhancement in the value of land. </li></ul><ul><li>Adanis are bringing a Port, railway lines, and an airport to the barren land </li></ul><ul><li>Poor villagers turned into millionaires. </li></ul>
  10. 10. Success stories <ul><li>Export </li></ul><ul><li>Single – Window Clearance in SEZs </li></ul><ul><li>Due to hassle free EXIM policies, many companies like Nokia, Flextronics, Apache software, etc came to India. </li></ul>
  11. 11. Export <ul><li>Exports from the functioning SEZs during the last four years: </li></ul><ul><li>YearValue (Rs. Crore) Growth Rate 2003-2004 13,854 39% </li></ul><ul><li>2004-2005 18,314 32% 2005-2006 22 840 24.7 2006-2007 34,787 52.3% </li></ul><ul><li>Exports from SEZs is 6% of total now. </li></ul><ul><li>It will cross 1L Crore in 2008-09 </li></ul>
  12. 12. Better living standard <ul><li>Survey reports say that workers enjoy better working environment and wages in SEZ than outside for the same job. </li></ul><ul><li>Just 2 out of 280 laborers in Panipat were children. This created huge furor in Europe. </li></ul>
  13. 13. SEZ success stories <ul><li>Success story of a farmer. </li></ul><ul><li>In Gems and Jewelry park Hyderabad, 700 girls and 300 boys from landless laborer families found employment. </li></ul><ul><li>17 states and 2 union territories accepted SEZ. </li></ul>
  14. 14. SEZ success in China <ul><li>Shenzhen, Pudong, Xiamen, etc contribute nearly $100B in export. </li></ul><ul><li>Shenzhen success story: </li></ul><ul><ul><li>A “sleepy fishing village” transformed into a metropolis in 25 years. </li></ul></ul><ul><ul><ul><li>CAGR of 38% </li></ul></ul></ul><ul><ul><li>Today it contributes $35 billion in net exports to the Chinese economy </li></ul></ul>
  15. 15. Not much revenue loss <ul><li>Most Export Oriented Units are given sops </li></ul><ul><li>Software companies are exempted already </li></ul><ul><li>For Rs. X of revenue loss, turnover should be 15 X </li></ul><ul><ul><li>30% tax on 20% profit </li></ul></ul><ul><li>SEZs with turnover 23,000 Cr employ 1,00,000 </li></ul><ul><ul><li>One with 15L will employ 65L </li></ul></ul><ul><li>The amount of indirect taxes would be much more. </li></ul>
  16. 16. Farmers are gaining <ul><li>Most land acquired from subsistence farmers </li></ul><ul><li>SEZs skyrocket land prices – Farmers gain </li></ul><ul><ul><li>Earlier farm income was 6000-7000 per acre p.a. </li></ul></ul><ul><ul><li>Now he gets Rs.80L for third of his 3 acre land </li></ul></ul><ul><li>Excellent way to shift away from agriculture </li></ul><ul><ul><li>65% of people produce 20-22% of GDP </li></ul></ul><ul><ul><li>Most people upgrade skills to find employment around SEZs </li></ul></ul><ul><ul><ul><li>Bharat Forge is training local folks </li></ul></ul></ul>
  17. 17. SEZs are NOT for land grabbing <ul><li>Minuscule percentage of farm land to be used: </li></ul><ul><ul><li>Total cultivable land is 135M hectares (45%). </li></ul></ul><ul><ul><li>SEZs will occupy only 35,410 hectares </li></ul></ul><ul><li>Most land is already available with SIDCs </li></ul><ul><ul><li>Private developers acquire the rest from market </li></ul></ul><ul><li>Min 35% of area used for processing purposes </li></ul><ul><ul><li>Standard figure is around 10-12% for townships </li></ul></ul>
  18. 18. Issues that remain un-resolved <ul><li>Rehabilitation and compensation policy unclear </li></ul><ul><ul><li>Land acquisition remains state issue </li></ul></ul><ul><ul><li>Nandigram and Singur are examples of poor state government policies </li></ul></ul><ul><li>SEZs in IT and BioTech need just 10 hectare </li></ul><ul><ul><li>Small SEZs might seem like tax haven </li></ul></ul>
  19. 19. Alternate models <ul><li>Pune’s Magar Patta City </li></ul><ul><ul><li>A sprawling ultra modern town-ship </li></ul></ul><ul><ul><li>“ Walk to work, walk to school” concept </li></ul></ul><ul><ul><li>Farmers still own the land </li></ul></ul><ul><ul><ul><li>Earn a recurring income </li></ul></ul></ul><ul><ul><li>State government facilitated development </li></ul></ul>

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