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GNLU/Ph.D./2011/007GNLU/Ph.D./2011/007
KALPESHKUMAR GUPTAKALPESHKUMAR GUPTA
Ph.D. Thesis Seminar at
Gujarat National Law U...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Introduction :-
 What is Special Economic Zone ?
 Aggarwal Aradhna (2004) defines Export Processing Zones
(EPZs) as spec...
Introduction :-
 Kandla SEZ, Kutchch is Asia’s & India’s first EPZ. (Set
up in 1965).
 Mr. Murasoli Maran, the then Comm...
Introduction :-
K L Gupta 6
Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016
Introduction :-
K L Gupta 7
Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016
Introduction :-
K L Gupta 8
Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016
K L Gupta 9
District
SEZ approved by
Govt. of India
% of approved
SEZs
Kutchch 16 28
Ahmedabad 15 26
Bharuch 8 14
Gandhina...
K L Gupta 10
Sector
SEZ approved by
Govt. of India
% of approved
SEZs
IT/ITES 12 21
Multi-product 11 19
Engineering 5 9
Ph...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Literature Review :-
K L Gupta 12
Literature Review :-
K L Gupta 13
 Linkage with domestic economy (Rabbani F. A., 1980)
 Develop external economic co-operation and technological
exchanges...
Cont…
K L Gupta 15
Cont…
 China designated four SEZs as laboratories for its
experiments with market economy and foreign investment.
(Xie Wei, 200...
 Though the gross exports, foreign exchange earnings and
employment increased phenomenally in absolute terms,
their growt...
 SEZ as India’s supersonic engine of growth against latest
land grab instrument. (Kujur Rajat Kumar, 2007)
 Large SEZs o...
 State Government – Investor Synergies. (Mukherjee Rahul,
2007)
 Non compliance of NFE provision. (Upadhyaya Himanshu,
2...
 Uneven distribution of SEZ investments across the country.
(Gopinath D, 2009)
 IT Zone concern. Quality of zone adminis...
 SEZ encouraging existing industries to locate in SEZ.
(Mukhopadhyay Partha & Kanhu Charan Pradhan, 2009)
 Use of eminen...
 Prioritizing sectors which need to be developed. (Tantri
Malini, 2010)
 Most appropriate development strategy is one, w...
 Real estate corruption, regional imbalance, review of existing
tax incentives. (Singala Subbaiah, 2011)
 Need to restru...
K L Gupta 24
Cont…
Cont…
 In Cochin SEZ, 55% workforce are contractual and don’t
enjoy any benefit as regular employee. (Venugopal P N,
2005)
 Ma...
 Need of social infrastructure. (PriceWaterhouse Coopers,
2008)
 Below minimum wages, environmental damage.
(Ananthanara...
 Govt.’s inability to define priorities, and regulate and
manage the phenomenon called SEZs. (Mukhopadhyay
Partha, 2009)
...
 The role of SEZs in human capital formation appears to be
relatively limited. (A Abdul Raheem, 2011)
 There is a need t...
The onus of land acquisition would be entirely on negotiations
between prospective SEZ entrepreneurs and the owners of
ag...
Literature Review :-
K L Gupta 30
Special Literatures :-
 Reluctance of zone officials and tenants to respond surveys.
(Malhotra Shavin, 2008)
 Lack of tr...
Literature Review (Gist) :-
K L Gupta 32
Research Gap :-
 No comprehensive study has been done on Economic & Legal
aspects of Special Economic Zone at central lev...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Research Problem:-
As we have seen that India embarked on journey of SEZ model
looking at success of Chinese SEZ. Exclusiv...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Objectives of the Study :-
Followings are the main objectives of the present study.
 To evaluate economic impact of SEZs ...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Hypotheses of the Study :-
Followings are the hypotheses of the present study.
 Special Economic Zone has promoted econom...
Universe of the Study :-
 417 formally approved, 32 in principally approved, 330
notified and 205 exporting SEZs in India...
Selected SEZs :-
1. Kandla SEZ, Kutchch (2000)
2. Surat SEZ, Surat (2000)
3. Surat Apparel Park (2005)
4. Adani Port & SEZ...
Data Collection & Analysis :-
Primary Data
 SEZ Act, 2005 & SEZ Rules, 2006
Secondary Data
 Articles from Journal, Books...
Scope of the Study :-
Present study is going to analyze Economic & Legal
aspects of SEZs and the researcher has confined h...
Scheme of Chapterization :-
Total 5 chapters
C 1 – Introduction to SEZs
C 2 – Legal Provisions regarding SEZs in India
C 3...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
Data Analysis & Interpretation :-
Investment (Overall)
Growth 1.72 (2012-13), 14.33 (2011-12), 6.23
(2010-11), NA (2009-10...
Export-Import
Slow growth of exports
Heavily dependent on Imports
Less net export earnings, in some cases in negative
Expo...
Net Foreign Exchange Earnings (NFEE)
NFEE most imp tool to measure performance of any SEZ. Its
requirement under law for c...
Domestic Procurement
Domestic procurement data shows the domestic linkages which is
utmost necessary for overall growth of...
Domestic Tariff Area (DTA) Sales
SEZs are allowed to sell goods in domestic tariff area provided
that they have achieved p...
Revenue Loss
RTI filed in Ministry of Finance to get this data.
Loss of Direct Tax & Indirect Tax, - Yearwise, Statewise
T...
K L Gupta 52
More than 1200+ replies
Wastage of Rs. 50, 000 + to govt. treasury
De-notification of SEZs
De-notified SEZ – 3
Under Process of De-notification – 5
Partly De-notified – 4
De-notification of...
Existed SEZ Unit
As per data available total 135 units closed down in last 8 years.
Most of SEZ have not provided the info...
CAG Findings
As per CAG report there is still no revenue outcome analysis at
the economic and the Govt. levels.
SEZs are c...
Single Enforcement Officer/Agency u/s. 21
No information provided.
Development Commissioner of the respective zone has bee...
Employment
Average employment in last five 8.71% year.
Most of SEZs have not provided the information.
SEZs which have pro...
Labour Laws compliance
All labour laws are applicable to SEZs. Most of SEZs have not
provided information under RTI
As per...
Agency/Officer nominated u/s 20 of SEZ Act, 2005
No information provided under RTI for appointment of
officer/agency.
No o...
Reference of Dispute u/s. 42 of SEZ Act
Most of SEZs have not provided information. As per available
information no signif...
Implementation of guidelines for Green SEZ
Policy implementation is in nascent stage.
Some of the SEZs implementing the po...
Land Acquisition/Environmental
Field visit not possible due to permission issue. As per secondary
data available no advers...
Locational Difference
SEZs have been established in four regions very well. Kutchch,
Ahmedabad, Bharuch have huge potentia...
Outline :-
1. Introduction
2. Literature Review
3. Research Problem
4. Objectives of the Study
5. Research Methodology
6. ...
 There is insignificant growth in overall investment.
Investment in Gujarat is very low compared to national
average.
 G...
 Govt. of India does not have proper mechanism to carry
out cost benefit analysis of SEZs operation.
 Good no. of SEZs h...
 No designated court u/s. 23 of SEZ Act to try all suits of
a civil nature and notified offences.
 Most of the SEZs have...
 Gujarat huge share in exports but only Reliance SEZ
effort. Performance of other SEZs needs to be evaluated
timely.
 Gr...
 Central Govt. should appoint independent
person/agency as single enforcement officer/agency
u/s. 21 rather than giving p...
 Updated information is not available with various
govt. offices, website. They is mismatch regarding
information availab...
 No proper response of RTI application. Transfer of
application from office to another.
 Govt. offices are not maintaini...
As we seen in the above discussion that there are
various economic and legal aspects of SEZ in India and
Gujarat, which ca...
References :-
150+ references including web sources
K L Gupta 73
K L Gupta 74
Kalpeshkumar L Gupta
www.klgupta.in
75
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Study on Economic & Legal Aspects of Special Economic Zones - Set Up In Gujarat Under the Special Economic Zones Act, 2005

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Study on Economic & Legal Aspects of Special Economic Zones - Set Up In Gujarat Under the Special Economic Zones Act, 2005

  1. 1. GNLU/Ph.D./2011/007GNLU/Ph.D./2011/007 KALPESHKUMAR GUPTAKALPESHKUMAR GUPTA Ph.D. Thesis Seminar at Gujarat National Law University, Gandhinagar, Gujarat, India February 4, 2017 1 Dr. J T DesaiDr. J T Desai SupervisorSupervisor
  2. 2. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 2
  3. 3. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 3
  4. 4. Introduction :-  What is Special Economic Zone ?  Aggarwal Aradhna (2004) defines Export Processing Zones (EPZs) as special enclaves, separated from the Domestic Tariff Area (DTA)  by fiscal barriers and are intended to provide an internationally competitive duty free environment for export production at low cost and benefitted usually from modern and efficient infrastructure, general fiscal and non-fiscal concession to firm and better governance due to single window facilities to ensure corruption and red tape free business environment.  SEZ is big area compared to EPZ having more benefits.  SEZ are mainly of two types Sector Specific & Multi-product. K L Gupta 4
  5. 5. Introduction :-  Kandla SEZ, Kutchch is Asia’s & India’s first EPZ. (Set up in 1965).  Mr. Murasoli Maran, the then Commerce Minister visited China, impressed by Chinese SEZ esp. Shenzhen SEZ and he brought SEZ Concept in 2000 and included in EXIM policy.  7 EPZs converted in SEZ (Kandla 1965, Santacruz 1973, Noida 1985, Chennai 1984, Cochin 1984, Falta 1984, Vishakhapatnam 1989).  New Law passed SEZ Act, 2005 and rules SEZ Rules, 2006.  Total 417 SEZs have formally been approved (Top IT 62%, Biotech 5%, Multi-product 5%, Pharma 5%), 205 Operational.  SEZs having share of around 25% in total exports of India & Gujarat SEZ having 45% share in total exports from SEZs in India. K L Gupta 5
  6. 6. Introduction :- K L Gupta 6 Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016
  7. 7. Introduction :- K L Gupta 7 Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016
  8. 8. Introduction :- K L Gupta 8 Source : www.sezindia.nic.in as on May 10, 2016 accessed on June 30, 2016
  9. 9. K L Gupta 9 District SEZ approved by Govt. of India % of approved SEZs Kutchch 16 28 Ahmedabad 15 26 Bharuch 8 14 Gandhinagar 6 11 Surat 3 5 Vadodara 3 5 Valsad 2 4 Amreli 2 4 Mehsana 1 2 Jamnagar 1 2 Total 57 100 District wise Distribution of SEZs in Gujarat www.ic.gujarat.gov.in. accessed on March 5, 2013
  10. 10. K L Gupta 10 Sector SEZ approved by Govt. of India % of approved SEZs IT/ITES 12 21 Multi-product 11 19 Engineering 5 9 Pharmaceuticals 4 7 FTWZ 3 5 Chemicals 2 4 Textile 2 4 Apparel 2 4 Alternative Energy 1 2 Bio-tech 1 2 Ceramic Glass 1 2 Electronics 1 2 Energy 1 2 Flat Steel 1 2 Food Processing 1 2 Handicrafts & Artisan 1 2 Multi-product Port based 1 2 Multi-services 1 2 Non-conventional energy 1 2 Oil & Gas 1 2 Plastic 1 2 Polymer 1 2 Power 1 2 Total 57 100 Sector-wise Distribution of SEZs in Gujarat www.ic.gujarat.gov.in. accessed on March 5, 2013
  11. 11. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 11
  12. 12. Literature Review :- K L Gupta 12
  13. 13. Literature Review :- K L Gupta 13
  14. 14.  Linkage with domestic economy (Rabbani F. A., 1980)  Develop external economic co-operation and technological exchanges and promote the socialist modernization programme. (D R Phillips & A G O Yeh, 1983)  Kandla FTZ had little success by any criteria. (D L LiJayawardena, 1983  Chinese carefully researched a number of existing zones in preparation for establishing their own. (Clyde D. Stoltenberg, 1984)  EPZs in Asian countries have been developed primarily with the aim of supporting the strategy of export led growth. Setting up an EPZ is probably not a difficult task, but to make it work is a completely different matter. When EPZs were first established, they were usually not integrated with the domestic economy, but in the long run, they should be an integral part of national development and should complement the growth of the domestic tariff sector. (Kwan Yiu Wong & David K Y Chu, 1984) Cont… K L Gupta 14
  15. 15. Cont… K L Gupta 15 Cont…
  16. 16.  China designated four SEZs as laboratories for its experiments with market economy and foreign investment. (Xie Wei, 2000)  China, based on the SEZ strategy, embarked on its economic open policy. (Albert G. Schweinberger, 2003)  SEZ strategy serves to attain the goals of both increased attraction of foreign capital and protection of domestic infant industries simultaneously. (Young Namkoong, 2003)  China’s idea is to minimize the gap between social and economic development in the region. (Nadeem M Firoz & H Amy Murray, 2003)  The results do suggest that a heavy reliance on foreign investors is unlikely to maximize the welfare of citizens and that there should be a balance between domestic and foreign investment. National interest may hold only if the zones generate private profit to domestic shareholders. (Kankesu Jayanthakumaran, 2003) Cont… Cont… K L Gupta 16
  17. 17.  Though the gross exports, foreign exchange earnings and employment increased phenomenally in absolute terms, their growth rates declined substantially. (Aggarwal Aradhna, 2004)  To be globally competitive, Indian industry needs to invest in quality and reputation. (Sheth Jagdish, 2004)  SEZ’s has inadvertently created a nest of bad elements such as widespread official corruption, smuggling, prostitution. (Liu Haishan, 2005)  Zones should not be considered the best policy option for long-run industrial development. (Aggarwal Aradhna, 2006)  Manufacturing units would shift base to the SEZ just to escape tax. (Menon Ramesh, 2006)  Frequent modifications in the policy will only detract serious investors from investing in SEZs. (Tyagi Vinay et al, 2007) Cont… Cont… K L Gupta 17
  18. 18.  SEZ as India’s supersonic engine of growth against latest land grab instrument. (Kujur Rajat Kumar, 2007)  Large SEZs on the Chinese pattern may not be suited to our conditions because India does not have vast tracts of contiguous land located close to ports. (Aggarwal Aradhna & Rajiv Kumar, 2007)  SEZs will aggravate regional disparities. (Bijoy C R, 2007)  Valuable resources spent to create SEZs will be at the cost of building better infrastructure for the rest of the country, something that will affect both the domestic industry as well as agriculture. (Goswami Bhaskar, 2007)  Thus once again rather than building a space for new opportunities, SEZs appear to be becoming a space for intensification of old ones. (Gopalakrishnan Shankar, 2007)  Benefit from SEZs can only be achieved by including the rest of the economy. (Erlend Reigstad, 2007) Cont… Cont… K L Gupta 18
  19. 19.  State Government – Investor Synergies. (Mukherjee Rahul, 2007)  Non compliance of NFE provision. (Upadhyaya Himanshu, 2008)  The conversion of fertile land into industrial land may create food crisis in near future.(Khan Saeed, 2008)  The government must slow down the process of giving approvals. This is important not only for social or political reasons but also due to economic realities. Restore STPI and EOUs benefits. (Chaterjee Sumana, 2008)  Lack of co-ordination between Commerce Ministry & Finance Ministry. (Pillai Manoj, 2008)  Developing SEZs in states which are lagging compared to other states can help to alleviate the inequities which will boost overall consumption. (Nema Pradeep & Pradeep Pokhariyal, 2008) Cont… K L Gupta 19 Cont…
  20. 20.  Uneven distribution of SEZ investments across the country. (Gopinath D, 2009)  IT Zone concern. Quality of zone administration key determinants behind success of zones.(Amitendu Palit, 2009)  India is far behind in investing in skills and training of a large work force that mans its export factories like China. (Kasturi Kannan, 2009)  Growing number of SEZs with sector-specific small sized fragmented zones may not yield the desired results. (L. Lakshmanan, 2009)  SEZ may not have major impact on employment and exports (5% of total exports in India) (Shah Deepak, 2009)  The locations for the new SEZs should be selectively done so that they spread development and address existing regional imbalances. (S Narayan Menon & Soumya Kanti Mitra, 2009) Cont… K L Gupta 20 Cont…
  21. 21.  SEZ encouraging existing industries to locate in SEZ. (Mukhopadhyay Partha & Kanhu Charan Pradhan, 2009)  Use of eminent domain for acquisition of land. (Sivaramakrishnan K C, 2009)  Data on EPZs is scant. ILO only collecting data on SEZ. Case study will be best method for study. (Nicola A. V. Virgill, 2009)  Land is treated as a transferable commodity in the market with no focus on people or their livelihoods. (Vaddiparti Neha & Sheela Prasad, 2010)  Small size of SEZ. IT/ITES SEZs. (D Nagayya & T V Rao, 2010)  Indian export promotion policies failed because the Indian government pursued a top down export promotion strategy rather than a bottom up strategy. (Seshadri Triyakshana & Virgil Henry Storr, 2010) Cont… K L Gupta 21 Cont…
  22. 22.  Prioritizing sectors which need to be developed. (Tantri Malini, 2010)  Most appropriate development strategy is one, which has a vision of developing both agriculture and industry simultaneously. (P Murugesan & P K Bandgar, 2010)  SEZs are not creating mfg. base. (Loraine Kennedy, 2010)  Coercive tactics for land acquisition, lesser compensation. (Rawat Vidya Bhushan et al, 2011)  Regional disparity. (Tantri Malini, 2011)  Shenzhen SEZ has experienced extraordinary growth. (Mee Kam Ng, 2011)  Shenzhen suffers from a lack of overall planning. (Madalina Giorigiana Mangra et. Al, 2011)  Indian government incurs a net financial loss on the SEZ plan by sustaining greater losses to tax revenue than gains to FDI. (Jain Sumit, 2011) Cont… K L Gupta 22 Cont…
  23. 23.  Real estate corruption, regional imbalance, review of existing tax incentives. (Singala Subbaiah, 2011)  Need to restructure the SEZ scheme in the country. (Tantri Malini, 2012)  Horizontal linkages. (Wei Ge, 2012)  Linkage of the SEZ with the SSI units. (Sharma Surendra, 2012)  New taxation policy affected SEZ operation. (Dabas Ajay, 2012)  Many farmers across the country refusing to give their land at any price. (M Levien, 2013) Cont… K L Gupta 23 Cont…
  24. 24. K L Gupta 24 Cont… Cont…
  25. 25.  In Cochin SEZ, 55% workforce are contractual and don’t enjoy any benefit as regular employee. (Venugopal P N, 2005)  Maintaining global labour standard. (Burman Anirudh, 2006)  Study reveals that casual workers are discriminated against the permanent workers. (Bhandari Amit & Almas Heshmati, 2006)  In Shenzhen SEZ, frustration with hard labor, merciless factory bosses, low pay and miserable living conditions is palpable. (Howard W. French, 2006)  Chinese experience should be read not only as a model but also as a salutary warning. (Gopalakrishnan Shankar, 2007)  Due to stagnation, SEZ’s ability to absorb surplus labour has been declining. (Aggarwal Aradhna, 2007) Cont… K L Gupta 25 Cont…
  26. 26.  Need of social infrastructure. (PriceWaterhouse Coopers, 2008)  Below minimum wages, environmental damage. (Ananthanarayanan Sriram, 2008)  Labour Commissioner’s power to Development Commissioner conflict of interest. (Singh Jaivir, 2009)  SEZ policy can lead to serious and adverse consequences including social conflict, civil strife and breakdown of democratic institutions. (Sharma Naresh Kumar, 2009)  SEZ creating disparity. (Centre for Education & Documentation, 2009)  Project-Affected Persons (PAPs) should be given assistance by specialized R&R agencies in all these processes. (Datta Sarkar et al, 2009) Cont… K L Gupta 26 Cont…
  27. 27.  Govt.’s inability to define priorities, and regulate and manage the phenomenon called SEZs. (Mukhopadhyay Partha, 2009)  Set up of Shenzhen Labour Arbritration Committee and court. (Anna P. Y. Tsui, 2009)  For SEZ success, govt. must consult with the farmers before acquiring their land. (Singh Dharminder, 2009)  There is increasing evidence of usage of child labour in factories in China. (Chaudhary Koel Roy, 2010)  Land Acquisition without much backlash, Tamil Nadu, Gujarat. (Sharma R N, 2010)  Big private developers have responded to land acquisition difficulties by partnering with state governments that helped to procure the land. (Seshadri Triyakshana, 2011) Cont… K L Gupta 27 Cont…
  28. 28.  The role of SEZs in human capital formation appears to be relatively limited. (A Abdul Raheem, 2011)  There is a need to impose stiffer obligations on the SEZs to justify the incentives. (Birajdar Shrimant, 2011)  SEZs and other infrastructure projects do not generally benefit small or medium sized enterprises in the development stage. (Chelsea Fish, 2011)  Privately developed SEZs are thus a form of arbitrage through which capitalists receive artificially cheap land acquired by the state and then re-sell it at many times that value. (Michael Levien, 2012)  It is observed that mere compensation for the land is not enough because the money paid to the farmers will get spent after a few days. (Barman Arup, 2012) Cont… K L Gupta 28 Cont…
  29. 29. The onus of land acquisition would be entirely on negotiations between prospective SEZ entrepreneurs and the owners of agricultural land. (Mitra Siddhartha, 2012) There will be strict background checks for new SEZ likely. State government officials are often unaware of the performance of SEZs in their own states. The Centre has thus decided not to approve proposals unless developers have a record of developing operational SEZs (Basu Nayanima, 2014) Over 90% SEZ’s land are lying vacant : Govt (Economic Times, December 7, 2015) Commerce Ministry working out policy initiative to revitalise SEZs (Economics Times, December 10, 2015) Cont… K L Gupta 29
  30. 30. Literature Review :- K L Gupta 30
  31. 31. Special Literatures :-  Reluctance of zone officials and tenants to respond surveys. (Malhotra Shavin, 2008)  Lack of transparency in government’s actions. (Asher Manshi, 2014) (Gujarat) K L Gupta 31 “One Public Information Officer (PIO), when questioned about the lack of transparency in governmental actions, was candid enough to say: ‘I am just a PIO in name, the real PIOs are the top bureaucrats, hand-picked by the government to work in favour of the companies”.
  32. 32. Literature Review (Gist) :- K L Gupta 32
  33. 33. Research Gap :-  No comprehensive study has been done on Economic & Legal aspects of Special Economic Zone at central level as well as state level.  No comprehensive study has been done on SEZs in Gujarat. K L Gupta 33
  34. 34. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 34
  35. 35. Research Problem:- As we have seen that India embarked on journey of SEZ model looking at success of Chinese SEZ. Exclusive law Special Economic Zone also passed in year 2005 for better governance of SEZs in India. After the SEZ Act, 2005, till date 330 SEZs have been notified by the central government. There are many advantages of having SEZs in the country and but presently it has been failing to meet the expectations in terms of growth in exports, employment, investments. There are several negative aspects of SEZs alongwith positives ones. This study will analyze the economic and legal aspects of SEZs in Gujarat. K L Gupta 35
  36. 36. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 36
  37. 37. Objectives of the Study :- Followings are the main objectives of the present study.  To evaluate economic impact of SEZs in Gujarat.  To evaluate compliance by SEZs in Gujarat under SEZ Act, 2005 & SEZ Rules, 2005  To do comparative analysis of SEZs in Gujarat with SEZs in other states.  To evaluate government’s policies regarding SEZs in India and Gujarat. K L Gupta 37
  38. 38. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 38
  39. 39. Hypotheses of the Study :- Followings are the hypotheses of the present study.  Special Economic Zone has promoted economy of Gujarat.  Special Economic Zones in Gujarat are complying all legal requirements as per the SEZ Act, 2005 and SEZ Rules, 2006  SEZs in Gujarat performing better compared to SEZs in other states.  Government policies are supporting Special Economic Zone to grow K L Gupta 39
  40. 40. Universe of the Study :-  417 formally approved, 32 in principally approved, 330 notified and 205 exporting SEZs in India.  Gujarat having 57 approved SEZs out of which 18 are functional K L Gupta 40 Sample Design :-  Researcher has taken those SEZs which notified at least 5 years ago so that its progress can be analyzed and interpreted accordingly.  Total 17 SEZs as sample size
  41. 41. Selected SEZs :- 1. Kandla SEZ, Kutchch (2000) 2. Surat SEZ, Surat (2000) 3. Surat Apparel Park (2005) 4. Adani Port & SEZ Ltd. (2006) 5. Reliance Infra., Jamnagar (2006) 6. Zydus Infra. Pvt. Ltd., Ahmedabad (2006) 7. Gandhinagar Electronic Park SEZ (2006) 8. Dahez SEZ Ltd., Bharuch (2007) 9. Synefra Eng. & Const Ltd. Vadodara (2007) 10.Ahmedabad Apparel Park (2007) 11.E-complex Pvt. Ltd. (2008) 12.Larsen & Toubro Ltd., Vadodara (2008) 13. Aqualine Properties Pvt. Ltd., Gandhinagar (2008) 14.Sterling SEZ & Infra. Ltd., Bharuch (2008) 15. Jubilant Infra. Ltd., Bharuch (2008) 16.Tata Consultancy Services Ltd. (2008) 17.Euro Multivision Pvt. Ltd. (2009) 18. GIFT SEZ Ltd. Gandhinagar (2011) K L Gupta 41
  42. 42. Data Collection & Analysis :- Primary Data  SEZ Act, 2005 & SEZ Rules, 2006 Secondary Data  Articles from Journal, Books, News article, Database, Central & State Govt. website, Govt. Notification & Circulars  Information received under RTI Act, 2005 K L Gupta 42 Around 150 references referred. Basic statistical tools have been used.
  43. 43. Scope of the Study :- Present study is going to analyze Economic & Legal aspects of SEZs and the researcher has confined his study to all notified SEZs of Gujarat region only. Gujarat is one of the top five states in India which has made significant effort in flourishing SEZs in the state. K L Gupta 43
  44. 44. Scheme of Chapterization :- Total 5 chapters C 1 – Introduction to SEZs C 2 – Legal Provisions regarding SEZs in India C 3 – Special Economic Zones of Gujarat - Profile C 4 - Data Analysis & Interpretation C 5 – Concluding Remarks K L Gupta 44
  45. 45. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 45
  46. 46. Data Analysis & Interpretation :- Investment (Overall) Growth 1.72 (2012-13), 14.33 (2011-12), 6.23 (2010-11), NA (2009-10) None of the SEZ provided data on Investment except Surat SEZ which shows unattractiveness of the zone. Multiproduct and Pharma Zone top in investment. 4 times growth in IT/ITES SEZs. FDI constitutes less than 1% of the total investment in SEZs of Gujarat. Gujarat has failed to attract FDI in the SEZs of Gujarat K L Gupta 46
  47. 47. Export-Import Slow growth of exports Heavily dependent on Imports Less net export earnings, in some cases in negative Export growth -1.66(2013-14), 19.24 (2012-13), 19.54 (2011- 12), 33.70 (2010-11), NA (2009-10) Import growth 1.17(2013-14), 20.08 (2012-13), 14.47 (2011- 12), 27.17 (2010-11), NA (2009-10) Average growth of Export-Import – 17.71% - 15.72% Gujarat grabbed share of 45% share in total exports made from SEZs in India but one of the state to register de-growth in exports. This 45% attributed to Reliance SEZ which is having 83% share in total exports from SEZ in Gujarat. K L Gupta 47 Data Analysis & Interpretation :-
  48. 48. Net Foreign Exchange Earnings (NFEE) NFEE most imp tool to measure performance of any SEZ. Its requirement under law for cumulatively for a period of five years from the commencement of production. (Rule 53 of SEZ Rules 2006) Duty forgone & duty collected main component to calculate NFEE. None of the SEZ provided information on this. Kandla, Surat, Reliance positive NFE where Synefra, Dahej & Adani showing negative. K L Gupta 48 Data Analysis & Interpretation :-
  49. 49. Domestic Procurement Domestic procurement data shows the domestic linkages which is utmost necessary for overall growth of the country. Many authors also have suggested linkages. Most of the SEZs have not provided information under RTI application regarding domestic procurement so it is not possible to arrive at any conclusion. K L Gupta 49 Data Analysis & Interpretation :-
  50. 50. Domestic Tariff Area (DTA) Sales SEZs are allowed to sell goods in domestic tariff area provided that they have achieved positive NFFE. Significant growth in DTA sale is not healthy sign for economy Many SEZs have not provided information on DTA. As per available data, it seems that average negative growth in last 4-5 years. In fin year 2013-14, there is significant growth in DTA sales. As per CAG report, sometime SEZs are considering DTA sales towards the calculating NFEE. It has been mentioned in the report that 8% and 5% of total production considered while calculating NFE for the financial year 2011-2012 & 2012-2013 respectively. K L Gupta 50 Data Analysis & Interpretation :-
  51. 51. Revenue Loss RTI filed in Ministry of Finance to get this data. Loss of Direct Tax & Indirect Tax, - Yearwise, Statewise Transfer of application from top to bottom level, no satisfactory reply. Tax Authority, Ministry have not compiled the data for SEZ scheme. Office of Director General of System & Data Management, New Delhi provided overall yearwise duty forgone (Excise & Customs). This is not helpful for state level purpose study. K L Gupta 51 Data Analysis & Interpretation :-
  52. 52. K L Gupta 52 More than 1200+ replies Wastage of Rs. 50, 000 + to govt. treasury
  53. 53. De-notification of SEZs De-notified SEZ – 3 Under Process of De-notification – 5 Partly De-notified – 4 De-notification of SEZs shows that SEZs are no longer attractive. This is because of change in govt. policy mainly taxation policy in year 2011-12 i.e. imposition of Minimum Alternate Tax (MAT) & Dividend Distribution Tax (DDT) 33 Developers surrendered their SEZ projects between December 2008 to July 2011 (Economics Times) K L Gupta 53 Data Analysis & Interpretation :-
  54. 54. Existed SEZ Unit As per data available total 135 units closed down in last 8 years. Most of SEZ have not provided the information. K L Gupta 54 Data Analysis & Interpretation :-
  55. 55. CAG Findings As per CAG report there is still no revenue outcome analysis at the economic and the Govt. levels. SEZs are counting Domestic Tariff Area (DTA) sales in calculation of net foreign exchange earnings (NFEE) No specific audit observation available for Gujarat region. K L Gupta 55 Data Analysis & Interpretation :-
  56. 56. Single Enforcement Officer/Agency u/s. 21 No information provided. Development Commissioner of the respective zone has been notified as Enforcement officer in year 2010. Penal Action u/s. Rule 54 (Monitoring of Performance) of SEZ Rules, 2006 Most of SEZ not provided information. Some stated there are no cases of penal action. Detailed information would have helped to assess this phenomena. K L Gupta 56 Data Analysis & Interpretation :-
  57. 57. Employment Average employment in last five 8.71% year. Most of SEZs have not provided the information. SEZs which have provided the information, not showing significant growth. Surat SEZ achieved more than estimated. Gujarat stands at a lowly 6th position in employment after Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh & Uttar Pradesh K L Gupta 57 Data Analysis & Interpretation :-
  58. 58. Labour Laws compliance All labour laws are applicable to SEZs. Most of SEZs have not provided information under RTI As per information received under RTI application even in FALTA SEZ, MEPZ, VSEZ no case of labour laws violation noticed. Labour Dispute Out of 17 only one SEZ, Adani has provided information RTI application and in that no case of labour dispute has been reported. Not possible to arrive at any conclusion regarding labour dispute position in absence of any information. K L Gupta 58 Data Analysis & Interpretation :-
  59. 59. Agency/Officer nominated u/s 20 of SEZ Act, 2005 No information provided under RTI for appointment of officer/agency. No officer/agency has been notified under the act to see compliance of any central acts. Designated Courts u/s 23 of SEZ Act, 2005 Only 2 SEZs replied stating that no court has been established under the SEZ Act so far, RTI Application revealed that no court has been established even in old centrally established SEZs. Even after 10 years of SEZ Act none of state govt. established a court/courts to try all suits of a civil nature and notified offences, K L Gupta 59 Data Analysis & Interpretation :-
  60. 60. Reference of Dispute u/s. 42 of SEZ Act Most of SEZs have not provided information. As per available information no significant no of cases arisen so far and have been referred under law. Also not in MEPZ, VSEZ, Falta SEZ. Section 42 refers to a any dispute of civil nature arises among two or more entrepreneurs or two or more developers or between an entrepreneurs and a developer in the SEZ and the courts to try suits in respect of such dispute had not been designated u/s. 23, such dispute shall be referred to arbitration. Central Govt. will make an appointment of the arbitrator. K L Gupta 60 Data Analysis & Interpretation :-
  61. 61. Implementation of guidelines for Green SEZ Policy implementation is in nascent stage. Some of the SEZs implementing the policy. Most of the SEZ not provided the information Training facilities in SEZs None of the SEZs have provided the information. Surat SEZ has set up jewellery training centre in the SEZ. Facilities in SEZs None of the SEZs provided the information regarding facilities available. As per website information KASEZ & SurSEZ providing good infrastructural facilities like Inland Container Depot, Customs, bank facilities etc. K L Gupta 61 Data Analysis & Interpretation :-
  62. 62. Land Acquisition/Environmental Field visit not possible due to permission issue. As per secondary data available no adverse incident happened during setting up SEZs in Gujarat except Adani SEZ issue. Adani got approval with restricted expansion. As per the latest report titled “Best Practices to Improve the Business Environment across India” released in May 2014 by the DIPP, MoC, Gujarat scored high on its land acquisition practices. K L Gupta 62 Data Analysis & Interpretation :-
  63. 63. Locational Difference SEZs have been established in four regions very well. Kutchch, Ahmedabad, Bharuch have huge potential for better growth for SEZ thus it rightly having bigger proportion of total SEZs in Gujarat. There is need of few SEZs in Dahod, Banaskantha, Rajkot region also so that these districts also grow with other districts of Gujarat. K L Gupta 63 Data Analysis & Interpretation :-
  64. 64. Outline :- 1. Introduction 2. Literature Review 3. Research Problem 4. Objectives of the Study 5. Research Methodology 6. Data Analysis & Interpretation 7. Concluding Remarks 8. Q & A K L Gupta 64
  65. 65.  There is insignificant growth in overall investment. Investment in Gujarat is very low compared to national average.  Gujarat share of 45% in exports in the year 2013 to 14. Reliance share 83% share in Gujarat. Question mark against other SEZs in Gujarat.  Considerable growth in imports. Not significant net exports earnings from SEZs.  Some SEZs are having huge imports than exports showing negative earnings.  Domestic procurement data have not been provided under RTI explaining domestic industry linkages.  No information provided by Office of the Industry Commissionerate, Gandhinagar.  No information is available regarding revenue loss due to SEZ operation. MoF not properly maintaining data on revenue loss due to SEZ operation. Conclusion :- Cont..K L Gupta 65
  66. 66.  Govt. of India does not have proper mechanism to carry out cost benefit analysis of SEZs operation.  Good no. of SEZs have been de-notified and some are under process of de-notification being unattractive destination for investors.  As per CAG report, there is still no revenue outcome analysis at the economic and the Govt. levels.  After five years of SEZ Act, central govt. notified DC as enforcement officer. DC will perform Admin activities plus enforcement.  No cases of revival of sick units.  Less no. of cases under penal action taken under.  Slow pace of employment generation. Some SEZs have not provided information regarding employment generation.  No information on labour dispute provided.  No agency u/s 20 of SEZ Act to see compliance of any central acts. Conclusion :- Cont..K L Gupta 66 Cont..
  67. 67.  No designated court u/s. 23 of SEZ Act to try all suits of a civil nature and notified offences.  Most of the SEZs have not replied regarding implementation of Green SEZ guidelines in SEZ.  None of SEZs have provided information regarding training facilities provided in the SEZs.  None of SEZs have provided information regarding facilities available in the SEZs.  There are not major cases regarding land acquisition for setting up of SEZs in the state except Adani.  There are not much environmental issues arisen because of SEZ operation except Adani SEZ which recently got the clearance from MoEF.  SEZs in Gujarat are very well geographically located covering all major part of state.  Above all there is no transparency in operation of SEZs in the state. Conclusion :- Cont.. K L Gupta 67
  68. 68.  Gujarat huge share in exports but only Reliance SEZ effort. Performance of other SEZs needs to be evaluated timely.  Grow domestic industry so that SEZs are less dependent on imports. This will lead to net foreign exchange earnings.  Govt. intervention in liberalizing fiscal policy. Many cos. discontinued operation.  Govt. should come out with a sound mechanism to assess the net benefit coming out of SEZ operation as there is no revenue outcome analysis.  Data management from DC office to Ministry of Commerce. It must be updated on website.  Some legal provision have not been implemented i.e. Agency to Inspect u/s. 20 and Designated Courts u/s. 23. Recommendations :- Cont..K L Gupta 68
  69. 69.  Central Govt. should appoint independent person/agency as single enforcement officer/agency u/s. 21 rather than giving power to DC.  Proper tuning between MoC & MoF for development of SEZs in the state and all over the India. Both ministries should do periodic cost-benefit analysis so that we can have proper picture of growth of SEZs.  Gujarat SEZ Act, 2004 should be scrapped to follow one single central law SEZ Act, 2005 and SEZ Rules, 2006. Gujarat SEZ law has been challenged by Mr Shabbir from Kutchch contending that state govt. incompetent to make laws on custom, excise, foreign trade.  All information of SEZ operation on exclusive website of particular SEZ to bring transparency in working. Recommendations :- Cont..K L Gupta 69 Cont..
  70. 70.  Updated information is not available with various govt. offices, website. They is mismatch regarding information available with central and state govt. Nicola A V Virgill (2009) stated that data on EPZs is scant.  Researcher could not visit specified SEZs which were taken as sample size in absence of permission from Industries Commissionerate. Malhotra Shavin (2008) during his Ph.D. thesis found that zone official and tenants were reluctant to respond survey. The admin. Seemed unwilling to share any financial information on the zone and refused to offer any help in carrying out the survey.  Human Development aspects have not been studied properly due to permission issues. Personal interview in SEZ with various stakeholders would have helped to understand the impact of SEZ on human development. Limitations of the Study :- Cont..K L Gupta 70
  71. 71.  No proper response of RTI application. Transfer of application from office to another.  Govt. offices are not maintaining data as required.  Major statistical tools could not be applied as required data is not sufficient and not provided by the concerned govt. Limitations of the Study :- Cont..K L Gupta 71 Cont..
  72. 72. As we seen in the above discussion that there are various economic and legal aspects of SEZ in India and Gujarat, which can be studied accordingly. The researcher has outlined almost all economic & legal aspects of SEZs with the help of extensive literature review. Researcher emphasized on secondary data for the present study which can be enhanced by empirical study in future. So far no significant study has been done with regards to SEZ in Gujarat, so there is a very wide scope to do further study the impact of SEZs in Gujarat by looking at different aspects. Future Scope of Study :- K L Gupta 72
  73. 73. References :- 150+ references including web sources K L Gupta 73
  74. 74. K L Gupta 74
  75. 75. Kalpeshkumar L Gupta www.klgupta.in 75

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