Special Economic Zone (SEZ) SWOT AnalysisMade By- SONIA MEHTA PGD11106
History of SEZ• India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asias first EPZ set up in Kandla in 1965.• With the same intentions and view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.
SEZ ?• A Special Economic Zone is a geographically bound zones where the economic laws in matters related to export and import are more broadminded and liberal as compared to rest parts of the country. SEZs are projected as duty free area for the purpose of trade, operations, duty and tariffs. SEZ units are self- contained and integrated having their own infrastructure and support services
OBJECTIVE of the SEZ Act Generation of additional economic activity Promotion of exports of goods and services Promotion of investment from domestic and foreign sources Creation of employment opportunities Development of infrastructure facilities
List of Developers who have set up SEZs Nokia SEZ in Tamil Nadu Quark City SEZ in Chandigarh Flextronics SEZ in Tamil Nadu Mahindra World City in Tamil Nadu Motorola, DELL and Foxconn Apache SEZ (Adidas Group) in Andhra Pradesh Divvys Laboratories, Andhra Pradesh Rajiv Gandhi Technology Park, Chandigarh ETL Infrastructure IT SEZ, Chennai Hyderabad Gems Limited, Hyderabad
SWOT Analysis for Indian SEZsStrengths• A large and growing domestic market.• Growing middle class with purchase power• India’s large English speaking workforce
Strengths• Relatively low labour costs• Worldwide acceptance of capabilities in fields like:1. Pharmaceutical manufacturing & research2. Clinical trials3. Manufacturing auto parts4. Engineering designing & consultancy, IT5. Entertainment
Weaknesses • Inadequate institutional support • Labour reforms • Inappropriate locations • Infrastructure bottlenecks – connecting infrastructure like Roads leading to SEZs. • Political changes
Opportunities• To use SEZs to catalyze infrastructure development.• New small ports & airports are also being developed keeping SEZ concept in mind.• Realistically establish competitive advantages in SEZs.
• A large NRI base who have traditionally invested less in Greenfield development in India.• Lower the high transaction /behind the border costs to exporters.• Tap the advantages of WTO/increase India’s small share of world trade.
Opportunities• To increase investments in core strength areas like IT and software products and services.• An alternative manufacturing base, particularly compared to Chinese SEZs.
‘Threats’• Loosing edge of low labour costs - many countries are competing.• The pattern of buying & selling may not continue. With relocations of industries in other third world countries, new competitors will emerge.
CONCLUSIONIt is expected that this will trigger alarge flow of foreign and domesticinvestment in SEZs, in infrastructureand productive capacity, leading togeneration of additional economicactivity and creation of employmentopportunities.