The Telegraph
Since 1st March, 1999
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Special economic zones fail to fuel export surge

New Delhi, June 29: The failure of the country’s special economic zones (SEZs) to serve as the engine of growth for the export sector is perhaps best reflected in the fact that the growth rate of exports from these zones is lagging far behind the overall growth rate of India’s exports.

Official statistics show that the rate of growth of exports from SEZs was around 10 per cent during 2002-03.

This is much lower than the 18 per cent growth rate for the country’s total exports. Exports from SEZs during the financial year ended March 31, 2003 were around $ 2 billion which constitute a mere 4 per cent of the country’s total exports that crossed the $ 51-billion mark during this period.

The scheme has failed to make a dent as exports from these zones, which were worth Rs 8,677 crore in 2000-01, rose by around 9 per cent to Rs 9,434 crore during 2001-02. In 2002-03, these exports rose by a mere 10 per cent to around Rs 10,382 crore ($ 2 billion).

While the Indian exim policy has adopted the Chinese model of going in for SEZs to promote growth in exports there are vital differences between the two countries at the ground level.

For instance, China’s proximity to Hong Kong was a major advantage that is missing in the Indian context. Hong Kong provided a platform for re-exports and transshipment of Chinese exports as well as world-class professional expertise in marketing, finance and production management.

While India is looking for increasing agricultural exports, highly mechanised loading facilities that exist in countries such as Australia are not available here.

This port infrastructure makes it possible for quick delivery of export cargoes to meet tight international schedules. Although there has been considerable improvement in some ports such as JNPT, the overall picture is far below world standards.

Worldwide SEZ schemes have been successfully adopted in countries with the main investment coming from the Centre. In India, the scheme expects state governments and private companies to provide the capital for developing these zones. The only problem is that most of the state governments, if not all, are cash-starved entities and are constantly looking towards the Centre for funds.

The private sector has traditionally fought shy of investing in projects with a long gestation lag. Jaitley’s invitation to NRIs, during his recent US visit, to come forward and invest in SEZs does not appear to have many takers either.

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