| The Special Economic Zones (SEZs) are coming up all | | | | product specific SEZs. For instance, an SEZ |
| over the country after the big tax breaks announced | | | | exclusively for gems and jewellery in the IT Hardware |
| for both developers and export units in such zones. | | | | Park near Hyderabad is being promoted by Gitanjali, a |
| The new SEZ Act 2005 has prompted 45 new | | | | well-known jewellery brand. Also, there is a Nanotech |
| projects worth over Rs 1.5 lakh crore in investment. | | | | park for related industries inside the Hardware Park. |
| Mahindra World City in its new avatar house three | | | | Similarly, Ramky group, developers of the Pharma City |
| SEZs? Auto, apparel and IT? Within the township. Its | | | | near Vizag is mulling a pharma SEZ inside the Pharma |
| occupants include Infosys, and BMW which has | | | | City. But do product or industry specific SEZs work if |
| secured land inside the township but not in the auto | | | | the economies of scale are worked out properly, they |
| SEZ. The TVS group is actively considering setting up | | | | would. Further, sharing common infrastructure could be |
| a facility in the city. | | | | an advantage, Said Mr. Acharya. This is true of |
| Reliance Industries, ONGC, Mahindra & Mahindra, | | | | successful SEZs around the world. |
| Reliance Energy, Wipro, Biocon, Hewlett Packard, | | | | Government enthusiasm and facilitation often boosts |
| Nokia and the Adani group are prominent among the | | | | the success of the facility. The AP government, in a |
| 40 players who have announced SEZs of their own. If | | | | bid to boost the SEZ rush is even contemplating |
| all these projects go as per schedule, new SEZs in | | | | ordinances till the glitches in the state SEZ Act are |
| India will attract investments in excess of Rs 1.5 lakh | | | | ironed out. Infrastructure is a definite must. Projects like |
| crore, comparing with the situation in 2000 when | | | | the Mundra Special Economic Zone (Mundra SEZ) |
| India’s original Act on SEZs yielded little more than | | | | which already has the Port, Container Terminal, its own |
| a few crores. | | | | rail link and airport, and its existing social infrastructure |
| China has over 600 SEZs unlike India which has | | | | may have a head-start and make a bigger difference. |
| struggled to figure afew. So far, if the 7,000-acre | | | | However, all of them in due course will have a positive |
| Special Economic Zone in Visakhapatnam gets | | | | impact. Gas will be a key driver of the Kakinada, |
| functional in the next three to six months, as planned, it | | | | Gangavaram and Vizag SEZs, Mr. Charta pointed out. |
| could be the largest in the country. BG Menon, CEO of | | | | The most prominent sector is the manufacturing |
| Mahindra World City attributes the growth of SEZs to | | | | sector which would gain the maximum from SEZs - |
| the recently passed SEZ Act by the Centre and the | | | | specially light and heavy engineering industries that are |
| Tamil Nadu SEZ Act which are trying to make | | | | oriented towards exports. Electronics and light |
| investment options attractive? Companies within the | | | | engineering get the advantage of the SEZs and reach |
| zone get 15-year income tax holiday besides benefits | | | | greater heights. Auto and auto-components could also |
| like zero customs duty on inputs, self-certification and | | | | avail of the SEZ to create the much talked about small |
| single window clearances. | | | | car manufacturing hub of the world in Indian SEZs |
| The Government of India, State Governments as well | | | | making these as the in-gate and out-gate to the global |
| as private business houses are turning SEZ | | | | markets. Besides these, industries which are being |
| developers. Reliance Industries Ltd has already got an | | | | impacted by reducing tax breaks too are now moving |
| in-principle approval for a Rs 30,000-crore | | | | towards SEZs. The gems and jewellery sector will |
| petrochemical SEZ in Jamnagar - the largest in the | | | | also find it more attractive to move into SEZ as their |
| country. It expected to be operational in the next three | | | | income tax advantages will end by 2009. Some |
| years. The public sector sector ONGC too will be | | | | software firms are now considering setting up SEZs |
| setting up three petrochemical SEZs in the next few | | | | since the income tax benefit available to them in a |
| years. These include a Rs 25,000 crore project in | | | | STP will not be available beyond the 2009-10 |
| Mangalore, a Rs 6,000 crore project in Dahej, Gujarat | | | | assessment year, an STP official in Kolkata said. |
| and a Rs 5,500 crore project in Kakinada, Karnataka. | | | | According to STP rules, firms enjoy 100% tax holiday |
| Even the Gujarat government set up an SEZ for the | | | | for a period of 10 years or till 2009-10, whichever |
| petroleum sector to attract multinationals and large | | | | comes first. In contrast, units under SEZs tax benefits |
| corporates to set up base in the state. In addition, the | | | | for 15 years irrespective of the year of their |
| textiles, chemicals, gems and jewellery sectors too are | | | | commencement. This apart, SEZ units are also |
| in an expansion mode. | | | | exempted from paying service tax. The drugs and |
| SEZs are a means of attracting companies to set up | | | | pharmaceutical sector as well as the agro and food |
| manufacturing or services bases within the country. | | | | processing sector too are seriously considering availing |
| This becomes a major revenue earner for the country. | | | | the SEZ platforms. |
| According to BP Acharya, Vice Chairman and | | | | Scale is important in ensuring adequate Return on |
| Managing Director, Andhra Pradesh Industrial | | | | Investment. This is typically in the range of 15%. Of the |
| Infrastructure Development Corporation Ltd (APIIC), the | | | | 40 odd SEZs that have received the in-principal |
| promoter of SEZs in the state, the time is ripe in the | | | | approval, many of them tend to be sector specific and |
| country for SEZs to take off in a big way. Moreover, | | | | small ranging from 5 acres to about 150-200 acres in |
| in a bid to make SEZs more viable, we are adopting a | | | | size. These sizes can only avail of the SEZ status to |
| public-private partnership model, he pointed out, and | | | | get the fiscal benefits of the governments. To truly |
| recently Andhra Pradesh has announced the Kakinada | | | | benefit from scale of operations they need to be |
| SEZ. The 9,000-acre SEZ has multiple stakeholders | | | | closer to 20,000 acres that is the international norm. |
| wherein ONGC and its subsidiary MRPL will hold 46%, | | | | The large ones, particularly those of international size |
| the AP government through APIIC 3% (by way of | | | | of over 20,000 acres can create their own captive |
| land) Kakinda Seaport Ltd and IL&FS 51%. The reason | | | | power plant, captive water supply and create industry |
| for the development of SEZs in the area, the key | | | | specific parks with industry specific common facilities |
| elements needed for setting up and developing SEZs | | | | within the Zone. The existing sea port and other |
| like land, infrastructure, access to roads and more | | | | multi-modal infrastructure make the zone leverage all |
| importantly sea ports are all there. ? | | | | the existing assets for greater synergies. Whatever |
| We are going to position Vizag SEZ as the Pudong of | | | | the trigger, SEZs are certainly the flavour of the |
| the Indian east coast, Claimed Mr. Acharya.While there | | | | season. |
| are large, multi-product SEZ, the state is also looking at | | | | |