Mapping the Variation in SEZ Distribution and Export Performance (A Case for India)

Abstract

At present, India has many functional Special Economic Zones (SEZs) and Export Oriented Units (EOUs), since the policy of Special Economic Zone (2000) and the scheme of Export Oriented Units (1981) were introduced. These two play an important role in the growth of export from the country. The SEZ and EOU/Export Processing Zones (EPZ) schemes have a common objective of export promotion. Therefore, by and large the procedures are the same. In some developing countries, a lot of economic privileges were given to (SEZs. These privileges facilitated international integration. Lured by the heavy incentives, a large number of industrial houses and developers – Indian as well as foreign – are pushing their applications to the State Governments to approve new proposals. Opening for international investors boosted economic growth in these regions. Hence, a strong regional disparity is developed in the allocation of SEZs in India. This paper tried to map the variation in SEZ distribution. This study will play a significant role for the further decisions of SEZ approvals, because investors have shown much interest in establishment of SEZs in the developed states like Maharashtra, Andhra Pradesh, Tamil Nadu, Karnataka and Gujarat. Among the major categories of SEZ approvals in the country, the IT/IT Enabled Services (ITES)/electronic hardware and semiconductor stand at the top. The state wise comparison reveals that Andhra Pradesh and Maharashtra have the highest number of IT/ITES SEZs, and Andhra Pradesh and Maharashtra have the highest number of Pharma/Bio-tech SEZs. Maharashtra stands at the top in the number of SEZ approvals and Gujarat stands first in the approvals of multi-product SEZs. About the investments and the business prospective of the SEZs, as on 31 March 2008, Gujarat attracted 60.2% of the total investment in the SEZs, covering 30%% of all SEZ land. In case of the approved land area for formal and notified SEZs, Gujarat stands at first place. This picture clearly revels that there is a string of regional or inter-state disparity in industrial development. Literature shows that there is a trade-off between balanced industrial (regional) development and external economies to industries. So, it is expected that SEZs will efficiently increase the export. But, in comparison to EOUs, export performance of SEZs is not satisfactory. The export from SEZs for the year 2007–2008 was Rs 66638 crore in against the export from EOUs, which is accounted for Rs 154428 crore, and average growth rate of export from the period 1992–1993 to 2007–2008 is about 31% for SEZs and 34% for EOUs. So, it is clear that still there is a long way for desirable outcomes from SEZs. Hence, it is suggested that a policy should be implemented, taking in to consideration the regional agglomeration of industries, and required infrastructure for SEZs.