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Penchant for growth with hurdlesFor the last few months SEZ has been a well searched word in the print and electronic media especially in the business sector and what made that buzz in the surrounding is still there to be known. As we know SEZ is just not a zone but a whole lot of opportunities that are available as incentives to be taken. SEZ had been successful all over the world, wherever it had been implemented but what about India? Is it successful in India? One has to think over it and a detailed analysis need to be done. Success of any thing depends upon its willingness to succeed, and this is what lacks in our government. Over the years SEZ policy had been under controversies and criticisms, right from its implementation in India and it has been a continuous affair till date.

SEZ was introduced in India with a few objectives and those are:

  • 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

Huge investments have been made in SEZs across the country and frequent changes in policies, especially relating to tax matters and land acquisition, are eroding the confidence among investors. Not only are this certain other factors also affecting the implementation of SEZ.

  • Improper SEZ policy
  • Irresponsible planning for locating SEZ
  • Ineffective Land Acquisition Policies
  • Improper Rehabilitation Policy

These are also responsible for not reaching great height, which was attained by other countries.

The case of improper SEZ policy can be seen in Union Budget for 2011-12

  • The finance ministry imposed 18.5 per cent minimum alternate tax on SEZ developers and units besides 15 per cent dividend distribution tax on developers. "This move will make it unviable for most investors to invest in SEZ.
  • Export oriented units located in SEZs are not eligible for other export promotion schemes and have to pay full customs duty on what they sell in domestic market, which were not proposed previously.

As we say "Actions speaks louder than words", the unwillingness and delaying nature of the government to implement right policies, and SEZ being one of them is the downfall of many and by seeing many more to come many of the things has been set and done but the questions remains the same, Has SEZ Policy Delivered in India? Which is still to be answered?