Indian investors turn to port-based SEZs
Away from the hustle and bustle of what is called developing a number of special economic zones (SEZs) across the country, more and more investors are understood to be looking at ports and port-based SEZs.
By ET Bureau |
Away from the hustle and bustle of what is called developing a number of special economic zones (SEZs) across the country, more and more investors are understood to be looking at ports and port-based SEZs.
According to consultants associated with such developments, hosts of investors are looking at developing SEZs around greenfield ports in different maritime states. "Ports and port-based SEZs seem to be the craze of the times.
Investors including infrastructure companies like construction majors and investment banks have been doing the rounds looking at potential projects," said a consultant associated with a foreign firm having expertise in developing economic zones.
Even though there is no market study made on the requirement of port-based SEZs, India needs a couple of them on the east coast and west coast, he opined. "But you will have to space them out," he added, perhaps alluding to the crowding of such facilities at various business centers across the country.
Whereas Gautam Adani-promoted SEZ is progressing at Mundra Port, nearby Kandla Port is understood to be seriously doing the ground work for developing its own SEZ.
New Mumbai, near Mumbai, is another example where multiple SEZs are at various stages of development.
It cannot be recommended for every port. Infrastructure is one of the most important factors while deciding on an SEZ.
There are other factors like environment, regulations, labour and weather conditions that need to taken into account before deciding a port-based SEZ. One should consider all this going to set up a SEZ and not because of government is providing some incentive."
"The biggest problem I find in India," said another consultant, "is that the investors do not have the expertise. The concept is there in their minds but they need someone to execute it."
"There is all around confusion at every level," said another port functionary on condition of anonymity. "Developers do not have the experience and the government is dithering and has failed to put in a cohesive policy framework. Its finance and commerce departments, meantime, are haggling about their respective jurisdiction over tariff areas."
"Land is a big issue in India as it is anywhere else in the world. If you have land available, it could be said that you have half the project," said Mr Nascimento.
Even though SEZs as an economic activity have been promoted by the government for quite sometime in the country, India is yet to see the benefits it could accrue. Port-based SEZs have come up a year ago and it is adding a new dimension to Indian ports.
But in order to take advantage of a port and its SEZ, one needs to look at long term. "I wonder whether the numerous business plans prepared by all the major ports have in them the possibility of having SEZs to augment their respective revenue streams," the port consultant said.
"The government should clarify its stand on SEZs and port-based SEZs and lay out a clear cut policy frame work for their development.
"Instead of promoting so many SEZs," another port consultant said displaying his criticism of the current ongoings, "it would be advisable for the government to declare the country an SEZ by given tax waiver for the next 10 years!"
According to consultants associated with such developments, hosts of investors are looking at developing SEZs around greenfield ports in different maritime states. "Ports and port-based SEZs seem to be the craze of the times.
Investors including infrastructure companies like construction majors and investment banks have been doing the rounds looking at potential projects," said a consultant associated with a foreign firm having expertise in developing economic zones.
Even though there is no market study made on the requirement of port-based SEZs, India needs a couple of them on the east coast and west coast, he opined. "But you will have to space them out," he added, perhaps alluding to the crowding of such facilities at various business centers across the country.
Whereas Gautam Adani-promoted SEZ is progressing at Mundra Port, nearby Kandla Port is understood to be seriously doing the ground work for developing its own SEZ.
New Mumbai, near Mumbai, is another example where multiple SEZs are at various stages of development.
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When asked whether he would recommend SEZ in every port of the country, Carlos Nascimento, second deputy general director, Dinh Vu Industrial Zone (which is one of the successful industrial zones developed in Vietnam), said, "No. It cannot be recommended for every port. Infrastructure is one of the most important factors while deciding on an SEZ.
There are other factors like environment, regulations, labour and weather conditions that need to taken into account before deciding a port-based SEZ. One should consider all this going to set up a SEZ and not because of government is providing some incentive."
"The biggest problem I find in India," said another consultant, "is that the investors do not have the expertise. The concept is there in their minds but they need someone to execute it."
"There is all around confusion at every level," said another port functionary on condition of anonymity. "Developers do not have the experience and the government is dithering and has failed to put in a cohesive policy framework. Its finance and commerce departments, meantime, are haggling about their respective jurisdiction over tariff areas."
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"Land is a big issue in India as it is anywhere else in the world. If you have land available, it could be said that you have half the project," said Mr Nascimento.
Even though SEZs as an economic activity have been promoted by the government for quite sometime in the country, India is yet to see the benefits it could accrue. Port-based SEZs have come up a year ago and it is adding a new dimension to Indian ports.
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But in order to take advantage of a port and its SEZ, one needs to look at long term. "I wonder whether the numerous business plans prepared by all the major ports have in them the possibility of having SEZs to augment their respective revenue streams," the port consultant said.
"The government should clarify its stand on SEZs and port-based SEZs and lay out a clear cut policy frame work for their development.
"Instead of promoting so many SEZs," another port consultant said displaying his criticism of the current ongoings, "it would be advisable for the government to declare the country an SEZ by given tax waiver for the next 10 years!"
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