SEZs’ viability under scanner

MUMBAI: After the initial euphoria over SEZs, concerns are being expressed over the viability and efficacy of this new business model. Rajiv Jalota, CEO, MIDC — which is planning a large number of SEZs in the state — on Wednesday raised some serious issues about the effectiveness of these export promotion zones.

Participating in ‘Maharashtra: Vision 2010’, a conference organised by the Maharashtra Economic Development Corporation (MEDC), Mr Jalota expressed the need for carrying out “social analysis” of SEZs.

If everything goes as per plan, Maharashtra will have as many as 51 SEZs across the state. Though the majority of them are coming up near Mumbai and Pune, other cities like Nagpur and Aurangabad too may catch up. The state controlled MIDC has been a nodal agency and facilitators for many SEZs.

MIDC has around 27 SEZs at various stages of completion. Mr Jalota pointed to two serious issues. According to him, economic cycles are likely to impact the occupancy of the zone. The other potential pitfall is the inadequate experience of developers to successfully manage and execute all aspects of the SEZs.

Mr Jalota detailed the problems of getting large tracts of land near the coast and suggested to building SEZs in the hinterland. “The SEZs located there can be provided with high-speed connectivity to ports,” he said. His statement comes in the wake of series of protests by villagers who are against Reliance’s mega-SEZ near Mumbai.

The Mukesh Ambani-led group has plans to create a giant SEZ by merging Navi Mumbai and Maha Mumbai SEZs to become the largest such project in the country. If successful the Reliance SEZ would sit on 30,000 acres of land near Mumbai. Though the land acquisition process for the project is yet to be completed, local villagers are protesting against the project. This has also opened a debate in the corridors of power about SEZs turning into new-age landlords.

Arun Nanda, ED, Mahindra & Mahindra, however, disagree with this. Speaking at the seminar he said: “The SEZs are not a real estate game but it’s all about providing infrastructure.” However, he cautioned all those enthusiasts rushing in with SEZ applications. “It requires very deep pockets and staying power. Besides you need to identify the right industry,” he added.

Neera Saggi, development commissioner of the country’s first SEZ, the SEEPZ in Mumbai, however, underlined the benefits of the SEZs. According to her the SEZs have been successful in attracting foreign investment and creating large scale employment opportunities.