Govt's SEZ dream going sour

NEW DELHI: The government''s plan to promote special economic zones (SEZ) as a major engine of medium-term growth in exports has failed to make significant progress.
Not even one of the dozen greenfield SEZ projects cleared by the government have moved close to the implementation stage. None of them has succeeded in achieving even financial closure.
While two-and-a-half years have passed since the scheme was launched, the only SEZs in operation are export processing zones (EPZ) converted into SEZs, and the Indore SEZ which is an Export Promotion Industrial Park (EPIP) upgraded into a SEZ.
Two of the most promising greenfield SEZs, the Positra (Gujarat) and Nangunery (Tamil Nadu) projects find themselves stuck while others are nowhere on the horizon.
The Nangunery SEZ project, planned at an investment of around $2 billion, has suffered due to political reasons. While the project was launched when a DMK government headed by M Karunanidhi was ruling Tamil Nadu, the subsequent regime change in the state is seen to have gone against the ambitious hi-tech SEZ.
While the Nangunery project has failed to move on, the Tuticorin port has floated a plan for its own SEZ. Nangunery lies quite close to Tuticorin and the port was to be used by the SEZ for the movement of its export-import cargo.
In case the Tuticorin port goes ahead with its plan for a SEZ, it would be curtains for the Nangunery project.
The case of Positra, promoted by Nikhil Gandhi, is far more serious. The Gujarat government is said to be going slow on allotment of land for the project which was planned at an investment of more than $1 billion.
Some land already allocated for the SEZ is also being demanded back, industry sources said. More than the land allocation, last year’s earthquake and the communal killings after the Godhra massacre have queered the pitch for the project, forcing promoters to look for an alternate site in Maharashtra.
The only saving grace so far has been the Indore SEZ, commerce department sources said. While the big fish have floundered, the EPIP-turned-SEZ has been launched by the Madhya Pradesh government on a compact scale, with marketing starting for the first phase.
The government has also sanctioned two SEZs for West Bengal, one at Kulpi and another at Salt Lake, along with Hassan in Karnataka and Visakhapatnam in Andhra Pradesh. However, none of them has shown any promise of materialising in the near future.
No greenfield SEZ in the country is likely to be operational for three years. This means lapse of five years since the SEZ concept was announced officially in 2000. If it takes five years to start a medium-term machinery, it isn’t possible to expect results in the form of incremental exports in the near future.
The only SEZs that are functional are the erstwhile EPZs at Kandla, Santa Cruz, Surat and Kolkata. The EPZs located at Noida, Chennai, Falta and Vizag are yet to be converted into SEZs.
Also, several policy issues pertaining to taxation and government regulations remain to be sorted out. With the investment climate deteriorating, it seems the wait for real SEZs is going to be long, ultimately having an impact on export performance.