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SEZ who?

the new policy on special economic zone (sez), equipped with much simplification of procedures and single window clearances, has opened its doors for more exports and foreign direct investments in the country. The Special Economic Zone Act, 2005, came into force on February 11, almost nine months after it was passed by Parliament.

According to Union commerce minister, Kamal Nath, these zones will attract investments of about Rs 100,000 crore, creating employment potential of over five lakh by the year 2009. The policy facilitates setting up units and conducting business in these special zones, besides incentives to attract foreign and domestic investments for export promotion. Trading in the zone would be tax free.

However, relaxation of labour laws within the sezs has become a point of contention: the success of sezs in countries like China and Malaysia has been attributed to stipulations in the employment regulations under which the employer can freely retrench workers or hire them on contract basis as per the work requirements of the company. Though initially included in the policy, the changes were dropped later on.

Critics, however say that the Act has come too late. Now, in an environment, where overall policy is being liberalised, the impact of sezs might be blunted. The Centre had announced an sez scheme in April 2000.

Approvals have been granted for 117 sezs, including three free trade warehousing zones. Seven sezs have become functional till date.

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