The best laid plans

Kandla Special Economic Zone (KASEZ) has come a long way since its inception. Still, although KASEZ has been the pioneer among SEZs, challenges are plenty in growth and development. Janaki Krishnamoorthi traces the journey of the oldest FTZ in India.

KASEZ originally called Kandla Free Trade Zone (KFTZ) was set up in 1965. It was Asia’s first Export Processing Zone (EPZ) and India’s largest multi-product EPZ. Inaugurated by the then Prime Minister of India, late Shri Lal Bahadur Shastri, on 7 March 1965, the FTZ was established with an aim to earn foreign exchange, create employment opportunities in the industrially backward area of Kutch and generate additional cargo to aid in the development of Kandla Port . "Apart from having the distinction of being the first FTZ in the Asia-Pacific region," Mahendra Jain, Development Commissioner of Kandla Special Economic Zone (KASEZ), says, "KFTZ also gave shape to the free enclave of export production concept in India. The 100 per cent Export-oriented Unit (EOU) scheme in India is also an offshoot of KASEZ experiment."

The metamorphosis
In November 2000, KASEZ was converted into an SEZ, largely to allow for 100 per cent Foreign Direct Investment (FDI) inflow through automatic channels, import on self-certification basis, to get exemption from daily customs inspection of export and import cargo, etc. In fact, compared to FTZs/EPZs, the SEZs policy has more clarity and focus, not only in terms of objectives but also in terms of institutional arrangements. KASEZ is one of the eight operational multipurpose SEZs under the Central Government management and is governed by the provisions of SEZ Act 2005 and SEZ Rules 2006 as amended from time to time.

Today there are 186 functional units in KASEZ comprising IT/ITES, engineering, pharmaceuticals, chemical and allied products, garments, plastics, trading units, etc. The exports at KASEZ has increased from Rs 7.49 crore in 1966-67 to Rs 227,067.50 crore in 2012-13.

The advantage
"Its strategic location near the Gulf of Kutch on the west coast of Gujarat at a distance of just 9 km from Kandla Port and 60 km from Mundra Port, has made it an attractive destination for international trade," says Jain who is also the Zonal Development Commissioner for Gujarat. "Other advantages include availability of unskilled and skilled labour in the vicinity, private warehouses with additional storage facilities, uninterrupted power supply from Paschim Gujarat Vij Company’s dedicated power station , operation of commercial banks with foreign exchange transaction facilities within the zone and hassle-free single-window clearance mechanism, both at the state and Central government level."

The challenges
There were no doubt challenges galore in developing KASEZ. Situated in the Gulf of Kutch the zone was not connected properly to the main land earlier, as Kutch was separated by the Rann of Kutch. Further, infrastructure facilities like roads, drainage etc, were poor and skilled manpower was in short supply. "However," says Jain, "these issues have since been resolved. Today, quality infrastructure is in place and KASEZ is well linked to the main land by road and also connected to Mumbai and Ahmedabad by air via Bhuj and Kandla airports."

There are challenges ahead tooùdeveloping specially designed earth quake resistant buildings as Kutch falls under seismic zone, tackling large-scale waste generated by old style units and heavy traffic jams as the approach road to both KASEZ and Kandla Port is same. However, a four-lane road connecting Ahmedabad to Kandla with an elevated portion over Gandhidham town, scheduled to be operational in about a year, is expected to resolve this problem.

Yet another major issue is lack of space for future expansion. The initial notified area of KASEZ was 700 acres which was expanded by nearly 300 acres in 2008 which is now almost saturated. A fresh proposal for allotment of 2,500 hectare of land sent to the State government in 2010 is still waiting approval.