In the context of several non-IT SEZs performing poorly in recent years, Janaki Krishnamoorthi looks at the performance of Kandla SEZ one of the oldest multi-product SEZ.
All is not well with IndiaÂ’s Special Economic Zones (SEZs), particularly in the non-IT/ITEs sector. Many of these SEZs are grappling with a sharp slowdown in growth. Not many new SEZs have come up in recent years. On the contrary, there have been a spurt in applications for de-notification of approved SEZs, again largely from non-IT sector.
In this context, it is interesting to note that Kandla SEZ (KASEZ) established in 1965 has not only managed to survive but is also planning to expand in the future. Here, even non-IT/ITES sectors have performed well says Mahendra Jain, Development Commissioner, KASEZ Â“The physical exports up to September, 2012 in IT/ITES sectors is Rs. 160 crores and in non- IT/ÂITES sectors is Rs. 121089 crores. From this it is evident that non-IT/ITES sectors have also made remarkable progress. This is true for the whole of Gujarat, where non-IT/ITES sectors have attracted large scale investÂment including FDI and created employment to both skilled and unskilled workersÂ” .
Only three SEZs , NG Realities Pvt. Ltd. (enginÂeering), Welspun Anjar SEZ (engineering) and Gujarat Hydrocarbon & Power SEZ Ltd. (oil & gas) have subÂmitted applications for de-notification citing reasons ranging from economic meltdown, poor market response to the imposition of Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT) on SEZs.
There are several reasons behind the success of non-IT sectors in Gujarat including the enactment of SEZ Act by the State and proactive government poliÂcies. Jain cites some of the reasons : Â“ The rock-solid indÂustÂrial and manufÂacturing base of Gujarat especially in secÂtors like chemicals/ petroÂchemicals, good port-based infraÂstrÂuÂÂcture, progressive industrial polÂiÂcies over a period of time, entrepreneurial spirit of the people, enaÂcÂtment of the SEZ Act by the State, etc surely would have contributed to the progressÂ” For the same reasons KASEZ has also been performing well. In addition its straÂteÂgic location, with services of two major Ports (Kandla and Mundra) and two airports ( Kandla and Bhuj) , have made it an attractive destination for interÂnÂational trade. The in-house support provided by the DevÂeÂlopment commissionerÂ’s office is another factor says Jain Â“Simplified procedures, single window cleaÂrance, round the clock, hassle free, customs clearances, at no additional cost ; round the clock security and fire service at no additional cost ; most competitive and low land rentals are the other factorsÂ”
Located on the Gulf of Kutch on the west coast of Gujarat KASEZ is one of the eight operational multipurpose SEZs run by the Central Government set up initially as an export processing zone. Today there are 186 functional units in KASEZ comprising of IT/ITes, engineering, pharmaceuticals, chemical and allied products, garments, plastics, and trading units etc.
There were no doubt challenges galore in developing the SEZ. Recalls Jain Â“ KASEZ situated in the Gulf of Kutch was not even connected properly to the main land earlier, as Kutch was separated by the Rann of Kutch . Infrastructure facilities like roads ,drainage etc were poor and skilled manpower was in short supply . However we have sorted out all these issues. Today KASEZ is well connected to the main land by roads and we have good infrastructure in place. It is also connected to Mumbai and Ahmedabad by air via Bhuj and Kandla airportsÂ”
The initial notified area of KASEZ was 700 acres which was expanded by nearly 300 acres in 2008 which is now almost saturated. A bio-gas plant and solar street lights are also on the cards. No doubt the oldest SEZ is on a progressive path, Jain added.