Looking past the SEZ furore

SHIJITH PK
Posted online: Saturday, January 20, 2007 at 0103 hours IST




The controversy over land acquisitions has affected the approval
process for special economic zones drastically. The Board of Approvals
has had to repeatedly postpone its meetings so that a rehabilitation
policy can be formulated first to help those displaced. But before
controversy began to bark at its heels, it was a body with a mission
that showed no signs of slowing down.
After the SEZ Act came into force in February last year,it handed out
more than 230 formal approvals to set up SEZs. In addition, more than
160 approvals were given 'in principle'. Interesting trends seen in the
approvals include a high number of multi-product SEZscompared to
sector-specific ones and the presence of Orissa in the ranks of the
states with the highest number of SEZ approvals.

Putting the controversy aside, a look at the proposals approved over the
last year would also give a fair idea of what the mainstays of India's
exports will be in the years to come.

Looking at the sectoral break-up of the approvals, both formal and in
principle, IT and IT-enabled services dominate, with 167 approvals,
forming 41% of the total. Of these, the largest SEZ proposed is the one
promoted by Adarsh Prime Projects over 468 hectares at Hobli near
Bangalore. After IT and ITES, the textile and apparel sector has the
largest number of approvals with 28. Of these, the state with the
largest number of proposals is Maharashtra with 8. The largest SEZ in
this sector is one at Visakhapatnam that has also been formally
approved. Called Brandix India Apparel city, it will have an area of
around 400 hectares.

The sector with the third largest number of approvals for SEZs is the
electronics sector with 19. Many of these SEZs would be involved not
only in the manufacture of electronics hardware but will also be home to
units in the IT/ITES sector. Here, West Bengal with 4, has the largest
number of approvals with 4 followed by Tamil Nadu and Maharashtra with 3
each.

There are some unique sectors too among the SEZs approved. For example,
the activities of one proposed SEZ at Chhatrapur in Orissa will revolve
around the mining and processing of minerals from beach sand, to be used
in sectors such as atomic power. Another SEZ in Noida will revolve
around the manufacture of equipment that utilises non-conventional
energy sources like solar power. It will be developed by Moser Baer, a
company otherwise known for making digital storage media.

Other interesting SEZ proposals include one based on ceramic and glass
products in Jhagadia in Gujarat, and another for handicraft items in
Moradabad in Uttar Pradesh. Unfortunately, there is only one SEZ
proposal that looks to build on India's agricultural potential, a 200
hectare agro-based SEZ in Latur, Maharashtra.

The size of the proposed SEZs ranges from 10 hectares to 10,000
hectares. Sector-specific SEZs have a minimum area requirement of 100
hectares, which is relaxed for globally competitive sectors like IT and
biotechnology. They have a minimum area requirement of 10 hectares.
Multi-product SEZs that serve several sectors, have a minimum
requirement of 1000 hectares and to no surprise, the largest SEZs are
multi-product based. The honours are shared by two 10,000 hectares
multi-product SEZs backed by Reliance Industries, one the Maha Mumbai
SEZ and the other based at Jhajjar in Haryana. The largest
sector-specific SEZ approved was the controversial chemicals-based one
at Nandigram in West Bengal with an area of 4000 hectares.

The usual suspects dominate the list of states with the largest number
of proposals approved. Maharashtra leads with around 73, or 18% of all
approvals, followed by Andhra Pradesh with 54 approvals and Karnataka
and Haryana tied at 46 each. The proposed SEZs unsurprisingly tend to
concentrate around the industrial centres of each state. While the fact
that there were no SEZs approved from the North Eastern states, Jammu &
Kashmir and Bihar isn't shocking, that there was only one approved from
Jharkhand is. The only automobiles and auto-components-based SEZ at
Adityapur in Jharkhand will be in a position to take advantage of the
industrial base and easy access to raw material available in the state.

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