June 20, 2008, New Delhi – Exports from SEZ ‘s are expected to double to Rs.1,35,000 Crores by the end of this financial year revealed Mr. G K Pillai, Commerce Secretary, Government of India.  While addressing PHD Chamber he highlighted that in 2007-08, the exports from SEZs were to the tune of Rs.66,638 crores, a 92% growth over 2006-07.  Out of these exports, 85% were physical exports, 13% deemed exports and 2% DTA sales.

He stated that direct job creation shall increase to 4 lakhs from 2 lakhs at present. It is having a multiplier effect on indirect jobs and provides an all inclusive growth  The 231 notified SEZ s were creating equitable opportunity for economic development .Tremendous knowledge and skills were being generated within these SEZs and there was a huge cascading effect on employment generation in the surrounding rural areas due to outsourcing which promoted inclusive growth. Many of the units operating within SEZs were subsidising training and skill development of their workers. These facts conclusively showed that the apprehensions and fears expressed on SEZs were misplaced. India was competing with a lot of countries for attracting FDI and our SEZs were acting as a catalyst in this regard.

According to Mr. G K Pillai, land acquisition was now a non-issue and developers were buying land at prevailing market rates and also working on relief and rehabilitation issues. The lacuna was in the Land Acquisition Act and not in the SEZ Act. For the country as a whole, less than 10% of the land acquired by the government was for SEZs. Most of the land was given by the various State Industrial Corporations to SEZ developers on lease. No land within a SEZ could be sold by the developer and it could only be given on lease. Land was already available for around 750 SEZs. Land prices in the vicinity of SEZs had gone up substantially benefiting the farmers. According to him, it would have taken a very long time to acquire land if we had gone for fewer but larger SEZs.

Mr. G K Pillai mentioned that the need for social infrastructure within the SEZs, like housing for workers, hospitals, recreational facilities, schools, etc., was crucial as otherwise it would severely strain the social infrastructure outside the SEZs in neighbouring areas as was happening in Bangalore. Due to misplaced concerns, the minimum processing area had to be increased to 50%, but now there was an increasing recognition of the need for creation of adequate social infrastructure within the SEZs. All activity within the SEZs was regulated and all social infrastructure was to be approved by the SEZ Board of Approval. Norms for various types of social infrastructure were being framed.

Mr. G K Pillai mentioned that SEZs had shown that if you trusted the industry, the industry more than repaid the trust imposed on it. In the SEZs, there had been a lot of procedural simplification, emphasis had been placed on self-certification by the individual units and effort was to provide a hassle-free environment. There would, of course, be some churning out and all SEZs may not fructify. No denotification of SEZs was being thought of except in Goa and that too for political reasons. There was a provision in the SEZ Act for the government to take over management of SEZ where the developer defaulted in fulfilling the laid down obligations.

Answering Questions put by leading industrialists on the challenges faced by the SEZ’s Mr. G K Pillai, said ,”The challenges were related to the creation of infrastructure both within and outside the SEZs and linking them ports and other places, need for some representative body of workers living in a SEZ to take care of their civic concerns and rights, need for putting in place adequate regulatory government officials in the SEZs, some issues concerning power and port-based SEZs like tariff duties on the sale of surplus power to DTA, etc. These were being looked into and were in the process of being sorted out. Provision of single window clearance was being pursued with the State Governments. Multi-State infrastructure issues could be tackled by the provision of funds by the Centre under the ASIDE Scheme”.

Mr. G K Pillai’s address was followed by a question & answer session. Mr. Ashok Kajaria, Vice President, PHD Chamber, proposed the vote of thanks. Mr. Krishan Kalra, Secretary General, PHD Chamber, had earlier introduced the speaker.