Special Economic Zone - An Overview, Challenges, and Its Growth in India

Special Economic Zones (SEZs) can be compared to their predecessors, Free Trade Zones and Export Processing Zones, in that they are intended at stimulating foreign direct investment (FDI) and fast, export-led, industrial growth. The essential characteristic of such schemes is that they allow the by-passing of particular social legislation or tax provisions which are perceived to be an impediment to progress or the competitiveness of an export-oriented activity. A brainchild of the Ministry of Commerce and Industry (MOCI), the SEZ Act that was passed in 2005 goes much further than previous policies as it seeks to establish a large number of private industrial townships, each covering hundreds or thousands of hectares of land. According to the MOCI, as of February 2010, formal approval has been accorded by states to 571 proposals out of which 348 SEZs have been notified. A total of 105 SEZs are already exporting. The 571 approved proposals are for SEZs sponsored by State governments and are in addition to seven Central Government SEZs and 12 State/private sector SEZs that were set up prior to the enactment of SEZ Act, 2005 (MOCI, 2010). These 571 approved SEZs represent a total of 67680 hectares. Despite the huge rate of approval and establishment of SEZs, and thus their apparent success, the development of SEZs has faced considerable opposition and is stalling in some cases. In this research paper Authors have tried to analyze the growth of SEZ in various regions of India. This paper examines some of the contentious aspects of the growth of SEZs that pose major challenges to India's public policy and governance.