“Indian SEZ policy has to adapt to the prevailing socio-political climate”

The Government’s policy of promoting Special Economic Zones (SEZs) as growth engines is tempered with a cautious approach to locating land for SEZ sites, M. Velmurugan, Executive Vice-Chairman, Guidance Bureau, Industries Department said on Wednesday.

Addressing a meeting on ‘Special Economic Zones-Opportunities’ hosted by the Indo-Japan Chamber of Commerce and Industry, Mr. Velmurugan said the State policy is against compulsory land acquisition or developing sites which had more than 10 per cent area of wetlands.

In fact, one of the main criticisms against SEZ promotion was that wetland ecosystems were being converted for non-farming purposes, he pointed out.

With an aim at avoiding disharmony around a SEZ habitat, the Government also insisted that developers engage in CSR initiatives and earmark jobs for locals at an SEZ site, he said.

According to Mr. Velmurugan, Tamil Nadu had the third most number (52) of SEZs in the country after Andhra Pradesh (70) and Maharashtra (57).

The highest number of SEZ initiatives were in the IT/ITES segment with 36 global companies making it to Chennai. “In fact, the State continued to receive a number of proposals even during the downturn”, Mr. Velmurugan said.

He pointed out that the most outstanding among success stories of global players setting base in Chennai was the rise of Nokia telecom SEZ in Sriperumbudur as its biggest manufacturing unit in the world producing as many as 11 mobile handsets every second. Since setting up its facility in Chennai after considering options in China and Thailand, Nokia had raised its manufacturing strength by over 12 times to produce 150 million handsets annually, he said.

In fact, it is now recognised that the SEZ format is the best business model to compete with China as mobile phones belong to the list of 217 items notified for zero customs duty under the Information Technology Agreement, the official said.

Mr. Velmurugan pointed out that unlike the Chinese SEZ experience where majority of investors were non-resident Chinese and Taiwanese, the investor profile in Indian SEZs was diverse. “Importantly, while China’s SEZ policy is looked upon as a model for the world, the Indian approach has to adapt to the prevailing socio-political climate,” he said. Kazuo Minagawa, Consul-General of Japan in Chennai and N. Krishnaswami, chamber president also attended.