ABSTRACT

A Special Economic Zone in short SEZ is a geographically bound zones where the economic laws in matters related to export and import are more broadminded and liberal as compared to rest parts of the country. SEZs are projected as duty free area for the purpose of trade, operations, duty and tariffs. SEZ units are self-contained and integrated having their own infrastructure and support services. Within SEZs, a unit may be set-up for the manufacture of goods and other activities including processing, assembling, trading, repairing, reconditioning, making of gold/silver, platinum jewellery etc. As per law, SEZ units are deemed to be outside the customs territory of India. Goods and services coming into SEZs from the domestic tariff area or DTA are treated as exports from India and goods and services rendered from the SEZ to the DTA are treated as imports into India.

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SPECIAL ECONOMIC ZONE (SEZ) ± An Overview

The world first known instance of SEZ have been found in an industrial park set up in Puerto Rico in 1947. In the 1960s, Ireland and Taiwan followed suit, but in the 1980s China made the SEZs gain global currency with its largest SEZ being the metropolis of Shenzhen.

From 1965 onwards, India experimented with the concept of such units in the form of Export Processing Zones (EPZ). But a revolution came in 2000, when Murlisone Maran, then Commerce Minister, made a tour to the southern provinces of China. After returning from the visit, he incorporated the SEZs into the Exim Policy of India. Five year later, SEZ Act (2005) was also introduced and in 2006 SEZ Rules were formulated. Early Start: India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000. This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations. Step towards SEZ Act, 2005: To instill confidence in investors and signal the Government's commitment to a stable SEZ policy regime and with a view to impart stability to the SEZ regime thereby generating greater economic activity and employment through the establishment of SEZs, a comprehensive draft SEZ Bill prepared after extensive discussions with the stakeholders. A number of meetings were held in various parts of the country both by the Minister for Commerce and Industry as well as senior officials for this purpose. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft

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providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. After extensive consultations. operation. and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs.  Development of infrastructure facilities. Types of SEZ: Sector Specific SEZ-units may be set up for ± Manufacture of one or more goods in a sector ± Rendering of one or more services in a sector -3- .SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. the SEZ Act. The SEZ Rules provide for: y Simplified procedures for development.  Creation of employment opportunities. came into effect on 10th February. 2006. Single window clearance for setting up a unit in a Special Economic Zone. y y y y Single window clearance for setting up of an SEZ.  Promotion of investment from domestic and foreign sources. Single Window clearance on matters relating to Central as well as State Governments. The main Objectives of the SEZ Act are:  Generation of additional economic activity  Promotion of exports of goods and services. Simplified compliance procedures and documentation with an emphasis on self certification. Around 800 suggestions were received on the draft rules. 2005. supported by SEZ Rules.

Other SEZ¶s ± SEZ in a port or airport ± SEZ for Free Trade and Warehousing -4- .Multi-product SEZ-units may be set up for ± Manufacture of two or more goods in a sector or goods falling in two or more sectors ± Trading and warehousing ± rendering of two or more services in a sector or services falling in two or more sectors.

duty free. Income tax y y y y Physical export benefit 100% IT exemption (10A) for first 5 years and 50% for 2 years thereafter. y External commercial borrowings by units up to $ 500 million a year allowed without any maturity restrictions.FACILITIES AND INCENTIVES FOR SEZ UNITS Customs and Excise: y SEZ units may import or procure from the domestic sources. consumables.OBU¶s allowed 100% Income Tax exemption on profit for 3 years and 50 % for next two years. Goods imported/procured locally duty free could be utilized over the approval period of 5 years. y y Duty free import/domestic procurement of goods for setting up of SEZ units. office equipment. all their requirements of capital goods. DG sets etc. spares. by-products on payment of applicable Custom duty. Reinvestment allowance to the extent of 50% of ploughed back profits Carry forward of losses Foreign Direct Investment: y 100% foreign direct investment is under the automatic route is allowed in manufacturing sector in SEZ units except arms and ammunition. Banking / Insurance/External Commercial Borrowings y Setting up Off-shore Banking Units allowed in SEZs. distillation and brewing of alcoholic drinks and cigarettes . y y y Domestic sales by SEZ units will now be exempt from SAD. Domestic sale rejects and waste and scrap on payment of applicable Custom duty on the transaction value. raw materials. Domestic sale of finished products. packing materials. y No cap on foreign investments for SSI reserved items. atomic substance. narcotics and hazardous chemicals. -5- . for implementation of their project in the Zone without any license or specific approval. cigars and manufactured tobacco substitutes. explosive. y Freedom to bring in export proceeds without any time limit.

Service Tax: y Exemption from Service Tax to SEZ units Environment: y SEZs permitted to have non-polluting industries in IT and facilities like golf courses. 2. Drugs and Cosmetics: y Exemption from port restriction under Drugs & Cosmetics Rules. Freedom to make overseas investment from it.4 crores per annum allowed for managerial remuneration Agreement to opening of Regional office of Registrar of Companies in SEZs. Exemption from interest rate surcharge on import finance. desalination plants. hotels and non-polluting service industries in the Coastal Regulation Zone area y Exemption from public hearing under Environment Impact Assessment Notification Companies Act: y y y Enhanced limit of Rs. Sub-Contracting/Contract Farming y SEZ units may sub-contract part of production or production process through units in the Domestic Tariff Area or through other EOU/SEZ units y y SEZ units may also sub-contract part of their production process abroad. y y y Commodity hedging permitted. SEZ units allowed to µwrite-off¶ unrealized export bills. -6- . Exemption from requirement of domicile in India for 12 months prior to appointment as Director. Central Sales Tax Act: y Exemption to sales made from Domestic Tariff Area to SEZ units.y Flexibility to keep 100% of export proceeds in EEFC account. Agriculture/Horticulture processing SEZ units allowed providing inputs and equipments to contract farmers in DTA to promote production of goods as per the requirement of importing countries.

etc. rules and procedures applicable to such SEZ. the States must satisfy themselves that they are in a position to supply basic inputs like water. They shall also comply with industrial and labour laws as may be locally applicable. electricity. y Minimum area of 1000 hectares will not be applicable to product specific and port/airport based SEZs .ROLE AND TERMS & CONDITIONS OF SEZ State Governments will have a very important role to play in the establishment of SEZ. regulations or bye-laws in regard to area planning. y Wherever the SEZs are landlocked. is consulted while considering the proposal. y Such SEZ shall make security arrangements to fulfill all the requirements of the laws. sewerage disposal. rules. pollution control and the like. y The SEZ should have a minimum area of 1000 hectares and at least 25 % of thye area is to be earmarked for developing industrial area for setting up of units. Representative of the State Government. The SEZ units shall abide by local laws. an Inland Container Depot (ICD) will be an integral part of SEZs. who is a member of the Inter-Ministerial Committee on private SEZ. -7- . y y Only units approved under SEZ scheme would be permitted to be located in SEZ. Before recommending any proposals to the Ministry of Commerce & Industry (Department of Commerce).

spares. raw materials. consumables. and consumable spares. y Exemption from payment of Central Sales Tax on the sale or purchase of goods. SEZ advantages are quite far more as compared to its disadvantages which are almost negligible. y The SEZ unit is permitted to realize and repatriate to India the full export value of goods or software within a period of twelve months from the date of export.e. -8- . 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment. provided that. the goods are meant for undertaking authorized operations.. from the domestic market. Advantages: y 15 year corporate tax holiday on export profit ± 100% for initial 5 years. trading or service activity has both advantages as well as disadvantages. The sale of goods or merchandise that is manufactured outside the SEZ (i. No license required for import made under SEZ units. raw materials. y Exemption from Central Excise duty on the procurement of capital goods. Duty free import or domestic procurement of goods for setting up of the SEZ units. Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years. etc. y y Exemption from payment of Service Tax. etc. in DTA) and which is purchased by the Unit (situated in the SEZ) is eligible for deduction and such sale would be deemed to be exports.ADVANTAGES & DISADVANTAGES OF SEZ A SEZ unit which has been set up for carrying on manufacturing. y Exemption from customs duty on import of capital goods. y y y y Allowed to carry forward losses.

y ³Write-off´ of unrealized export bills is permitted up to an annual limit of 5% of their average annual realization. Disadvantages y y Revenue losses because of the various tax exemptions and incentives. 2. y Exemption from requirement of domicile in India for 12 months prior to appointment as Director. y Enhanced limit of Rs. Setting up Off-shore Banking Units (OBU) allowed in SEZs. y y y No routine examination by Customs officials of export and import cargo. y Since SEZ units are considered as µpublic utility services¶. -9- . y The Government has exempted SEZ Units from the payment of stamp duty and registration fees on the lease/license of plots. y External Commercial Borrowings up to $ 500 million a year allowed without any maturity restrictions. 1947. OBU's allowed 100% income tax exemption on profit earned for three years and 50 % for next two years. y The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.40 crores per annum allowed for managerial remuneration. Many traders are interested in SEZ. no strikes would be allowed in such companies without giving the employer 6 weeks prior notice in addition to the other conditions mentioned in the Industrial Disputes Act. so that they can acquire at cheap rates and create a land bank for themselves.

Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Value (Rs.711.689 2.40% -10- .615 66. 2. Employment: It is expected that if all 577 formal approvals become operational then Employment numbers will be more than 2 millions directly.854 18. In the year 2009-2010 India seen growth of 121. Crore) 13.40% of in exports from SEZ¶s compare to previous year.39 Growth Rate (Over Previous Year) 39% 32% 25% 52% 93% 50% 121. Exports: SEZ has contributed good amount of exports revenue for country.IMPACT ON INDIAN ECONOMY 1.638 99.20.314 22 840 34.

19 billion between April and June this year. 5.3. Exports from such tax-free manufacturing hubs totalled US$ 18. -11- .16 billion last year up from US$ 13. Exports from 98 functional special economic zones (SEZs) increased by over 25 per cent to US$ 8. 4.60 billion a year before. The government has allowed companies located in SEZs to claim service tax refund for services availed outside the tax-free export zones. Exports from special economic zones (SEZs) rose 33 per cent during the year to endMarch 2009.

1000 crores or Net worth* of Rs. Information Technology 35% 50% 50% 50% . 250 crores or Net worth* of Rs.421 acres = 10. m of built up area.(not exceed 20% of the Processing area in Sector Specific SEZ) 4 40 ha 5 10 ha 50% 6 10 ha 50% Note 1 hectare = 2. Nonconventional Energy Electronic Hardware and Software. 250 crores -12- . 1 lakh sq.metres.000 sq. 50 crores Multi product SEZ¶s y y Investment should be more than Rs. Bio-technology. 1000 hectares = 2500 acres Minimum Investment Requirements Sector Specific SEZ¶s y y Investment should be more than Rs.MINIMUM LAND REQUIREMENT Sr No Minimum Contiguous Area Required (Max 5000 ha) 1000 ha 100 ha 100 ha Nature of SEZ Minimum Processing Area Required 1 2 3 Multi Product Sector Specific SEZ in Port or Airport SEZ for Free Trade Zone and Warehousing Gems and Jewellery.

Components & Spares) Operation Stage (Raw Materials. 3. 2. 6. Reduced Cost of infrastructure Reduced Cost of Utilities Reduced Cost of Raw Material Reduced Cost of Capital Reduced Cost of Manpower Operational Ease Enabled Baskets of Benefits leading to global competitiveness -13- .Major SEZ Benefits: No Customs Duty No Excise Duty No Sales Tax No Service Tax No Purchase Tax No Stamp duty & Registration Fees No Stamp duty on Mortgages No Electricity duty No Customs Duty No Excise Duty No Sales Tax No Service Tax No Purchase Tax No Stamp duty & Registration Fees No Stamp duty on Mortgages No Electricity duty Development Stage (Capital Goods. Consumables. 4. 5. 7. Components & Spares) As above As above Profit Stage Exemption from Income Tax No Income Tax for 10 years (80 IAB) Results of Benefits: 1. Consumables.

CURRENT FACTS OF SEZ¶s IN INDIA Current Fact Sheet: -14- .

police shot dead at least 14 villagers and wounded 70 more including children and women.000-ha) SEZ by Reliance Infrastructure. Nandigram Violence The Nandigram violence is another famous incidence related to SEZ controversy. They claimed that the acquisition of large tracts of agricultural land in the villages of the district not only violated the Land Acquisition Act of 1894.000 acres of land for a Special Economic Zone (SEZ) to be developed by the Indonesian-based Salim Group. Jamnagar Incidence In November 2006. farmers from the Jamnagar District in Gujarat moved the High Court of Gujarat and later to the Supreme Court in order to challenge the setting-up of a 10. It is located about 70 km south-west of Kolkata. -15- . This led the Government to ³consider´ putting a ceiling on the maximum land area that can be acquired for multi-product zones and decide to ³go slow´ in approving SEZs. The main objective was to remove the protestors in order to expropriate 10. farmers first protested to safeguard their interests through litigation and court cases challenging the establishment of SEZs. 4. Farmers of that village were against it. on the south bank of the Haldi River. In against of this. opposite the industrial city of Haldia. There are millions of people whose livelihood depends on agricultural land.000 heavily armed police stormed the Nandigram area. During this incidence. Nandigram is a rural area in Purba Medinipur district of the Indian state of West Bengal. In 2007 the West Bengal government decided to allow Salim Group to set up a chemical hub at Nandigram under the SEZ policy.000-acre (approx. but was also in breach of the public interest.SEZ CONTROVERSY Land. on the order of the Left Front government on 14 March. But later on. more than 3. But the introduction of SEZ in India has resulted in the dispossession of agricultural land and has affected the livelihood of farmer at large. 2007. especially agricultural land is a very sensitive issue in India. So. the resistance against SEZ in India became massive when political parties also joined the farmers.

´ said Neeru Ahuja. where investments made are relatively low. 2012 and any unit that commences commercial operations by March 31. ³It is a welcome move given the original position of the code. there are nearly 576 formerly approved special economic zones of which 114 are operational. They are expected to garner nearly `10 lakh crore of investments.DIRECT TAX CODE (DTC) IMAPACT 31 Aug. Deloitte Haskins & Sells. SEZ developers. -16- . The 20% MAT adds more pressure on investors and skews the picture from a cash-flow perspective. The Bill has suggested a phased withdrawal of the current regime of tax exemptions that are linked to profits. get 100% tax exemption on profits for 10 years. Mr Mitra said. ³The code will grandfather the existing unavailed exemptions for units that commence operations by 2014. on the other hand. ET Bureau SEZ tax sops retained till 2014. partner. revenue secretary on Monday after the Bill was tabled in the Lok Sabha. and replacing it with tax sops linked to investments. it would definitely lead to lower exemptions.´ said Abhishek Goenka.000 crore from tax exemptions. The finance ministry proposes to implement the DTC by April 1 2012. a 50% exemption for the next five years and another 50% exemption on re-invested profits in the following five years. ³The tax-free status is partly taken away by the imposition of 20% MAT on such units though the MAT will be creditable in future years. the Direct Taxes Code Bill has proposed to retain the current tax system of exemptions for zones notified till 2012 but imposed a 20% minimum alternate tax. 2014 will be able to enjoy profit-linked tax exemption even as the Bill marks a shift in the criterion of corporate tax holidays. 2010. The finance ministry is hopeful that this will help offset the revenue loss of nearly `80. At present. But developers and units have opposed the move. but will need to pay 20% MAT NEW DELHI: In a partial reprieve to special economic zones (SEZs). For sectors such as IT. SEZ units get 100% tax exemption on profits earned for the first five years. partner. which they can choose in the block of the first 15 years.´ said Sunil Mitra. As per the Bill. any zone notified before March 31. BMR Advisors. as this will hurt the SEZ policy. as it would make investments in such zones unattractive. But the tax exemption should have been continued in perpetuity.

000 hectare. where it developed SEZ on a focused manner. The concept of SEZ is fundamental model of China FDI model. Cumulatively. The understanding was that this proximity would make it easier to attract FDI and in turn would facilitate the firms to shift parts of their production processes to China. The first four SEZs set up in China in 1980 were Shenzhen (32.100 Ha) in Fujian Province. 20 per cent of the total FDI into China has made its way into SEZs. technical knowledge. Prominent industries established in these zones are textile and garments. employ more than two million people directly and approximately 16 million overall.000 Ha) received full provincial status and was officially declared as the µFifth SEZ¶. state level Economic and Technology Development Zones (ETDZs) and FTZs. This is to be remembered that.SEZ: THE CHINESE WAY Special Economic Zones (SEZ's) are development zones established by the Peoples Republic of China (PRC) to encourage foreign investment in China.750 hectare (Ha)). type of investments and regional political structure such as Open Coastal Areas. In 1984. this did not happen overnight and it has taken 25 years for China to become what it is today. and future tax revenues in return for significant tax concessions at start-up of the operations and over a number of years.350 hectare. Macao and Taiwan. They were chosen specifically because of their proximity to major regional world trading centers of Hong Kong. metal works and -17- . The five SEZs cover an area of 421. The contribution of Chinese SEZs to the country¶s exports is in the range of 15-23 per cent. which are multi-product SEZs. China has conceptualized various other forms of free zones depending upon their geographical locations. Zhuhai (12. SEZ has been one of the key reasons for the huge FDI that China has managed to attract so far. taken together. The ETDZs cover an area of 30.400 Ha) in Guangdong Province and Xiamen (13. Open Economic Zones. and Shantou (23.40. They are not unlike SEZs in other part of the world.100 Ha). These zones. bringing much need jobs. SEZs apart. fourteen coastal towns were opened up to form Open Coastal Zones and in 1988 the island of Hainan (3.

For years three and four. -18- . In the fifth year. the company pays the full normal tax rate. there is 1/2 of the normal tax rate. A typical example of the PRC tax concessions offered to a manufacturing startup typically looks like: y y y y y No tax during start-up years before making a profit The first year that your company makes a profit starts the "Tax Clock" and is year one The first and second year after the tax clock starts. trading. These rates can vary by site and are subject to change from time to time. there is no tax. Benefits of an SEZ: The biggest benefit to the foreign investor is significant tax concessions during the early life of the project. chemicals and pharmaceuticals and healthcare product manufacturing. logistics and high technology enterprises. warehousing.machinery.

Basically locals.INDIA-CHINA COMPARISON China India Very big. Longer and steeper than in China. It may be interesting to note that total Valid In-principle approved 155 SEZ¶s in India is less than the land area of China¶s one SEZ. -19- . In 1969 with the export processing zone concept. And China does not offer tax incentives across the board to all companies. Present. No restriction. Flexibility is totally absent. Relaxed in the SEZs. Experimentation of liberal policies in the specified areas while insulating them from the rest of the country. Hainan and 28 operational. Currently India has 577 formally approved SEZ¶z Anywhere. There is no minimum area requirement to set up an SEZ in China. But failed to muster courage in giving these regions foreign territory status till the year 2000 when Murasoli Maran announced the SEZ policy. which should have been the case. Other Comparative Factors: y China's SEZ initiative is government driven. as India does. About 200 received Pudong approvals. To facilitate exports and imports easily. unlike as in India. Typically in hundreds of Size Even 10 hectares will do. Anywhere and any number. Not foreign investor driven. Based on fiscal sops. hectares. But in India the private sector will develop most of them. Xiamen. Issue Location Labour laws Policy Regime Investors In 1979 Commencement Number Tax holidays Only six: Shenzhen. Zhuhai. Number China has only 5 SEZ¶s Well thought out and located only on coasts. Basically foreigners who are wooed with sops and promise of stability in policy. So far Shantou.

many Indian corporate prefer the Chinese way. creating employment or inviting foreign investments -20- .building infrastructure.y Chinese incentives differ from zone to zone and are based on the number of years of operation. use of advanced technologies. For example. y And though India's policy is a "please-all" one. It goes back to the 1980s when China was looking for a way to invite private and foreign investment. And its goals are many . India's SEZ policy comes 15 years after it kicked off economic liberalisation. companies involved in building infrastructure get special tax benefits. y China's SEZ initiative is linked to the opening up of its economy. extent of exports and the type of activities indulged in.

The draft law scheduled to be reviewed this month.CHINA SEZ & NEW LABOUR REFORMS New Chinese Labour Laws May Force Flight of Foreign Investment 07 September 2010 Overseas companies may no longer find China a lucrative country to set up manufacturing units after the newly-drafted labour laws in southern China's Shenzhen special economic zone (SEZ) were introduced. analysts had then said that China was rapidly turning into a developed market from an emerging market and labour costs were set to rise. The average monthly wages for factory workers in the city are about 3.9 million. aimed at empowering workers to collectively negotiate higher wages. while workers at most of the manufacturing units at Shenzhen SEZ are paid between 1. -21- . Overseas firms in China are now increasingly facing labour issues with migrant workers. demanding better pay and service conditions. They said car makers have little choice but to accept higher costs and wages if they want to remain in business in China.500 Yuan ($220). The new labour draft comes after the Shenzhen SEZ was hit by a series of wage disputes mainly at Japanese auto parts units that saw production grinding to halt until the companies agreed to hike wages. comprises four of the six districts of Shenzhen City in Guangdong Province spanning an area of 493km that turned the city from a cluster of fishing villages with a population of 30. many from the vast countryside. affecting parts suppliers of Japanese carmakers like Honda and Toyota. in a bid to prevent a spate of worker suicides the consequent rising public anger against it. Shenzhen SEZ. raised workers' wages at its Shenzhen plant by 66 per cent from 1 October 2010.900 Yuan ($560). Labour strikes started in May in Shenzhen SEZ and in nearby cites in Guangdong province.100 Yuan ($146) to 1. allows workers in the manufacturing hub of Shenzhen SEZ to collectively bargain for higher salary if the wages of the majority of workers are less than half the average pay level in the city.000 into a booming metropolis of 8. Taiwan's Hon Hai Precision Industry. the world's largest contract manufacturer to companies like Apple. The new laws would allow workers at Shenzhen SEZ demand wage hikes of as much as 70 per cent in order to bring their salary level to that of city workers. After a series of copy-cat strikes at Shenzen. established in 1980.

google. But with social unrest due to huge differences in wages between workers at Shenzhen SEZ to those working in cities.Shenzhen. Foxconn is planning to build a new plant in Zhengzhou. Some companies like Foxconn have already decided to shift some of their manufacturing units from Shenzhen to Northern China. Year after year. under reforms brought out by the late Deng Xiaoping. Shenzhen has delivered double-digit growth but workers' salaries have remained the same since the past decade. cheap power.com/group/stocktalks/topics) -22- . But many overseas companies are now pondering pulling out of China as cheap labour was one of the prime reasons that made them invest in the country in the first place. where labour costs are still low. which is often seen as a test bed for economic reform in China. Shenzhen became the first area in China to be designated as a Special Economic Zone that could accept foreign investment. then get out of China. "If you are a foreign enterprise and cannot afford to pay higher wages. the country saw mass strikes and Beijing for the first time remained a mute spectator." one Guangdong provincial official is reported to have said. less red tape and abundant cheap labour that would later set the place to lead the country's explosive manufacturing-based economic growth. had an output of $120 billion last year. capital of Central China's Henan province (Source: http://groups. Overseas companies were lured into investing in Shenzhen as it offered lower taxes.

India is seeking lots of major reforms like Land acquisition reforms. unless and until the views of political parties in India is focused and centralised towards the India. unlike China.IS COMMUNISM IS BETTER THAN DEMOCRACY INCASE OF FASTER DEVELOPMENT OF COUNTRY??? India being a democratic country. Here the representative of people from different parts of India carries different views towards the social and economical growth of the country. Communism is a political ideology that is based on a common ownership. India. isn¶t a dictatorship. still they are unable to enact them at faster pace. Labor Reforms that are in pipeline but due to different political views towards those reforms. India may not be able to achieve those highs what China has achieved. political system of governance either carried out by the people directly or by elected representatives. they¶re the latest example of how ideas that work just great in Communist China don¶t quite translate so well in Democratic India. India¶s leaders can¶t just railroad through policies the way China¶s communists do. mainly concerned with equality and fairness is focused while taking major decision due to its centralized political structure. All in all. -23- . Where as China. This is the main reason because China can take decisions faster unlike India where representative of people with different motives and views affects the decision taking ability of government. As the ongoing debate about them in India shows.

2010 in addition to 19 existing zones established before the enactment of the SEZ Act 2005 as compared with the US. etc. where the numbers of SEZs are much lower and the land areas of their multi-product SEZs are huge in size.CONCLUSION India has 363 notified SEZs as on 27th August. -24- . Philippines and Thailand. Total 363 SEZs are in the pipeline due to aggressive policies adopted to promote them as growth drivers but are delayed for notification due to land acquisition problems. the SEZs are promoting infrastructure and also instrumental in increasing manufacturing growth and thereby exports. But the growing number of SEZs with sector-specific small sized fragmented zones may not yield the desired results. Indonesia. China. lower growth prospects for some specific zones. No doubt.

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