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In June 2008, the state government approved more than 2,400 hectares of land for setting up 45 special economic

zones (SEZs) in Karnataka. This is expected to attract an investment of Rs 24,000 crore. A total of 6,244.4 hecatares is needed for SEZs in Karnataka. The government expects about 10 lakh (1 million) jobs to be created in the next few years. The approved SEZs include 33 IT/ITeS companies with investment worth over Rs 18,000 crore. The land requirement for SEZs in IT/ITeS is 712.95 hectare and will provide direct employment to 615,500 people. Sector IT/ITeS Hardware BT Sector-specific Product SEZs (e.g. garment, automobile) Airport-based SEZ Total No of SEZs 33 2 2 7 1 45 Total Investment in INR Crore 18,306 633 750 1,824 3,384 24,899

Investment to the tune of Rs 3,384 crore and earmarking 112 hectres exclusively for airportbased SEZ has been formally approved. The Centre has given in-principle approvals to only 8 SEZs in Karnataka having total investments of Rs 20,220 crore, including Rs 400 crore from IT/ITeS sectors. Major and Medium industries minister Murgesh R Nirani said the government would not acquire fertile lands for SEZ. Much appreciated! Farmers will be taken into confidence before acquiring the land. 20% of the developed land will be held by the farmers from whom the government acquired the land. Also, one member from the farmer's family will be given employement in the SEZ. Drying lands, where single crops can be grown, can be acquired from the farmers on a consent basis. If more than 50% of the farmers in any specific location earmarked for SEZs are not in favor of parting with their land, the promoters will not be permitted to pruchase land in such locations. SEZ Zones Steel Zone: Bellary, Koppal, Raichur district Cement Zone: Bagalkot, Bijapur, Gulbarga, Bijapur Food Processing Zone: Shimoga, Mysore, Bijapur, Bagalkot, Kolar, Bangalore Rural IT-ITeS/BT Zone: Mangalore, Mysore, Hubli-Dharwad, Belgaum Automobile Zone: Dharwad and Bangalore Readymade Garment Zone: Bangalore, Bellary, Mysore Petroleum, Chemicals And Petrochemicals Complex: Mangalore and Udupi

What are SEZ`s
Special Economic Zones (SEZ`s) are specifically delineated duty free enclaves, deemed to be foreign territory for the purposes of trade operations and duties and tariffs. At present there eight functional SEZ`s located at Santa Cruz (Maharashtra), Cochin (Kerala), Kandla & Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta (West Bengal) and Nodia (Uttar Pradesh) in India. Further a Special Economic Zone at Indore (Madhya Pradesh) is now ready for operation. In addition, 18 approvals have been given for setting up of SEZ`s at various locations across the nation. SEZ`s can be set up by any private / public / joint sector or State Government or its agencies. Foreign investors can also participate in setting up SEZ`s. SEZ`s - the growth catalysts.

sez is on its way to set up 16 special zones in Andhra Pradesh and 2 in Kerala, and 8 in
Karnataka. This makes India's total special economic zones to 212. Commerce secretary G.K Pillai has approved 26 new projects for special economic zone of late. Karnataka had submitted a range of 41 proposals for special economic zone proposals in sectors that includes Information Technology (IT) to food processing. The Karnataka Industrial Areas Development Board (KIADB) for the establishment of food processing units has allotted an area of 157.01 hectares and other services related to the special economic zone of Karnataka located at Hassan. The Board of Approvals (BOA) has also given its approval to the Karnataka Industrial Areas Development Board's (KIADB) proposal to construct the special economic zones effective for the sectors such as pharma, biotech and chemical industry in Hassan and the projects that would be executed under the provision of this will cover an area of more than 281.21 hectares. The other major proposal for the SEZs in Karnataka that got the sanction order from the Board of Approvals (BOA) was for the sector that comprises Karnataka Biotechnology and Information Technology Services. This unit of Karnataka SEZ proposed that a special economic zone could be set up in the biotechnology sector in the Electronics City of Bangalore that would acquire a land of more than 43 acres. The board of approvals had also sanctioned the proposal of Shree Renuka Sugars Limited that wants to establish a special economic zone focused upon a unified sugarcane-processing unit that would acquire an area of over 100 hectares. This unit will comprise of a sugar plant, power station and industrial plant located at Burlatti in Belgaum district in Karnataka. The BOA officially gave approval for the set up of 4 SEZ units in Karnataka that will be based on the Information Technology plants. One of the special economic zone units in Karnataka among the

four include Ittina Properties Private Limited's proposal for the establishment of special economic zones in the sectors such as electronics, hardware and software which will be located in Bangalore covering an area of around 15.732 hectares. The board of approvals also sanctioned the proposal of Divyasree Infrastructure for the setting up of a special economic zone in the IT/ITES sector that would acquire a land area of 20.234 hectares and will be located in Bellandur Amani Kane near Bangalore. Another proposal to set up a SEZ in the IT/ITES sector in Bangalore covering an area of 20.24 hectares by Chaitanaya Infrastructure Private Limited was also approved by BOA. Some of the noteworthy proposals for SEZ that were officially approved by the BOA include setting up of a biotechnology SEZ in Medak district and a pharmaceutical firm in Mahaboobnagar district. The Board of Approvals who is in authority of the special economic zones has mostly approved SEZs in Karnataka and some of them are already on their way for accomplishments. The government of Karnataka is planning for a perfect amelioration of the state with such industrial developments. The main features of Indian Special Economic Zones are as follows y y y y y y y y y y y

Modern harbor - Artificial harbor and handling bulk containers made operational through out the year Airport - Houses both domestic and international air terminals to facilitate transit, to and from major domestic and international destinations Financial Institutions - Has host of Public and Private Bank chains to offer financial assistance for business houses A vibrant industrial city with abundant supply of skilled manpower, covering the entire spectrum of industrial and business expertise Other Advantages - Well connected with network of public transport, local railways and cabs Pollution free environment with proper drainage and sewage system In-house Customs clearance facilities Uninterrupted power supply Abundant supply of technically skilled manpower Abundant supply of semi-skilled labor across all industry vertical Easy access to airport and local Railway Station

The successful implementation of Indian SEZ Policy is evident from the facts which are enumerated as follows y y y

Projected exports from all SEZs for 2007-08 is ` 67300 crore Presently, 1016 units are in operation and providing direct employment to over 1.79 lakh people of which around 40% are women Private investment by entrepreneurs before the SEZ Act was around ` 4400 crore. In the 63 notified SEZs which have come up after

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10th February 06, investment of ` 13,435 crore has already been made in less than a year Have created direct employment for around 18,457 people

Some of the key provisions of the Indian SEZ Rules 2006 are mentioned as below y y y y y y y y y y y y y y y y y y y y y

Should be exempted from duties on all imports for project development Should be exempted from excise / VAT on domestic sourcing of capital goods for project development Should be offered 10-year tax holiday in a block of the first 20 years No foreign ownership restrictions in developing zone infrastructure and no restrictions on repatriation Freedom to develop township in to the SEZ with residential areas, markets, play grounds, clubs and recreation centers without any restrictions on foreign ownership Should be exempted from taxation on business income Should be exempted from import duty, VAT and other taxes 10% FDI allowed through the automatic route for all manufacturing activities Procedural ease and efficiency for speedy approvals, clearances and customs procedures and dispute resolution Simplification of procedures and self-certification in the labor acts Artificial harbor and handling bulk containers made operational through out the year To be equipped with air ports for easy transit of men and goods To be equipped with host of Public and Private Bank chains to offer financial assistance for business houses Should be a vibrant industrial city with abundant supply of skilled manpower, covering the entire spectrum of industrial and business expertise Should be well connected with network of public transport, local railways and cabs To encourage pollution free environment with proper drainage and sewage system To house in-house customs clearance facilities Should have easy access to airport and local railway station Full authority to provide services such as water, electricity, security, restaurants and recreational facilities within the zone on purely commercial basis Should have abundant supply of technically skilled manpower Should have abundant supply of semi-skilled labor across all industry sectors

The Procedure of Setting Up SEZ Unit in India has been simplified for the Indian government wants the number of SEZ to increase in the country. The government of India has simplified method of setting up SEZ Unit in India. Special Economic Zone means an area that has been specified as an enclave that is duty free and is treated as a foreign territory for various purposes such as tariffs, trade operations, and duties. SEZ help in the economic and industrial growth of the state and this is the reason that the government of India has made it easy to set up SEZs in India. In India, SEZs can be set up by the state government, or its various agencies or any public, private, joint sector. Even foreign companies can set up SEZs in India.

Procedure of Setting Up SEZ Unit in India includes filling up of an application with the name, address, and status of the promoter. Along with the application form, the project report which has details such as the proposed SEZ's location, the details of infrastructure that already exists, details of infrastructure that will be established, and the total area of the proposed SEZ. The project report of the proposed SEZ that will be submitted along with the application form should also contain investment details, which would include the financing mode and the project's viability. Also it should contain details as to whether the proposed SEZ would be a multiproduct or specific industries zone and foreign equity details. The application along with the project report for the setting up of SEZ Unit is submitted to the Chief Secretary of the State. The Steps of Setting Up SEZ Unit in India are that after the application has been submitted, the state government then forwards the application to the Department of Commerce, Indian government. Along with the application form, the state government has to give their commitment that the area where the proposed SEZ will be set up is free from all kinds of environmental restrictions, that it would provide electricity, water, and various other services when required, and that it would allow transmission, generation, and power distribution inside the SEZ. Further the state government has to give the commitment that it would exempt the proposed SEZ from sales tax, turnover tax, and mandi tax on the goods that are supplied from the area of Domestic Tariff to the units in the SEZ. Also the government of the state has to give the commitment that it would declare the units of the SEZ as Public Utility Service and that the system of single point clearance and minimum inspection would be provided to the SEZ. Procedure of Setting Up SEZ Unit in India are that once the application has been forwarded that incorporates the state government's commitments then it will be considered by the Department of Commerce's Inter- Ministerial Committee. When the committee accepts the proposal, a permission letter is issued to the applicant of the proposed SEZ. Procedure of Setting Up SEZ Unit in India, as seen is very simple. The government of India must continue to simplify the Method of Setting Up SEZ Unit in India. For, this will help in increasing the number of SEZ in the country, which in its turn will lead to the growth and prosperity of India.

SEZs and Land Acquisition is taking place mainly in agricultural lands and the central and state
governments are acquiring the land from the farmers. Across India, the total amount of land, which will be acquired, is around 150,000 hectares and this amount of land is capable of producing around 1 million tons of agricultural produce. The various advantages of SEZs and Land Acquisition in India are that it has helped to bring in huge amounts of foreign currency into the country, increased the number of jobs for the people of the country, and has also helped to bring in highly technologically advanced machines into the country. The various disadvantages of SEZs and Land Acquisition in India are that it is estimated that more than 10 lakh people who are dependent upon agricultural lands will be evicted from their lands, it is estimated that the farming families will have to face loss of around Rs.212 crores each year in total income, and it will also lead to putting the food security of India at risk. SEZs and Land Acquisition in

India has now resulted in dissent, uproar, and opposition from the farmers, for their livelihood has been put at stake. Recently due to Land Acquisition in Atchutapuram, which is near Visakhapatnam, the farmers have declared war against the setting up of SEZ in their lands. The land compensation money that the state government is giving is very less in comparison to the actual market rate of the land and this has angered the farmers even more. Recently, at Nandigram village, which is in West Bengal, the farmers have also protested against the setting up of SEZ in their lands. SEZs and Land Acquisition has been taking place in India in a very fast pace over the last few years. The government of India must make sure that Land Acquisition and SEZs must prove beneficial for the people of the country and not harmful.

Local sales tax / value added tax laws:

y Section 50 of the Special Economic Zone Act of India, empowers all the concerned State Governments to issue notifications allowing exemptions to developer or entrepreneur on state taxes, levies and duties.
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Rule 5(5) of Special Economic Zone of India provides that before recommendation of any proposal for establishment of a Special Economic Zone, the State Government should offer various incentives, including exemption from state and local taxes, levies, stamp duty, other duties and taxes levied by local bodies on goods required for operations of such authorized unit. Further, the goods sold by such unit in the domestic tariff area (DTA) should also be extended all such exemptions support, except the goods procured from domestic tariff area should be sold as it is Therefore, the Special Economic Zone Act and the Rule of India involves all the state governments with clear indication of incentives offered as per the respective state policy.

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Some of the important SEZ in India are as follows y y

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Karnataka Biotechnology and Information Technology Services - SEZ on biotechnology sector in Bangalore's Electronics City, over an area of 43 acres Shree Renuka Sugars Limited - SEZ on sugarcane processing complex covering 100 hectares, comprising a sugar plant, power station and distillery, at Burlatti in Belgaum district Ittina Properties Private Limited and three other - SEZs in IT sector, covering electronics, hardware and software sectors in Bangalore, over an area of 15.732 hectares Wipro Infotech - SEZ on IT / ITES at Electronics City, Sarajpur Bangalore Hewlett Packard India Software Operation Pvt. Ltd. - SEZ on IT Food processing and related SEZ services in Hassan, over an area of 157.91 hectares

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SEZs on pharmaceuticals, biotechnology and chemical sectors in Hassan, covering of 281.21 hectares The History of SEZs in India suggests that the seeds of the basic concept of Special Economic Zone (SEZ) were sown in the mid sixties. Further, the History of SEZs in India suggests that the basic model of the present day Indian Special Economic Zone was structured with the establishment of the first Export Processing Zone (EPZ) at Kandla in the year 1965. Several other Export Processing Zones were set up at various parts of India in the subsequent years. The lack of good Government of India economic policy and inefficient management soon became the detrimental factors for the success of these Export Processing Zones. Thus, the performance of these Export Processing Zones of India fell short of expectations.
y The modern day Special Economic Zone came in to existence because the economic

reforms incorporated in the early 1990s did not resulted in the overall growth of the Indian economy. The SEZ policy of India was devised to act as a catalyst to promote the economic growth attained in the early 1990. The economic reforms incorporated during the 1990s did not produce the desired results. The Indian manufacturing sector witnessed a sudden dip in the overall growth of the industry, during the second-half of 1990s. The History of SEZs in India suggests that red tape, lengthy administrative procedures, rigid labor laws and poor physical infrastructural facilities were the main cause of deterioration of Foreign Direct Investments (FDI) inflow in to India. Further, the Indian markets were not mature enough to facilitate easy entry of Foreign Institutional Investors (FIIs) in to the Indian economic system. Furthermore, the legal framework of Indian economy was not strong enough to prevent misuse of Indian markets by the foreign investors. Thus, the lack of investor friendly environment in India prevented growth of Indian industry, in spite of implementation of liberal economic policy by the central government. This resulted in the formation of a much larger and more efficient form of their predecessors with world-class infrastructural facility. The History of SEZs in India suggests that the present day Special Economic Zone policies of India are well complimented by the provisions of the Acts and Rules of Special Economic Zone. A number of meetings were held across India for the formulation of - 'The Special Economic Zones Act, 2005', which was subsequently passed by Parliament in May 2005. The SEZ Act, 2005 and SEZ Rules became effective on and from 10th February 2006. The SEZ Act 2005 defines the key role for the State Governments in Export Promotion and creation of infrastructural facilities. A Single Window SEZ approval mechanism has been facilitated through a 19 member interministerial SEZ Board of Approval or BOA. And the decision of the SEZ Board of Approval is binding and final.