The Indian model of Special Economic Zone (SEZ) could not achieve the same amount of success as its Chinese counterpart. While the SEZs contributed hugely to China's economic growth, it’s a different story in India altogether. This is why the present day government is now working to bring new legislation in place of the existing SEZ Act. One can only hope that after the introduction of the new law, SEZs will become an effective engine for economic growth. Like China, SEZs in India too were specially envisaged to boost the country’s exports. To fulfill the dream, various concessions were offered to manufacturers including a fifteen-year tax holiday and relief from various domestic laws. Notwithstanding such measures, SEZs in India couldn’t deliver the desired results within the stipulated time as exports from SEZs were never more than 20 per cent of the total export of the country. Thus, it is no wonder that during the last decade, nearly 100 SEZs have applied for denotification so that the land can be used for other purposes.
In such a situation, efforts should be made to remove the gaps that have derailed the country’s tryst with SEZs, while preparing the new legislation. Experts have pointed out various flaws in India's SEZ Act and have opined that as long as such complexities remain, the country’s experiment with the SEZ model of growth will never be able to write any success stories. Issues such as absence of proper planning, lack of foresightedness and inability to acquire modern technology are cited as reasons for India’s failure to register an impressive economic growth like China with the help of SEZs. For example, Chinese SEZs do not cater to the domestic market, while Indian SEZs have to depend on the local market in want of adequate orders from abroad. Again, Chinese SEZs always look for new avenues to boost exports, while Indian SEZs are restricted to only a few sectors and have never showed any effort towards innovation. Whilst we are not innovativing enough, China is developing new ideas with each passing day and have made their country the biggest manufacturing hub in the world.
The recent pandemic has highlighted the importance of multiple manufacturing hubs in the world to keep the supply chain unaffected in case of any eventualities. At present India has altogether 1850 SEZs and industrial parks lying over four lakh hectares of land. Plans should be drawn to turn this huge facility into one of the biggest manufacturing hubs in the world. At the same time, adequate importance should also be given to finding new avenues beyond manufacturing to earn valuable foreign exchange. The country can put stress on education, healthcare and tourism sectors. For example, the Northeastern region can be declared as SEZ for human resource development and adventure tourism. The region has huge potential in these two fields and can attract many tourists towards this part of the country. A pragmatic approach is the only way forward for SEZs.