Financial Daily from THE HINDU group of publications
Tuesday, Apr 13, 2004
Industry & Economy
Exports & Imports
In the success zone
The road to success, it seems. An inside view of SEEPZ. Shashi Ashiwal
THERE are chances that a first-timer could miss the modest entrance to the SEEPZ Special Economic Zone in the densely populated Andheri area of Mumbai. But once inside, one would be overwhelmed by the scale of operations spread over 110 acres that is today recognised as India's hallmark in the realm of special economic zones.
When the Special Economic Zone was launched in 1974, it was meant exclusively for electronic products in fact, it was first christened Santacruz Electronics Export Processing Zone (SEEPZ). But in the mid-80s, when the market and scope for electronic products hit a rough patch, the gem and jewellery industry sought to set up units there. And today a major slice of the zone's revenue flows from the gem and jewellery (GJ) industry. Not wanting to drop the SEEPZ-acronym, as it came to be recognised as the brand name for the products that flow out of the zone, it was decided to rename it as the SEEPZ Special Economic Zone.
Recalls Mr Manhar Bhansali, former President of the Gem and Jewellery Export Promotion Council, one of the representatives of the industry who strove for allotment of space for GJ units in the zone: "Back then, we never did imagine that gem and jewellery units would raise the activities of SEEPZ to this level. Today, SEEPZ accounts for over 50 per cent of India's exports of gem and jewellery."
Mr T.P. Gopalakrishnan, Executive Secretary of the SEEPZ Gems & Jewellery Manufacturers Association, adds: "Today India has carved a distinct niche for itself in the world jewellery market, with the domestic industry participating in leading jewellery trade fairs at Basel, Las Vegas and New York."
An indication of the growth of the GJ units at SEEPZ can be had from the increase in turnover during the last five years. Export of gold and jewellery from SEEPZ rose from $406 million in 1998-99 (when India's exports were in the region of $846 million) to $504 million in 2001-02 and $712 million in 2002-03.
While SEEPZ is the emerging brand name for Indian jewellery in the international market, the Special Economic Zone is also becoming a major hub for software services and hardware components for the IT sector. Several major players, such as CGI, which is the largest Canadian independent IT service provider and the fifth largest in North America, have set up units in the zone to provide a wide range of services.
Already, software developed by units located at SEEPZ generates funds and transfers for international banks in all continents, besides helping run hospitals in West Asia and manage quality control systems for car production in the US. Addressing the global sensitivity to Intellectual Property Rights, the Indian government has already amended copyright laws to ensure their protection.
What makes the Special Economic Zone attractive to new units?
The major factor, apart from the available infrastructure, is the package of fiscal and non-fiscal incentives that are provided to the units.
While the fiscal incentives include waiver of licensing, duty-free imports, excise-free procurements and tax holiday, the non-fiscal incentives include repatriation of capital, free remittance of profits and provision of `Public Utility' status to the electronics and gem and jewellery units by the government under the Industrial Disputes Act.
The Special Economic Zone also boasts of a sound infrastructure base, including an uninterrupted power supply that is guaranteed by the generating stations of western Maharashtra, abundant water supply, adequate warehousing and forwarding services and in-zone customs clearance, as the zone has its own ports of entry with a fully-staffed customs wing.
Other facilities at the zone include a foreign post office, four banks, communication centre and an exclusive telephone exchange.
What is more important for those looking to set up units in the zone is that the applications for new units are cleared within a stipulated timeframe through a single-window clearance mechanism. The normal time taken for approval of projects is 15 days for the SEZ's development commissioner and less than 45 days for clearance by the Board of Approvals.
Now, with the special economic zone being expanded, the zone will be witnessing brisk developments in the years to come.
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