The Hindu Business Line : SEZs in rapid implementation mode: KPMG

At a glance
173 SEZs have received approvals and about 400 more are awaiting approval.
Andhra Pradesh has managed to garner almost a third of the total SEZs followed by Gujarat.
Tamil Nadu, Karnataka and West Bengal, have not made enough applications.

V.Rishi Kumar

Hyderabad, Dec. 25 Most of the technology sector special economic zones (SEZs) have gone into implementation mode and are set to serve as growth engines in the country.

However, some of the private IT SEZs could face a few implementation challenges including financing large projects, and marketing space, according to a KPMG consultant.

The partner of KPMG, Mr Vikram Doshi, who is the India head for the SEZs, told Business Line that a third of the total SEZs thus far cleared in the country are IT SEZs and are better placed to be executed much ahead of SEZs in other sectors such as manufacturing.

Mr Doshi said that the rapid implementation of IT SEZs is also driven by the corresponding sunset clause of the Software Technology Park of India (STPI) scheme, necessitating them to be equally competitive even if they were to loose STPI benefits.

Providing SEZ snapshot, Mr Doshi said so far 173 SEZs have received approvals and about 400 more are awaiting approvals.

Of the 173, Andhra Pradesh has secured approvals for 48 units. Of them, about 30 are IT specific.

Andhra Pradesh has been first off the block to apply for SEZs and has managed to garner almost a third of the total SEZs followed by Gujarat.

Surprisingly, Tamil Nadu, Karnataka and West Bengal, have not made enough applications, something difficult to understand, Mr Doshi said.

China vs India

The success story of Chinese SEZs is always cited in comparison to implementation in India. In fact, they are not comparable. Each SEZ in China is spread across about 200 km and the entire city or the region has been transformed to serve as SEZ. As per estimates, of the $700-billion exports from China, about $100 billion is from one SEZ-Shenzhen.

“It is not possible to replicate similar success in India as the approach and circumstances in which we function are quite different. Therefore, the SEZ policy has factored India scenario and accordingly addressing various issues,” he said.

Sops available

One of the reasons IT SEZs are getting expedited is to avail themselves of various concessions including stamp duty, registration etc. Significantly, unlike STPI units which have service tax on inputs, SEZ firms would not have this.

This is a big advantage. However, while the overall SEZ path is positive, most of these SEZs are coming up in clusters and also have the potential to create regional imbalances, he said.

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