The Hindu Business Line : SEZs post 25.8% growth rate in 2001-05

The Government's focus on developing special economic zones (SEZs) as export growth drivers seems to be paying off, even though the zones may have a long way to go in emulating the success of their Chinese counterparts.

Exports from the eight SEZs functioning in the country have registered a healthy compounded annual growth rate of 25.8 per cent between 2001-02 and 2004-05, according to the Ministry of Commerce and Industry data.

China growth

However, the growth rate is way behind the blistering pace set by their Chinese counterparts. For instance, the Shenzhen SEZ in China recorded a growth of 38 per cent CAGR between 1981, when it was started, and the year 2004 - the highest economic growth rates recorded from any such enclave worldwide.

It must be mentioned, though, that the Chinese SEZs are much larger in scale and also have been operational much longer than the Indian ones.

Catching up

While the Indian SEZs have some catching up to do with respect to the Chinese zones, the SEZs here could prove to be instrumental in the Government's efforts to get anywhere close to the Ministry of Commerce and Industry's target of capturing a one per cent share of world exports (exports to the tune of $80.48 billion) by the end of the current fiscal.

High target

According to Ministry estimates, this requires growth projections of 11.9 per cent (CAGR) for exports between 2002-2007 and the high export growth recorded by the SEZ units could prove to be a big plus in closing in on the targeted growth.

On the rise

As on March 31, 2006, a total of 811 units were operating out of the eight functional SEZs, with overall investment estimates of about Rs 1,800 crore and employment generation for 1,00,650 persons, according to DHL's India Trade Outlook.

Besides these eight functional zones in Mumbai, Kandla, Surat, Chennai, Kochi, Falta and Vishakapatnam — all of which were converted from export processing zones to SEZs, a number of new zones are on the anvil.

Three greenfield SEZs have commenced operations at Indore in Madhya Pradesh, Jaipur in Rajasthan and Manikanchan in West Bengal.