Special Economic Zones are the key to generating employment and boosting manufacturing, allowing India to compete with the likes of China. India can become a global manufacturing hub. With a combination of planned macroeconomic support and intervention, on the one hand, and firm and industry level initiatives by private enterprise can help speed up the process of industrial development and create competitive export clusters.

Foreign trade works as an engine of economic growth. Colonial powers acquired secure markets in their colonies and trade with them boosted the economic development of the home country. Under WTO, the world is the market and India must secure a place in that. For that, states should set up Special Economic Zones (SEZs) and each zone should specialize in different commodities for exports. China entered the world market at a much later stage. In a short time, it has captured all the world markets leaving India and Japan behind. Outsourced call centres provide opportunities for employment and for crucial foreign exchange. The large English-speaking Indian manpower is an advantage which must be maintained. Set up of SEZs in non-fertile agricultural lands. Moreover, mega-sized SEZs are the ideal solution.

SEZs rope in a huge amount of revenue and should be encouraged if India is to make a mark in this competitive world. The first and second-generation reforms have created a conducive environment for foreign investments in India. Market oriented policies are boosting economic activity, all round development and GDP growth rate. Government procedures are constantly being simplified and paper work minimized. As the Indian economy gears for competition in the international market, overseas investors clearly see the potential for attractive returns from investments in India, which is also evident from the many FDI success stories already achieved.

India has one of the highest inward flows of foreign investment in the Asia-Pacific region. Additionally, new Special Economic Zones (SEZ) have been introduced which not only provide foreign investors with a sound base in which to establish their businesses, but act as an engine for economic growth. The liberalization of the FDI policy circa 2005 allows a 100% stake in ventures, and industrial policy reforms have drastically reduced industrial licensing requirements, removed restrictions on expansion, and facilitated easy access to foreign technology and FDIs.

In recognition of the importance of the SEZ Scheme in the country, strategy for accelerated export growth and the contribution of 100% Export Oriented Units (EOUs), a major step has been taken for the simplification and codification of rules, regulations and procedures applicable to SEZ and EOU units and all these rules and regulations were being put in one place which would greatly facilitate both potential investors as well as the existing units. Sales from Domestic Tariff Area (DTA) to SEZs would be treated as exports and this would now entitle domestic suppliers to drawback/DEPB benefits etc.

Further, agriculture/horticulture processing SEZ units would be allowed to provide inputs and equipments to contract farmers in DTA to promote production of goods as per the requirement of importing countries, which would help in promoting SEZs specializing in agro exports.For anybody wondering why China is already an economic power and Asia’s other giant, India, is struggling to catch up, consider four letters: SEZs.