Is SEZ growth story just in numbers? 253 notified zones have only 343 units

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New Delhi, Aug 27 : Consider this. A first-of-its-kind status report on industrial units within special economic zones compiled by the commerce ministry, shows that the number of units in 253 SEZs notified by the government since the last two years (after the SEZ Act and Rules were put in place) is just 343.

While it may appear that the government’s goal that every SEZ having high occupancy levels in their units, has been belied by market forces, it may be too simplistic an interpretation. Of the 253 notified SEZs, only 90 are operational so far and therefore, it is too soon to expect a proliferation of units, commerce ministry officials reasoned.

Of the 253 notified SEZs, only 56 were notified in 2006, while 133 were notified in 2007 and 64 this year. For the units to come up in an SEZ, typically it takes an average of 6-7 months after an SEZ is notified, officials said.

Analysts also point out that due to the downward pressure on rents, companies interested in setting up units in SEZs have been demanding that the developers must lower their rentals. A Parliamentary panel had recently sought a record of the total number of units in all the notified SEZs, according to an official.

Interestingly, commerce and industry minister Kamal Nath had many a time stressed the importance of having SEZs with more units rather than just a lot of such tax free zones with a few units in them. Pointing to the Chinese example, he had earlier said that even there, one SEZ has around 600-700 units.

Ajay Nijhawan, convenor of the Export Promotion Council for EOUs and SEZs Panel for SEZ Developers, said, “Among the few SEZs that are operational, most are sector-specific or IT SEZs. There are also many captive SEZs with a company itself being the developer. When a lot of multi-product SEZs spanning an area of around 5,000 hectares or more become operational, we will see an increase in the number of units in an SEZ.”

Nath has also been stressing that bigger SEZs are more economical. However, a proposal by his ministry to get rid of the 5,000 hectare cap set by the Empowered Group of Ministers on SEZs last April, is yet to be cleared.