OECD for opening up of Indian market, raps SEZs

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New Delhi, September 21:: Indian expatriates in the US, represents almost 2% of India’s GDP. Foreign direct investment (FDI) inflows have rapidly grown and shifted away from manufacturing to services sectors, but remain negligible to what the BRICs received. In 2004, India attracted less than 10% of the inflows into China, it said.

Saying that India’s path of development has been different from that of China and from the paths followed in the earlier decades by Japan, Korea and other Asian tigers, the OECD study criticized the setting up Special Economic Zone (SEZ) in the country which is essentially a Chinese model.

However, in China there is a limited number of SEZs – about six in number – and are highly regulated by the government. In India the number of SEZs have run into hundreds. There is popular resistance by farmers and the local people in different parts of the country against the government’s SEZ policy which causes diversion of farmlands.

Raping India’s SEZ policy, the OECD study observed : “In an effort to offset the high taxation of intermediate products and barriers to services trade, India has opted to maintain and cultivate an extremely complex system of duty exemption schemes, special investment and establishment rules and SEZs that provide incentives particularly to exporting firms.”

Further questioning the SEZ policy on promoting economic efficiency and growth, the study said “the discriminatory export-oriented policies may in some circumstances bring more harm than good.” It criticized it as “negative incentive.”