India allays WTOs SEZ concerns

New Delhi, May 25 | Updated: May 26 2007, 05:30am hrs
Stung by the World Trade Organisations doubts about the efficacy of Special Economic Zones in creating employment and attracting investment, India on Friday sought to allay the concerns by saying that in 15 months since the SEZ Act and Rules were notified investments to the tune of $ 8 billion have made and another $25 billion investment is underway.

The WTO had said on Wednesday that as many of the industries attracted by the SEZs appear to be capital intensive, it is not clear that this is the most effective way to create employment opportunities, especially for the less-skilled labour force.

Commerce secretary G K Pillai said at the WTO Trade Policy Review Meeting for India in Geneva that as far as SEZs are concerned, I think the WTO Secretariat was a little premature in expressing doubt about their effectiveness in boosting investment and employment.

So far, over 31000 people have got direct employment and this is expected to rise to 100,000 by the end of this calendar year and to 4 million by the end of 2010. The large number of textile, gems and leather SEZs being established would provide employment for a less skilled labour force, he said.

Underlining Indias macro-economic sustainability, Pillai said that the recent rise in inflation was due to the global acceleration in inflation and the rise in world commodity prices, including food and energy as well as due to the slower rise in Indian interest rates that lagged the rise in world rates.

The fiscal situation, which earlier used to raise some disquiet among the international financial community, is now firmly under control, he added. Since the passing of the Fiscal Reform and Budget Management Act, in July 2004, the fiscal deficit has declined steadily to reach 6.3% of GDP in 2006-07(BE). Thus, one of the major factors that could lead to higher long-term inflation is now in abatement as a result of extensive fiscal reforms, Pillai, Indias chief negotiator at WTO, said.

He said Indias trade basket is diversifying rapidly and pointed out that the direction of Indias trade, both exports and imports is increasing with developing countries in Asia, East Asia, Africa and Latin America.

He added that India also proposes to introduce, in a phased manner, the Duty Free Quota Free Scheme for LDCs this year. Pillai said India levies basic customs duties on imports and in addition, imported articles are liable to an additional duty which is equal to the excise duty leviable on a like article produced or made here.