The special economic zone (SEZ) developed by Nokia has become the largest export zone in the country in terms of production, showing that more than tax arbitrage, better manufacturing quality is driving growth here, too.
The most recent figures on production and exports from SEZs available for 2008-09 show that the zone, situated at Sriperumbudur in Tamil Nadu, clocked production of Rs 18,349 crore. This new generation SEZ, which was notified as recently as in 2005, now accounts for 17% of the total production of the 110 operational SEZs in the country and 10.4% of their exports.
Reflecting the same trend, as many as five of the top ten SEZs in the list are new generation SEZs, which began operations in the current decade. All these zones, touted by the commerce ministry as the biggest potential industrial hubs in the economy, have a clear focus. Thus, while the gems & jewellery sector-based Surat SEZ is ranked third, the Essar Hazira SEZ focused on the oil economy, ranks sixth.
Similarly, the Reliance Jamnagar Infrastructure zone is ranked seventh and the Manikanchan SEZ, another gems & jewellery centre, ranks tenth. Of the SEZs with the highest production, half were in the western region, three in the south, one in the north and one in the east. The data, however, does not reflect the concern expressed by the finance ministry that most of the production was spurred by a ten-year tax holiday for SEZs.
Commenting on the top ranking for its SEZ, Nokia said it underlines the company?s successful cooperation with the Indian government, but also represents a unique and optimised business model that will provide growth opportunities for all parties in the value chain.
However, the commerce and industry ministry data shows that exports from the Nokia SEZ, which specialises in telecom equipment and R&D services, was lower at Rs 10,385 crore, which was 56.6% of its total production. Around Rs 7,072 crore of production was accounted for by deemed exports from within the country.
The rapid climb of the Nokia SEZ to the top, which came three decades after the first zone was notified as early as in 1965, has been clearly aided by accelerated growth of the telecom sector.
The surge of the new generation SEZs is evident from the fact that the 103 zones set up in the post-2000 period now account for more than half of the total SEZ production and exports. While the total production of new generation SEZs stood at Rs 59,802 crore in 2008-09 (55% of the total SEZ output), their export trade was Rs 52,705 crore (53% of the total SEZ exports).
In terms of aggregate exports, the top position again went to the Noida SEZ with exports of Rs 16,296 crore. The Surat SEZ followed with exports of Rs 15,307 crore and Cochin SEZ with Rs 11,707 crore. While all of three are multi-product SEZs, the performance of the Noida SEZ stands out, as it is located in a landlocked region. Nokia SEZ could only claim fourth position in terms of SEZ exports.