In data that may lay to rest all doubts of sceptics, special economic zones, which its supporters backed by arguing that they will boost exports, investments and employment, delivered on all these three counts during 2007-08. They are expected to improve their performance in the current fiscal.
Exports from these tax-free industrial enclaves nearly doubled from Rs 34,615 crore (Rs 346.15 billion) in 2006-07 to Rs 66,638 crore (Rs 666.38 billion) in 2007-08. This is marginally short of the target on account of delays in the commissioning of some zones.
The commerce ministry has projected exports from the zones at around Rs 1,25,950 crore (Rs 1,259.5 billion) in 2008-09, growth of 89 per cent over the previous year.
"The performance of the zones shows their inherent strength and in the coming years we would see this robustness in exports, investment and employment continue," Commerce Secretary Gopal K Pillai told Business Standard.
India established export processing zones in 1965. These were renamed as SEZs in 2000 under a new policy. These were bought under the SEZ Act and its related rules from February 2006 to assure investors of a stable policy regime.
The impact of this is evident in the latest data, which show a 191 per cent rise in exports from these zones between 2005-06 (Rs 22,840 crore or Rs 228.4 billion) and 2007-08.
Critics have been opposing the setting up of these zones for displacing a large number of farmers. Others have labeled the policy a real estate "scandal."
Exports contributed 84 per cent to total turnover of the zones in the last financial year. The seven government zones (earlier EPZs) and 19 other SEZs accounted for 92 per cent exports from the tax-free enclaves.
The 39 operational zones set up after the SEZ Act became operational accounted for the rest. ETL infrastructure at Tambaram, Tamil Nadu, recorded the highest exports of Rs 1,245.69 among the new zones.
Sectors which contributed to export growth from the tax-free zones are gems and jewellery (Rs 23,006 crore or Rs 230.06 billion), trading and services ( Rs 20,866 crore or Rs 208.66 billion) and electronic hardware ( Rs 11,121 crore or Rs 111.21 billion).
Employment in the zones stood at 336,000, out of which nearly 60 per cent incremental jobs were created since February 2006. "All these jobs were created without government spending in the past two years. In the past 40 years, only 126,000 jobs were created in the existing zones. Next year, incremental jobs will total 400,000," added Pillai.
Investments in 232 zones stood at Rs 77,210 crore (Rs 772.1 billion), out of which 97 per cent were incremental flows since 2006. According to the commerce ministry, Rs 3,63,367 crore (Rs 3,633.67 billion) investments are lined up for 206 new zones in the country.
At present, the country has nearly 600 SEZs in various stages of approval.