Special Economic Zones (SEZ) - India Vs. China
- 2. India has sanctioned close to 200 SEZs. Guess, how many SEZs China has since kicking off the policy in 1979? Five + entire island province of Hainan: 1. Shenzhen 2. Zhuhai 3. Shantou 4. Xiamen 5. Pudong 6. Hainan
- 3. Is India getting something wrong in its SEZ policy, or should we merely conclude that India will soon be 33 times as successful as China?
- 4. The Chinese started their liberalization and industrialization with the formation of SEZs in late 70s, but in India, SEZ is being incorporated 15 years later after the start of liberalization process. Indian SEZ attracts investment in high end human skill based industries and service sector due to larger english speaking workforce and knowledge based industries like software and IT enabled services etc. Strong domestic demand - In china, about 50% of the SEZ sales are to the domestic market. Though India has a large domestic market it has failed to project this to lure SEZ investors.
- 5. • Chinese SEZ are public funded whereas Indian model encourages private sector led development. • China provides an attractive tax environment with world class infrastructure and liberal labour laws. Whereas India, being a democratic country fails to implement the labour laws under pressure from labour union. On Ease of doing business index (source: worldbank.org) India ranks 133 while China ranks 83.
- 6. China SEZs was inspired by the success of Asian Trading Hub, Hong Kong. The Chinese started building massive cities for manufacturing and industrialization under their SEZ framework. All the Chinese SEZs are located along the coast line.
- 7. Indian SEZs are mostly concentrated near major cities and more than half are being developed by Real Estate Companies in order to grab land at cheap prices under SEZ land acquisition act which is a scam in itself.
- 10. Shenzhen is the largest SEZ in China and is spread over 493 Sq Kms. (49,300 hectares). While the largest SEZ in India, Reliance - Navi Mumbai and Maha Mumbai SEZ, is mere 14,000 hectares.
- 12. For anybody wondering why China is already an economic power and Asia’s other giant, India, is struggling to catch up ?? Consider three letters: SEZ.