Wednesday, July 14, 2010

What lies behind the amazing export performance of SEZ's?

This piece from Business Standard makes for interesting reading. I quote some parts: 

"There is something odd about India’s export numbers.....Exports from 111 such (Special Economic) zones totalled $49 billion in 2009-10, up 123 per cent from the $22 billion earned in the previous year.....What is odd, therefore, is not the export figure for the zones but that for the rest of the country. Total exports last year, at $176 billion, were about 5 per cent lower than in the previous year. If you take out the SEZ numbers for the two years, then non-SEZ exports fell from $163 billion to $127 billion — a sharp drop of 22 per cent....Indeed, non-SEZ exports in 2009-10 were at the same level as three years earlier ($129 billion in 2006-07). The law on SEZs was passed in 2005, and it took a while for the government to start clearing the zones after the controversy over land acquisition and related issues. It was only after this that the zones could start functioning. So, it is safe to assume that hardly any of the exports that took place in 2006-07 would have been from the SEZs."

The writer goes on to pose the question if the growth of exports from SEZ's is purely on account of diversion of exports  from non-SEZ areas to SEZ's to enjoy the tax concessions.

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