State lags behind in the SEZ race | india | Hindustan Times
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State lags behind in the SEZ race

india Updated: Sep 16, 2006 16:02 IST

MADHYA PRADESH, which was the first state to set up Greenfield operational special economic zone (SEZ) in India, now finds itself lagging behind other states in signing mega SEZ deals. Out of 150 SEZ cases formally approved by the Centre, 105 are located in Andhra Pradesh, Maharashtra, Tamil Nadu, Karnataka and Gujarat. MP is ranked even behind states like West Bengal, Uttar Pradesh and Haryana.

While West Bengal has seven formal approvals, Uttar Pradesh six and Haryana eight, MP has only four approved SEZs - a multi-product SEZ in Pithampur, Medicaps IT SEZ in Indore, Crystal IT Park in Indore and Genpact India’s IT SEZ, which is coming up in Bhopal.

Leading industrial houses like Reliance, Essar Group, Adanis, Bajaj Auto, Bharat Forge, Wipro, Biocon, Mahindra & Mahindra, DLF and many others have unveiled ambitious plans for setting up SEZs across the country, excepting for Madhya Pradesh.
A senior government official attributes the tepid response to ‘lack of political will at the highest level.’ The government, he says, needs to form a high-power committee to deal with industrialists.

The problem, he says, is that government officials are reluctant to do this liaisoning work for the fear of sullying their reputation. “This mindset has to change. When you look at states like Andhra Pradesh, their officials go out of their way to woo industrialists. The Chief Minister has to act like the CEO of the State, willing to guide his bureaucrats in taking the hard decisions.”

Principal Secretary (Industry) O P Rawat, however, begs to differ. “There is nothing wrong with the SEZ policy of the State. Besides the existing SEZs, a multi-product SEZ is coming up in Gwalior, he told Hindustan Times over the phone. The fact remains that the State Government is struggling to attract fresh investments in SEZ Indore, thanks to poor infrastructure.

“We are unable to allot processing area to the new applicants. All the prospective investors insist on basic infrastructure like electricity, water and drainage within a stipulated timeframe, a demand we are not in a position to fulfil,” says a senior government official.

In the current fiscal, out of eight applications received for setting up units in SEZ Indore, only two LOPs (letters of permission) have been issued. The government’s failure to find a strategic partner for the estimated Rs 1,000 crore infrastructure development in SEZ Indore is seen as a major hurdle in attracting new investors.

In the absence of a strategic partner, Audyogik Kendra Vikas Nigam (AKVN) has been fumbling in making commitments to new investors about a timeframe for infrastructure development in the SEZ.

This uncertainty is a roadblock for prospective investors to come to the SEZ as, experts say, there will be loss of lakhs of rupees if the production is delayed even by one day.

Says Pithampur Industries Association president Gautam Kothari, “Any government can offer tax breaks and land at concessional rates, but the backbone of SEZ is high-class infrastructure, which is lacking in the State.

A study conducted by a group of NRIs to look at why Indian EPZs/SEZs have failed to emulate China’s success made a strong case for quality of infrastructure instead of fiscal incentives.