SEZ - Special Economic Zone remains to be a broadly contested issue in India .The government offers huge incentives to developers of such zones with minimum regulatory control. The commerce ministry has been pushing for setting up of these zones with the intention of trying to emulate China where the brightest and most growing cities / zones have benefited immensely from the SEZ concept. Apart from wide-ranging tax benefits, 100-per cent FDI is permitted in SEZ units, except in select strategic sectors. Such units can keep full export proceeds in foreign currency and repatriate such earnings as they wish. They can borrow up to $500 million from overseas markets every year and can outsource production and other activities to overseas units.

SEZs have become the most talked about in the Indian economic circles, its lack of clear policy has provoked strong opposition from leftist political parties, activists, farmers groups, economists and urban planners. However the government of India is moving ahead with the programme to set up special economic zones (SEZs) to trigger a manufacturing wave in the country. Amid evidence of an undercurrent of rural hostility to giant industrial zones coming up on agricultural land, Posco, a South Korean steel company, was last week permitted to set up a 1,600ha SEZ in mineral-rich Orissa state. Posco plans to invest 530 billion rupees (S$18 billion) in the zone. Some 30 other SEZ applications have now won the backing of the Board of Approvals, taking the total number of SEZ proposals cleared to 181. The government sees boosting manufacturing as crucial to balancing the country’s economic growth.

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