News: After special economic zones, here come India's special economic regions

(DNA 29/08/2006) Ahmedabad - After special economic zones (SEZ), it may be special economic regions (SERs). Gujarat is all set to get India’s first SER in the port town of Dholera, around 150 km from Ahmedabad. The project is estimated to be implemented in a year.

So what’s and SER? It’s an expanded version of an SEZ, minus the tax sops. SERs could be spread over an area of 250-300 sq km. An entire region - like a strategically located port town - can be developed and equipped for industrial development in a focused manner. One example is Pudong near Shanghai in China. The big difference, though, is that unlike an SEZ, an SER does not provide fiscal incentives to industry. To lure investors, the government focuses on providing state-of-the-art infrastructure.

“The Gujarat government is carrying out a feasibility report on the Dholera project. It is generating a lot of interest amongst non-resident Indians (NRIs) as well as companies. But it is too early to quantify how much investment will flow in,” Gujarat’s principal secretary of industries and mines, D Rajagopalan, told DNA Money.

He added that Dholera had been chosen due to its proximity to cosmopolitan Ahmedabad, which the government is developing as a port city. “Dholera’s location will help manufacturing units to procure raw material and transport their products at a much lower cost.” The SER will have an area of 250-300 sq km, the official said.

The SER concept in India was mooted by a group of NRIs who met Prime Minister Manmohan Singh last December. They evinced interest in sectors like pharmaceuticals, garments, electronics, specialty chemicals and petrochemicals, offering investments of about $30 billion over the next three to four years.

Industry sources claim that operating costs in an SEZ are lower by almost 20-22%, and this can be replicated in an SER if the scale is large enough. The manager of the Sur SEZ in Surat, RK Vyas, backs the concept, saying despite the lack of fiscal incentives, “it will be very good for industry”.

“With excellent infrastructure in place, it will be easy to procure raw materials, skilled manpower and directly export the produce. Kutch has also been identified as the right zone for the development of the timber industry. A similar SER could be developed for the cotton-producing regions of Gujarat, wherein textile and garment units are also developed,” he said.

The NRI group that met the prime minister included Victor Menezes, former vice-chairman, Citigroup, Romesh Wadhwani, chairman and CEO, Symphony Technology Group, and Raj Gupta, president, Rohm & Haas.

Representatives from global petrochemical majors like Exxon, Mitsubishi, BASF and BP, who are keen to invest in India, were also present at the meeting that included government officials from Gujarat, Orissa, West Bengal, Andhra Pradesh and Karnataka.

A task force headed by TKA Nair, principal secretary to Prime Minister Manmohan Singh, is considering applications from seven states - Gujarat, Maharashtra, Orissa, Andhra Pradesh, West Bengal, Haryana and Karnataka - for setting up SERs.

An interesting feature proposed for SERs is to give them greater flexibility in the application of labour laws.

As for the composition of the SER at Dholera, Rajagopalan says it would be open both for foreign and domestic industry. “Gujarat is ideally placed and industry will automatically come. It will not be restricted to NRIs,” he adds.