Govt panel comes down heavily on SEZs

Special Economic Zones (SEZ) have come in for a sharp criticism from a high-level government panel which said that creation of SEZs not only meant "betting on the strong" but also providing a "special level playing field" for the mighty corporates.

"...The creation of SEZs that manifestly benefit the large corporate entities is a case of not only betting on the strong but one of creating a special playing field for the already mighty...," the National Commission for Enterprises in the Unorganised Sector (NCEUS) said in its final report submitted to Prime Minister Manmohan Singh.

The Commission headed by noted economist Arjun Sengupta observed that instead of creating 'special enclaves' for the big and strong on freshly acquired land, "a hard look is warranted towards areas that have spawned clusters of single products or multi-products and services."

Enterprises and establishments in the Indian economy need a 'level playing field' especially when a large proportion of the units are too small to access raw materials, credit, technology and markets at costs that are comparable to large units, it said.

NCEUS has suggested creation of 'growth poles', comprising micro and small units providing them fiscal incentives at par with SEZs.

The 'growth poles' of small and micro units should receive the same fiscal incentives as given to those operating in SEZs. The developers and infrastructure service providers should also get similar benefits, NCEUS said.

"Such support would be much more justifiable than the support received by the bigger and stronger units in SEZs," it said.

The Commission further said the actual cost of such support would not be very large, because most of these small and micro units do not pay much tax or duties now and may be liable to pay such taxes only after they reach a certain stage of development.

The micro and small enterprises provide employment to over 42 million people and contribute 45 per cent of India's industrial output.