Model Kandla SEZ struggles to get its due

Better facilities in upcoming SEZs may force companies to leave the zone.

The Kandla special economic zone (KSEZ), Asia's first special economic zone (SEZ) and the country's oldest, has not received the attention it deserves.

"KSEZ hasn't got its due and hasn't developed the way it should have been," said Paras Jain, president, KSEZ Industries Association (KSEZIA).

He added that this was despite the fact that the newer SEZs were following the KSEZ model.

Located about 9 km from Kandla port in Gujarat, KSEZ is spread over of 700 acres and houses about 150 units, including textiles, pharmaceuticals, chemicals, plastic recycling and ready-made garments. As one walked through the lanes of KSEZ, big names like Hindustan Unilever, IPCA Labs, Gokul Overseas were quite visible.

KSEZ rakes in over Rs 1,500 crore foreign exchange, besides giving employment to more than 10,000 people.

Of the total exports, castor oil comprises 40 per cent. KSEZ earns about Rs 600 crore from exporting the oil.

In tune with the current trends, it was imperative to improve the existing facilities and general working conditions in the KSEZ, said Jain.

While it was mandatory for a new SEZ to put social infrastructure in place, including dwellings for workers, schools, hospitals and recreational zones, KSEZ had no such facility, lamented a manufacturing-unit owner.

The unit owners complained about the frequent revision of rent for plots. According to SEZIA, the rents had been rising steadily over two years.

Jain added that electricity tariffs were high in KSEZ. The units paid Rs 5.80 per unit, which, according to RG Chellani, secretary, KSEZIA, was the highest among all SEZs in the country.

"KSEZ should also get electricity at low rates, which will enable more industries to come forward," said Jain.

Recently, KSEZ had acquired 300 acres for further expansion to house more industries. There were around 40 companies waiting to set up units in KSEZ, said Chellani.

He also didn't rule out the possibility of exporters moving out from KSEZ to other upcoming SEZS like Mundra SEZ if they offered power at a lower rate. Interestingly, KSEZIA has asked the country's largest power generator, National Thermal Power Corporation (NTPC), to sell power directly to KSEZ, but the deal hasn't yet materialised.