Fading SEZ appeal

India needs to get the basics right

The government has started work on replacing the Special Economic Zones (SEZ) Act, 2005, with a new law. The finance minister has indicated that the updated legislation would enable states to become “partners in the development of enterprise and service hubs”. The sustained enthusiasm for SEZs is hard to understand, given their serial underperformance. These failures could, however, offer useful lessons for the government. India was among the first Asian countries to experiment with the concept in the 1960s, which resulted in a series of export-processing zones and export-oriented units, which did not yield the expected boost in exports. But