According to a Recorder Report, a move is afoot to establish Special Economic Zones (SEZs) in place of the existing industrial and export processing zones so as to promote sector-specific economic activity. As per a proposal prepared by the Ministries of Industries and Privatisation for the approval of the Economic Co-ordination Council, these zones are to be given attractive incentives such as income tax holiday of up to 10 years.
Furthermore, in a departure from the existing regulatory provisions applicable to the existing industrial and export processing zones, the proposed SEZs may be set up over as small an area as 50 acres against the present limit of 500 acres. The condition of 40 percent foreign equity would go, and country/company specific provisions would also be removed. The policy framework for the SEZs will be given legal cover through an act of Parliament.
Properly implemented, the plan can go a long way in giving a boost to economic activity as well as in skill development of our labour force. The idea of sector specific industries, or clusters as they are better known, in fact, is being successfully implemented by a number of countries in Europe and elsewhere in diverse fields such as textiles, biotechnology, and electronics.
Since sector specific industries may comprise similar as well as complementary companies, proximity of location means shared infrastructure facilities and easy access to inputs, which translates into reduced costs and increased productivity. Indeed, this tried and tested plan will strengthen the production sector - something this country badly needs.
Of course, businesses in these special areas would also generate greater employment opportunities. It is pertinent to mention here that one reason India is so far ahead of us in almost every field of economic endeavour is the investment it made over the years in human resource development. Within the specific context of industrial development, it put in place focussed skill development programmes.
Irrespective of that example, we need to pay serious attention to manpower development. Whereas the industries to be located in the proposed economic zones are to get a number of concessions and incentives, they must be bound to run special skill development programmes of their own. That would serve their best interest as also the country's overall developmental effort.
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