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Special Economic Zone policy of India is used as an instrument of Export Promotion with an expectation of better export performance over its previous EPZ policy. A look on the trend of export gives us a rough idea about export performance of this strategy. So this paper has given a statistical support to our visualization by using Structural Stability Model to check the statistical significance of SEZ over its previous EPZ nature. The results of this model support to export performance of SEZs over EPZs. This paper also presented other dimensions of assessing export performance where it is found that SEZs are dominated by few sectors. And the zone dominated by labour intensive sector has not performed well in exporting. It is also observed that there is large difference in export performance between zones. So this paper suggests a cautious implementation of this policy with equal export capability within zones and multi sector development in the zone.
Keywords: EPZ Export Processing Zone, SEZSpecial Economic Zone, Export
Introduction
To promote export India adopted several measures and the scheme of establishing Export Processing Zones (EPZs) is one of it. But EPZs are criticized for their unused potential. Except Santacruz EPZ (SEEPZ) all other zones remained very weak in their performance. Thus the need for restructuring in the form of SEZs has come in light. The scheme of establishing SEZs is adopted in India after viewing its significant contribution in Chinese export. It is confirmed by many studies that the export performance of Chinese SEZs is successful. This success is a result of correct location choice, well planed policy with respect to infrastructure, incentives, labour supply and overall decentralization. The contribution of Chinese SEZs to the country's exports is in the range of 15-23 per cent. These zones, taken together, employ more than two million people directly and approximately 16 million overall. Cumulatively, 20 per cent of the total FDI into China has made its way into SEZs. Prominent industries established in these zones are textile and garments, metal works and machinery, trading, warehousing, logistics and high technology enterprises, chemicals and pharmaceuticals and healthcare product manufacturing (RBI staff study-2009).
It is important to mention that this policy was also criticized in China on various grounds. At initial...