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India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965. With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.

Since then India has not looked back and is pulling no punches. In order to capitalize the emerging opportunities in the industrial sector, the Gujarat government is currently planning to set up a dedicated Special Economic Zone (SEZ) for defence supply industries. For providing a thrust to the defence sector in Gujarat, the Central and the State governments will work in tandem for better coordination.

The two behemoths in the global market today is China and India because of their population besides their aggressive economic growth fuelled by reforms and entrepreneurial initiative. While the Chinese have a head-start with the formation of SEZs in late 70s and early 80s, in India, SEZs are being incorporated 15 years after the start of liberalization process.

China, inspired by the success of Asian Trading Hub, Hong Kong started building massive cities for manufacturing and industrialization under their SEZ framework rolling out red carpet for foreign companies to build and operate from these SEZs. While most Chinese SEZs are located close to ports and trade nations like Hong Kong, Macau and Taiwan along the coast line, Indian SEZs are located near major cities. An approach to SEZ creation must look at entire districts, with a port and a hinterland. Large-scale investments should ensure that manufacturing has priority, followed by services with the focus on the larger picture.