Mega Special Economic Zones (SEZ) in Bangladesh

• India’s plan to step up investments in Bangladesh by setting up three mega Special Economic Zones (SEZ) exclusively for Indian companies in the latter’s territory has hit a major hurdle.
• Indian companies have cited various constraints including inadequate infrastructure and lack of uninterrupted power supply” at Mongla, Bheramara and Mirsarai – the sites in Bangladesh for the proposed Indian SEZs. For better connectivity and business prospects, they sought alternative sites close to the Chittagong Port and the capital city of Dhaka — similar to those been allocated by Bangladesh for Chinese SEZs.
• India and Bangladesh had inked a Memorandum of Understanding (MoU) in June 2015 — during Prime Minister Narendra Modi’s visit to Bangladesh — for cooperation on establishing Indian SEZs in Bangladesh.
• The plan was to develop Indian SEZs at Mirsarai (1,005 acres), Bheramara (about 480 acres) and Mongla (200 acres). The construction of these SEZs and Indian investment in the zones were to be facilitated through concessional Line of Credit extended by India to Bangladesh.

About SEZ(India):

• 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.
• This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations. SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes.
• After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February, 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments.

The main objectives of the SEZ Act are:

• Generation of additional economic activity
• Promotion of exports of goods and services;
• Promotion of investment from domestic and foreign sources;
• Creation of employment opportunities;
• Development of infrastructure facilities;

It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities.
The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and creation of related infrastructure. A Single Window SEZ approval mechanism has been provided through a 19 member inter-ministerial SEZ Board of Approval (BoA). The applications duly recommended by the respective State Governments/UT Administration are considered by this BoA periodically. All decisions of the Board of approvals are with consensus.
The SEZ Rules provide for different minimum land requirement for different class of SEZs. Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing area where the supporting infrastructure is to be created.

By: Vishal