With a ban on 59 Chinese apps, including TikTok, the government has moved ahead on the path of giving economic clout to China by informally directing government departments and ministries to abstain from purchasing Chinese goods.
Now, it is necessary to take a big strategic step to increase the exports by giving maximum encouragement to the manufacturing sector in the country and making the Special Economic Zone (Special Economic Zone (SEZ)) effective.
SEZs have to make maximum use to attract global exporting companies originating from China. Also, the new establishment of the Coastal Economic Zone (CEZ) will have to materialize. A major reason for India's lagging behind on the export front so far is that SEZs are not successful in their cause.
The SEZ, which started in the country since 2000, aims to give special incentives to export-based units, increase employment opportunities, and attract domestic and foreign investors. As of the end of March, the country has more than 5,000 industrial units under 238 SEZs, employing over 21 lakh people.
About Rs 5.37 lakh crore has been invested in SEZ. About Rs 7.85 lakh crore was exported from SEZ units in the last financial year. However, according to an ASSOCHAM report on SEZs, more than half of the SEZs in the country are lying idle and have not been able to prove much utility in boosting exports.
If we look at the budget provisions of the last five years, we find that due to the lack of favorable provisions for SEZs, their targets for export growth could not be met. Whereas, with good SEZs, the possibilities of becoming a new hub of products ready for India and increasing exports can be realized.
According to a recent Bloomberg report, due to Corona's resentment towards China, many global exporting companies located there are preparing to shift their manufacturing operations entirely or partially. The report states that India is giving priority to inviting companies from Japan, the USA, South Korea, and the UK based in China.
At present, the government's strategic efforts will be beneficial for the export of commodities such as agriculture, processed food, apparel, gems and jewelry, leather and leather products, carpets, and engineering products, including medicines. The Indian pharma industry is important all over the world.
India is the only country that has the largest number of pharmaceutical manufacturing plants outside the US as per USFDA standards. The possibilities of iPhone manufacturing and its export sector in India are increasing. Several reports have found that there is a major logistic and connectivity problem in moving SEZ production to the nearest port.
In such a situation, if two-three, three-three SEZs are developed along with the appropriate infrastructure on the eastern and western coasts of the country, then this problem can be overcome to a great extent. It can also help in increasing trade and exports, getting more foreign direct investment (FDI), and increasing employment opportunities.
It should be hoped that the government will move forward on the path of making SEZs useful, activating more than half the idle SEZs and new installations of CEZs quickly.
It should also be expected that the Govt. Productivity Linked Incentive Scheme (PLI) for global exporting companies, incentive scheme for electronics components and semiconductors (SPECS), revised electronic manufacturing package scheme, and plug and play among the Covid-19.
Special incentives being offered under the model will attract global exporting companies moving out of China to India. This will definitely make India stronger financially and will also be in a position to compete with China on the economic front.