Promoting Special Economic Zones as a Strategy of Industrialization and Lessons Learned

Aradhna Aggarwal in examining the formation and evolution of SEZ policy and its contribution to Indian industrialization over different phases draws lessons for new policies. Contextual solutions require experimentation, but continuity of government support over the political cycles is also essential. Commercial sustainability with some legal backing may be the way for policy consistency, making special initiatives independent of the government. To the extent special concessions are given, some sunset clause, or else use of competition, and appropriate regulation to prevent rent-seeking, would be required. Tax concessions could be reduced as other constraints ease. A CAG report that highlighted the large tax losses, and the large percentage of unutilized land in SEZs, points to the necessity of both proper design and implementation. But a blind anti-industry position is counterproductive when employment generation is the way to reduce poverty. Strategic vision and dynamic learning must combine with a political will to implement.