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New Sunshine Sectors Of India's SEZs

With the right policy backing, the SEZ-EOU sector today has become a large contributor to the country's manufacturing, exports, and employment generation

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The Prime Minister's coveted 'Make in India' mission launched in September 2014, covering 25 sectors of the economy, was envisaged to transform India into a global design and manufacturing hub.

Giving wind to this mission have been the over 5146Special Economic Zone Units in 223 SEZs(SEZ) and over 3000 Export-Oriented Units (EOU) of our country, which are creating favourable conditions for growth of the manufacturing and services industry. The government has been providing support to SEZs in the form of various sops and incentives to bolster manufacturing.  

With the right policy backing, the SEZ-EOU sector today has become a large contributor to the country's manufacturing, exports, and employment generation. It is estimated that SEZs provide direct employment to more than 2 million people in different parts of the country.

Exports from SEZs grew by 18 per cent year-on-year between the financial year 2016-17 and 2017-18.  Our SEZs exported merchandise and software worth Rs 5,51,344 crores in FY18 as compared to exports worth Rs 4,68,567 crores last year. Non-conventional energy equipment and bio-tech are increasingly becoming the new sources of earning foreign exchange for the country. Non-conventional energy and equipment exports saw 113 per cent y-o-y growth in FY18.
SEZ exports have been on the rise in the current financial year as well. Exports in April 2018, the first month of the financial year 2018-19, grew 5 percent compared to the year-ago month. Several sectors such as biotech, chemicals, pharmaceuticals, computer, electronics, non-conventional energy, plastic, rubber, trading, and services are continuing to record healthy growth.

Following the government's decision to open up Defence, Railways, Space, etc, sectors to private participation, activities have started picking up in some of these industries this year.
Recently, it was reported that Reliance ADA Group would set up its second unit to make radar components in the Special Economic Zone (SEZ) adjacent to Multi-modal International Hub Airport (MIHAN) in Nagpur by October this year after it began its commercial production of aircraft spares at its plant in the SEZ sometime back.  Reliance is implementing the Rs30,000 crore offset arrangement, arising out the deal to buy 36 Raffale aircraft, from France's Dassault for the Indian Air Force (IAF).

The radar unit will be registered as a separate entity for which the clearances are expected to be secured by July from the development commissioner for Mihan-SEZ. The unit will have facilities to test radars and also make components. Initially, it may appoint 50 persons which may be scaled up in the future.

Last month, a delegation of the French Aerospace Industries Association (GIFAS), also visited Mihan. It is believed that Reliance is also planning to tie up with the GIFAS members, which include small-scale units too. The work advances services of various units under GIFAS which specialize in different areas of aircraft manufacturing may be needed.

If the deals work out their units will be set up in the Mihan-SEZ within the Dhirubhai Ambani Aerospace Park. If works out this may be the first ever venture of GIFAS members in India. At Mihan, Reliance is coming up with an aviation manufacturing complex named after the company's founder Dhirubhai Ambani. Starting from making aircraft spares there are plans to assemble unit at the Nagpur-SEZ. Almost entire works to be implemented under the offset deal will be undertaken here.  If all plans fall in place, Mihan SEZ could then emerge as one of the biggest defence manufacturing hubs in the country.

With the rise of such new sunrise industries both in manufacturing and services sectors, SEZs not only would continue to play a greater role in contributing to foreign exchange earnings of the country but also in meeting the 'Make in India' goals in the times to come.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Dr Vinay Sharma

The author is the officiating Chairman of Export Promotion Council for EOUs and SEZs and the founder & Managing Director of Oil Field Warehouse & Services Limited – the pioneer of SEZ based material management services in India

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