Special Economic Zones in Pune

Journey from 90’s to 2010

Pune Then and Now…

Oxford of East to Deemed Universities

Surprisingly Google search gave me Pune 2050

….

Dr. Vikhe Patil Foundation’s Pravara Centre for Management

Research & Development

Research Paper Presentation“Emergence of Tier II Cities in

Maharashtra”By Prasad S. Lagad

Agenda

• Introduction - Maharashtra – Development of Maharashtra, Potential for business & growth• Objectives• Theme of Research• Tier II Cities – Basis of Classification• Pune City – Historic Base, Education, Tourism, Infrastructure• Special Economic Zone – Act, Rules & Regulations, Approvals, Tax benefits, Exemptions, EXIM

Policy• SEZs in Pune – Why Pune city, Reasons for growth• Observations & Findings• Conclusion• Bibliography

Theme for Research

SEZs in PUNE

Tier II Cities in Maharashtra

AURANGABAD

PUNE

NAGPUR

NASIK

Tier II cities – Basis of Classification

• Tier - A relative position or degree of value in a graded group.

• Tier I, II & III – Various criteria such as Real Estate, Infrastructural Development, Size of Population, Income of Population(Inclusive of HRA & CCA).

• Reasons for classification of Tier I, II & III.• Tier II cities in Maharashtra – Aurangabad,

Pune, Nagpur & Nasik.

Reasons to select

• Geographical Location• Historic Base• Educational Hub• Availability of Skilled resources• Scope to explore real estate sector• Infrastructural Developments & Transport

System

Special Economic Zones• Concept :- • Duty free areas with Integrated Infrastructure• High Point – Preferential Policy framework with a package

of incentives• Benefits of local advantages within an international

business environment• Business infrastructure combined with social facilities • Development, Administration and Operation to be

undertaken by private sector to enable a hassle free operating environment

• Envisage as areas of excellence to enable global companies to derive domestic advantages for doing business.

Special Economic Zone• Origin from Industrial Parks to SEZs – 1896• Chinese Experience – 1979-80• Extremely successful Chinese format to

promote exports, attract FDI and foster overall economic growth

• Shenzhen SEZ, started in 1981, has achieved 38% GDP growth. CAGR – the highest economic growth recorded in human history

SEZ Framework

SEZ can be categorized on basis of sector, function or location and required to have processing as well as non processing area.

Types of SEZ

Sector – Specific SEZ

Manufacture one or more goods in

a particular sector.

Render one or more services in

a particular sector

Multi – Product SEZ

Manufacture multiple goods in one sector or

across multiple sectors :-Trading & Warehousing

Render two or more services in a sector or

multiple sectors.

SEZ in port or Airport

SEZ in an existing port or airport for manufacture of goods falling in two or

more sectors or for trading and warehousing or rendering of services.

Minimum Area RequirementSr. No. Type Minimum Area of SEZ

1 Multi Product SEZ 1000 Ha.

2 Multi Services SEZ 100 Ha.

3 Sector Specific SEZ 100 Ha.

4 Port Based 100 Ha.

5 Airport Based 100 Ha.

6 Electronic Hardware & Software including ITES 10 Ha. & min built up area of 1 lakh Sq mt. for IT

7 Bio Technology 10 Ha. & min built up area of 40,000 Sq mt.

8 Gems & Jewellery / Handicraft 10 Ha. & min built up area of 50,000 Sq mt.

9 Non – Conventional Energy including Solar energy equipment cell

10 Ha. & min built up area of 40,000 Sq mt.

10 Free Trade Warehousing Zone 40 Ha. & min built up area of 1 lakh Sq mt.

SEZ Layout

Processing Area

Processing area is the demarcated area in SEZ where units can be located for

manufacture of goods and services Minimum processing area has been

uniformly fixed at 50% 1000 ha – 5000 ha for multi product SEZs

100 ha for product specific SEZs

Non-Processing Area

Non Processing area is intended to provide support facilities to SEZ processing area and may include :

* Educational institutes * Hospitals

* Hotels * Recreation and entertainment

* Residential and business complexes

• SEZ defined in India:- “Specifically delineated duty free enclave and

shall be to be foreign territory for the purposes of trade operations and duties and tariffs”

- EXIM Policy 2000, Chapter 9 Para 30

SEZ :- Indian scenario

• To achieve its three-fold objectives of attracting FDI, increasing exports and accelerating the country’s economic growth the Government of India announced the introduction of Special Economic Zones (SEZs) in it Export-Import Policy of March 2000.

Legal framework for setting up SEZ is defined under SEZ Act and State SEZ Policy

Legal Framework

SEZ Approval• SEZ can be established either by Central or

State government or privately.

• Prescribed form should be submitted for approval to state government, which is forwarded to Board of Approval consisting of (Deputy Secretary, Ministry of Commerce & Industry, Department of Commerce, Udyog Bhavan, New Delhi)

Type Minimum Investment

Net Worth Criteria

Sector Specific 250 cr. 50 cr.

Multi Product 1000 cr. 250 cr.

Procedure of Board of Approval for SEZ

SEZ Status Definition

Formally Approved Given when land is available to set up the SEZ

In Principle Approval Given when the land has not yet been secured but all other criteria are fulfilled

Notified Final stage after which physical development work begins

Maharashtra’s Contribution Approval No of units

Formal Approval 105

In Principle Approval 38

Notified SEZs 63

Contribution in %age compared to whole India

Approval %age

Formal Approval 18.13

In Principle Approval 24.55

Notified SEZs 17.16

Growth of Maharashtra from SEZ IT / ITES

Year Maharashtra State (Rs. In Crores)

2006-07 27625.00

2007-08 35374.00

2008-09 42360.88

Tier II cities ContributionApproval No of units

Formal Approval 42

In Principle Approval 11

Notified SEZs 17

Contribution in %age compared to whole Maharashtra

Approval %age

Formal Approval 20.38

In Principle Approval 05.33

Notified SEZs 08.25

Pune City ContributionApproval No of units

Formal Approval 32

In Principle Approval 05

Notified SEZs 24

Contribution in %age compared to whole Maharashtra

Approval %age

Formal Approval 15.53

In Principle Approval 02.42

Notified SEZs 11.65

Total SEZs Contribution of Pune

Name No

In Maharashtra 206

In Pune 61

Percentage 29.61 %

SEZ : Sector-wise Contribution (Pune)Sector Formal

ApprovalIn Principle Approval

Notified Approval

Aluminum 0 0 0

Automobile 0 1 0

Biotechnology 2 0 1

Electronic Hardware & Software 4 0 3

Engineering 2 1 0

Gems & Jewellery 0 0 0

IT / ITES 19 1 18

Multi-Product 1 2 0

Multi-Services 1 0 0

Pharmaceutical 1 0 2

Research & Development 1 0 0

Textile 1 0 0

6%13%

6%

59%

3%3

%

3%3% 3%

Formal Approval

Aluminum Automobile Biotechnology Electronic Hardware &

Software Engineering Gems & JewelleryIT / ITES Multi-ProductMulti-Services PharmaceuticalResearch & Development Textile

In Principle Approval

Aluminum Automobile Biotechnology Electronic Hardware &

Software Engineering Gems & JewelleryIT / ITES Multi-ProductMulti-Services PharmaceuticalResearch & Development Textile

Growth from SEZ IT / ITES Export

Growth in Operating & Exporting Units

SEZ Facts

SEZ Facts• Total Investment made inclusive of Foreign

Direct Investment (FDI) up to 31. 03. 2008 is Rs. 1578.43 Crores in Pune.

• Employment Created:- Direct Employment – 20,274 Employees (Men-14908 & Women-5366) Indirect Employment – 30,509 Employees in Pune.

Current Updates

• US to invest in Indian Tier II cities• Software exports from Tier-II cities up: Minister• Infosys eyeing Tier-II cities for expansion• Tier II cities - The next IT destination• Domino's spreads to Tier II & III cities in India• Fujitsu Consulting eyes tier-II cities• It’s raining projects on Pune• Pune On top of state list with 13 SEZs @ Rs 8.8Kcr• IT Exports rise by 15.01 percent from SEZs.

Cons of SEZs

• Lack of Proper Rules

• Diversity in Development

• Mangrove Destruction

• Fertile Land Destruction

• Land Requirements

Observation & Findings

• Maharashtra State exploring Tier II cities.

• Increase in FDI in Tier II cities.

• Pune as a Tier II city makes a shift towards Tier

I parameters.

• IT sector in Pune city major contributor in SEZ

exports.

Conclusion• Special Economic Zones have boosted Exports.• Increase in Trade & Commerce Activities due

to SEZ.• Tier II cities got a gateway due to SEZ.• Development of Tier II cities in faster pace.• SEZ Policy needs revision from time to time.• SEZ to make more concrete rules with regards

to Small Scale Investors & Developers.

Bibliography

• Indian Economy – Ruddar Datt & KPM Sundharam 58th edition

• http://www.economictimes.com/• http://www.sezindiainvest.com/• http://www.mumbai.stpi.in/• http://www.sezonline-ndml.com/• http://sezindia.nic.in/index.asp/• http://www.india-reports.com/ • http://www.silliconindia.com/

Any Questions