Adanis made money. But are SEZs really working?
On Tuesday (3 May), Adani Ports and Special Economic Zones reported a profit of Rs 566 crore for the quarter ended 31 March. That's a mere 2% increase from Rs 554 crore it made in the same period a year ago.
Indeed, special economic zones (SEZs) are suffering a slowdown throughout India:
- Number of problems that SEZs in India are facing. These are:
- Falling exports,
- Increasing applications for de-notifications,
- Fewer application for new SEZs.
- Reasons for SEZ slowdown:
Global deceleration of exports,
Unclear fiscal policies for SEZs,
No exemption from Minimum Alternate Tax, the amount which companies need to pay even if they are exempted from other taxes.
No exemption from Dividend Distribution Tax. That's the tax levied based on the profit paid to investors.
- Ways in which the government is tackling the slowdown of SEZ:
Regular review meetings with development commissioners of SEZs,
Meetings with SEZ stakeholders and road shows for publicity throughout the country.
- The share by which exports fell between 2013-14 and 2014-15.
In 2013-14, exports worth Rs 4,94,077 crore went out from SEZs in India, and in 2014-15 it fell to Rs 4,63,770 crore.
Significantly, SEZ exports fell from 31% to 4% from 2012-13 to 2013-14.
As of December 2015, the value of exports stands at Rs 3,41,685 crore. That's a decrease of 1.8% against the corresponding period in previous year.
The question then is, are SEZs withering away despite Adani raking in profits at a critical time?
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