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What's the difference between India and China's SEZ policy? news
06 October 2006

CNBC-TV18 checks out the differences between special economic zones in China and India. China has five, India has 200 and still more coming up, that's the SEZ score.

But that doesn't necessarily mean victory for India. It simply indicates the contrasting approaches between Indian and Chinese policies on SEZs.

Each of the five SEZs in China is the size of a mega city. Even the 25,000-acre Reliance SEZ in Navi Mumbai pales in comparison.
Unlike India, where 200-odd SEZs will spread over the length and breadth of India, China's five SEZs are strategically located in the southeast, three of them in Guandong province.

Sudhir Kapadia, tax head, KPMG India, says, "They are close to ports and trade nations like Hong Kong, Macau and Taiwan. A lot of thought has gone into the location of these SEZs. "

China's SEZ initiative is government driven. But in India the private sector will develop most of them. There is no minimum area requirement to set up an SEZ in China, unlike as in India. And China does not offer tax incentives across the board to all companies, as India does.

Chinese incentives differ from zone to zone and are based on the number of years of operation, use of advanced technologies, extent of exports and the type of activities indulged in. For example, companies involved in building infrastructure get special tax benefits.

And though India's policy is a "please-all" one, many Indian corporates prefer the Chinese way.

J J Irani, director, Tata Sons, says, "India should also go slowly like China has done."

Director, HR, Infosys, T V Mohandas Pai says, "We should look at entire districts, with a port and a hinterland for SEZ. We should make large-scale investments in that so there is synergy, and we should ensure that manufacturing has priority, followed by services, but the vision has to be much larger. The way it is today, the vision is too myopic, and too small, and I am afraid we will not get the benefit that China did."

China's SEZ initiative is linked to the opening up of its economy. It goes back to the 1980s when China was looking for a way to invite private and foreign investment. India's SEZ policy comes 15 years after it kicked off economic liberalisation. And its goals are many - building infrastructure, creating employment or inviting foreign investments.


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What's the difference between India and China's SEZ policy?