Special Economic Zones are a result of the economic reforms initiated by the Indian Government in 1991. This article discusses both the sides of the coin about SEZ’s.
In 1991, the Indian government introduced a series of reforms into its economy, namely – Liberalization, Privatization and Globalization (L.P.G) reforms. These were badly needed measures to save the crumbling Indian economy at that point of time.
Private participation and investment in businesses were encouraged, Multinational Corporations (MNC’s) were invited into India to open up production facilities.
The government did a lot to attract foreign companies to set up their facilities in India. They government introduced the concept of Special Economic Zones or SEZ’s specially for the MNC’s. These SEZ’s were exempt of many restrictions and duties which were enforced on companies outside the SEZ’s.
MNC’s who operated within in the SEZ’s enjoyed many benefits. Low taxes, cheap skilled labour, cheap raw material, advanced infrastructure and many more benefits were the various advantages that MNC’s within the country enjoyed.
Attracted to this, many MNC’s started to come to India. They set up production here. The SEZ’s were a big puller of new businesses and industries. States started introducing huge SEZ’s within their state to attract more and more companies.
More MNC’s meant more income for the state. The state saw the importance of this source of income and strived hard to develop the infrastructure to accommodate new factories and companies.
The MNC’s also meant that there were now more jobs and incomes arose multifold. New types of industries were formed within India. The MNC’s also brought the Indian consumer more choice in most products. Most importantly, there was a lot of transfer of ideas.
People all over the world now buy goods made in India. They recognize and Indian product to be of good quality. Thanks to the coming in of MNC’s, our products now go to every corner of the globe.
However, this does come with downsides. MNC’s tend to be greedy at times. They dump their wastes without proper treatment and pollute the environment. The wages they pay to Indian employees are far less than what they are worth for their abilites.
MNC’s pay much lower taxes. If they had to pay the default amount of taxes an Indian industry would have to pay, then India’s budget would be carrying much more money than it is carrying now.
There is also the problem of brain drain. Talented, educated Indians work for the benefit of the MNC’s. The brains which can be used for the development of the nation is going to a greedy corporation of another country and funding their growth and development.
Nevertheless, the SEZ’s are a boon, if it weren’t for them, many people would have remained unemployed. They have brought us more closer to the outside world. The SEZ’s have put us in the centre stage and people are now respecting and recognizing us for our prosperity and expertise.