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The administration of US President Donald Trump sent out confusing signals soon after coming to office by threatening to withdraw the US from the North Atlantic Treaty Organization, the World Trade Organization, and the United Nations Human Rights Council. The administration also slapped sanctions against Iran and Russia in a bid to coerce and prevent them from adopting strategies contrary to Washington’s interests.
Of late, Washington seems poised to disengage militarily from Yemen, Syria and Afghanistan. This apart, President Trump’s decision to erect a wall against neighbor Mexico to prevent migration has precipitated the country into a temporary domestic political chaos.
However, there are clear indications that the administration will maintain its influence in the Middle East through its Arab Gulf allies. For instance, the administration has not only been lobbying for maintaining arms supplies to Saudi Arabia, President Trump has admired Riyadh’s willingness to contribute to reconstruction efforts in Syria. He said: “Saudi Arabia has now agreed to spend the necessary money needed to help rebuild Syria, instead of the United States. Isn’t it nice when immensely wealthy countries help rebuild their neighbors.”
Amid perceptible disagreements within the administration, the decision seems to be based on the realization of America’s long military entanglements claiming substantial amount of economic resources with mounting troop casualties in the region without palpable benefits and solutions at sight. It is in this light that the administration’s decision to draw up plans to remove approximately 7,000 US troops from Afghanistan as well as all 2,000 from Syria must be understood.
On the other side, the administration has clearly adopted measures to enhance its role and contain Chinese influence in the Indo-Pacific region. The administration not only articulated an innovative geographical expression for the “Asia-Pacific” by renaming it “Indo-Pacific’’ and underlined the centrality of India to the region but containment of China and formation of a group of allies became central to its Indo-Pacific strategy.
Indicating positive engagement in the Indo-Pacific region, US Secretary of State Mike Pompeo announced $113 million in new technology, energy and infrastructure initiatives with the objective of casting the US as a trustworthy partner in the Indo-Pacific region in July and some days later he pledged to provide $300 million in new security funding for the region.
Meanwhile, Australian Foreign Minister Julie Bishop said in July, “Australia, the United States and Japan have announced a trilateral partnership to invest in projects … that would build infrastructure, address development challenges, increase connectivity, and promote economic growth.”
The belief that the Trump administration on the lines of “America first” thinking would hamper the alliance system is refuted by its stress on the formation of a formidable alliance system in the Indo-Pacific. The administration concluded a so-called 2+2 meeting with India on September 6 that devoted more time to discussions on the American imperative of shaping the contours of Indo-Pacific policy and intended to bring India closer to the US in sharing similar viewpoints as regards their role and aspirations in the Indo-Pacific region.
In Washington’s perception, New Delhi was a reluctant partner in the overall American strategy to strengthen the US-Japan-India-Australia quadrilateral format primarily aimed at containing Chinese influence. The Trump administration seemed poised to inspire and recruit stable partners in the Indo-Pacific region in the face of rising prominence of the Chinese role under the rubric of the Belt and Road Initiative (BRI).
Signing of the defense pact known as the Communications Compatibility and Security Agreement (COMCASA) on the eve of the 2+2 dialogue, while facilitating Indian military platforms’ access to encrypted, cutting-edge and high-end secured communication equipment from the US, was primarily aimed at allowing interoperability between the US and Indian armed and naval forces and enabling India to put Chinese moves in the Indian Ocean and Himalayas under close surveillance.
The two countries also agreed to conduct tri-service military exercise during the dialogue. Forging ahead with Indo-US strategic relations, the American leadership granted India Strategic Trade Authorization-1 (STA-1) status with an objective to ease export controls over sales of high-technology product, which has so far been applicable only to its NATO allies.
On the other side, the Trump administration indicating a low priority for the Afghan engagement (Islamabad was previously considered central to Washington’s Afghan war and peace strategy) extended its suspension of security assistance to Pakistan as Islamabad failed to act against terrorism as per the American convictions.
While the leadership in Pakistan was reeling under economic crisis and poised to seek loans from the International Monetary Fund, the Trump administration expressed its unwillingness to assist Islamabad in securing any loans from the IMF to repay Chinese loans. The administration remained cautious as to Beijing’s rising geopolitical influence under its BRI, which it believed could rise to global prominence if unchecked.
The administration continued to show its disapproval of the Chinese BRI over issues from rising indebtedness among participating countries to lack of transparency and disregard for an open and inclusive approach on sustainable financing. Further, it took to stiff trade restrictions to check Beijing’s growing economic clout allegedly by illegitimate means, which took the form of a trade war between the two great powers.
The Trump administration made efforts at attaining breakthroughs in the process of denuclearization of North Korea and ushering in peace on the Korean Peninsula arguably to concentrate more on containing Chinese influence. The administration meanwhile announced its decision to withdraw from the landmark Intermediate-Range Nuclear Forces Treaty with Russia, indicating its preference for a comprehensive pact that included Russia, the United States and China, and US national security adviser John Bolton was noticed saying in Moscow that Russia had been violating the INF Treaty for years and rising powers such as China meant that it was a “new strategic reality out there.”
It is worthwhile mentioning that the Indo-Pacific region is not only rich in natural resources, especially hydrocarbons that fuel the industrial engines of the world’s economies, it is also emerging as a center of international trade and investment by throwing up a large market of nearly half of the world’s population. There are in fact many reports that predict that by 2050, half of the world’s top 20 economies will be in the Indo-Pacific and countries like India, China, Indonesia and Japan will be among the top five economies in the world.
Dr Manoj Kumar Mishra has a PhD in international relations from the Department of Political Science, University of Hyderabad, India. Currently, he is working as a lecturer at the Department of Political Science, SVM Autonomous College, Odisha, India.
Rashtriya Lok Samata Party (RLSP) chief Upendra Kushwaha, a former Indian cabinet minister who recently quit the National Democratic Alliance (NDA) government, joined the opposition United Progressive Alliance (UPA) and became a part of the Grand Alliance in Bihar. Kushwaha cited dissatisfaction with the NDA government’s failure to fulfill the promises made to the people of Bihar as the reason for his joining the Grand Alliance.
Although the exact reason he left the NDA was unhappiness regarding seat-sharing with the Bharatiya Janata Party (BJP), the major constituent of the NDA, no doubt this has brought smiles to the face of the Indian National Congress (INC), the main constituent of the UPA, which is now hoping to return to power in 2019.
Bottom of Form
Former Bihar chief minister Lalu Prasad’s Rashtriya Janata Dal, currently led by his son Tejaswi Yadav, is the main opposition party in the state. Congress, buoyed by victories in the recent state assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh, is trying to flex its muscles to gain more of Bihar’s seats at the upcoming national parliamentary elections from its ally RJD. Some Congress leaders have even pitched for a 20:20 seat share just like the equal seat share of the two NDA partners BJP and Janata Dal (United).
However, Congress is aware that an equal seat share with the RJD is not possible given the INC’s weak organizational structure in the state in comparison with the RJD, which has been successful in holding its core vote banks – Yadavs and Muslims – accounting for 31% of the state population. During the last national election, out of 40 parliamentary seats held by Bihar, the RJD contested 27, leaving 12 seats to the Congress. The remaining lone seat was contested by the Nationalist Congress Party (NCP).
But the current scenario of the Grand Alliance, which expanded with the membership of the RLSP, presents a gloomy picture for the Congress. Recently, the Vikassheel Insaan Party led by Mukhesh Sahni, an Extreme Backward Caste (EBC) member, also joined the Grand Alliance.
The INC has a task ahead to bargain with the RJD to retain the previously allotted tally of 12 seats in Lok Sabha, lower house of Parliament. The Grand Alliance in Bihar currently comprises the RJD, Congress, Jitan Ram Manjhi’s Hindustani Awam Morcha (Secular), the Kushwaha-led RLSP and Sharad Yadav’s Lok Janatantrik Dal.
Besides, there are talks between RJD and the three Left parties – the Communist Party of India, Communist Party of India (Marxist) and Communist Party of India (Marxist-Leninist). It is to be noted that CPI (ML) and RJD have been arch-rivals in Bihar state politics but their strong opposition against the BJP has brought them closer.
According to reports, the RJD is willing to sacrifice seats to accommodate its allies but it will contest no fewer than 20 seats. The RLSP, as the reports say, is promised four or five seats by the RJD. The other parties – HAM (S), LJD, CPI, CPM and CPML – may get one seat each, although they are eager to contest more than one. Also, the RJD may concede one seat to the Samajwadi party. In such a situation, Congress is left with a smaller number of seats in its share than in 2014. The RJD is reportedly supposed to allocate only eight seats – fewer than 2014 elections – to INC.
In the present scenario, it seems that to defeat the BJP led by Prime Minister Narendra Modi, Congress has no other option but to agree to the will of its allies that are dominant in their own regions. Bihar, once a stronghold of the Congress, is a significant state for national politics and the Congress is aware of the fact that to restore its lost glory, the party has to revive in the state.
However, at present, there are no hopes of increment but rather high chances of decrement in the tally of Congress’ seat share in the Grand Alliance and it is definitely a challenge for the INC in Bihar to persuade the RJD to allow it to contest at least in 12 seats like in 2014 in the upcoming general elections.
And if the party fails, it will be a blow to the Congress, as it will continue to be dominated by regional forces like the RJD in Bihar, and this may have adverse effects in seat bargaining in the upcoming 2019 polls in other states such as Uttar Pradesh, Tamil Nadu, West Bengal, Maharashtra, Jharkhand, Andhra Pradesh and Karnataka, where Congress is willing to stitch alliances with the other regional parties to defeat the BJP.
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The year started with monthly trade deficit soaring to a 56-month high
Despite a global trade war, India managed to grow its exports in 2018 but high crude prices and rising domestic demand continued to inflate the trade deficit at a faster rate.
The year started with monthly trade deficit soaring to a 56-month high. By October, it had risen to more than $153 billion.
Despite reports of crippling capital inadequacy in the wake of the new Goods and Services Tax regime, double-digit export growth continued for half of the year.
On the other hand, imports also shot up as volatile crude prices made a comeback to haunt policymakers after a year of relative ease. India’s current account deficit (CAD) is expected to triple to $19-21 billion in Q2 of FY19, or about 3 per cent of the GDP, from the modest $7 billion in Q2 last fiscal year, economists predict.
As a result, the government placed import restrictions and raised inbound duties on six separate occasions for hundreds of products including textile inputs, steel, mobile phones and solar panels, among others. The move was strongly criticised for raising protectionist barriers at a time when economic growth was tepid
But India managed to navigate through a field of tariff landmines as a trade war between the United States and China heated up throughout the year. New Delhi countered threats by the Donald Trump administration to cut market access for Indian goods by entering protracted negotiations with the US, that continue at the time of writing.
Even a year and a half after its launch, the goods and service tax (GST) regime continues to pose grave problems for the central government’s fiscal maths.
While monthly collections have crossed the Rs 1 trillion mark twice in the current year, they remain well below the desired monthly run rate. This is despite the number of returns filed rising to 6.96 million in October, up from 6.75 million in September
On its part, the government had hoped that compliance under the new indirect tax regime would improve with the introduction of the e-way bill. However, data on Integrated GST (IGST) domestic collections does not suggest a sustained increase in tax collections. For the government to meet the budgeted indirect tax target, collections would have to rise to Rs 1.33 trillion per month for the rest of the current financial year, says a report by Kotak Institutional Equities. Part of the shortfall could be plugged by distributing the unallocated portion of the GST compensation cess between the central and state governments. Or, the Centre could hold onto IGST collections. Despite this, the Centre is staring at a huge gap in indirect tax collections, which the report pegs at Rs 800-900 billion.
A back series by definition, looks back. But the back series of GDP data released by the Central Statistics Office (CSO) in November has created a controversy that raises doubts about the credibility of Indian statistics. The release of the GDP back series was long overdue — since January 2015 when the national accounts data was released with the new base year of 2011-12. It was known that the series would need to post the GDP data for some years before 2011-12 on the new base to make those comparable with the new series. Since there has been a change of government, the numbers were also political fodder. In July, an expert committee set up by the National Statistical Commission released a series to show that GDP grew even faster than was estimated for some years under the United Progressive Alliance (UPA). This inconvenient truth caused the government a rethink. In November, a reassessment under the aegis of the NITI Aayog lowered the estimates for some of the same years. The GDP growth rate during UPA’s ten-year term averaged 6.7 per cent annually compared with the National Democratic Alliance average of 7.35 per cent. As a Business Standard edit noted: “The data does not align with that from the real economy”. The comparison problem emerges in the back series when prices held constant. Statisticians calculate GDP on current prices and then re-estimate those using what they call deflators. These deflators are a mix of consumer and wholesale prices but can introduce an element of subjectivity. Independent experts have this gripe with the back series. It would be resolved only when the CSO releases data on how those deflators were calculated. India could have well done without this controversy.
In the March 2018 quarter, the gross non-performing assets (NPAs) of Indian banks surged past Rs 10 trillion. This surprised many observers, if not the bankers, as the true extent of bad debt was not evident before the Reserve Bank of India (RBI) arm-twisted lenders to disclose whatever was hidden under the carpet. There are many economic reasons for this NPA pile-up, but the numbers ballooned after the central bank’s February 12 circular. The circular said if a loan is not serviced for 90 days, it is in default and recovery proceedings can be started against it.
Not surprisingly, the gross NPA of all listed banks jumped to Rs 10.25 trillion in the March quarter, from Rs 8.86 trillion in the December 2017 quarter.
The March level was roughly 11.5 per cent of the total loan book. Adding restructured, and loans suspected to be falling into NPA, the share could be 13-14 per cent of the loan book.
RBI’s financial stability report says the gross NPA ratios of the banking system could reach 12.2 per cent of the loan book by March 2019. The good news is that the gross NPAs showed a downward trend in June and then in September quarter . This is largely because of the strict Insolvency and Bankruptcy Code, or the fear of it. Bankers now believe the recognition part of NPA is over, and the recovery needs to begin.
The MSME MInistry has proposed to establish a governing council to ensure efficient delivery of all export-related interventions as part of its action plan to boost shipments from micro, small and medium enterprises.
The ministry has recommended a detailed analysis of various trade agreements, including FTAs and bilateral and multilateral trade agreements, to identify areas of concern for MSMEs in the strategic action plan titled Unlocking the potential of MSME Exports.
It said a study will be conducted of special economic zones and export promotion zones in the country to reassess their role and objectives as these are an essential constituent of Foreign Trade Policy and it is important to harness their potential.
Moreover, a tech-enabled online portal shall be developed featuring country-wise list of global products and services in demand and information on how to enter specific foreign markets. It will also have details on loans and credit offered by various financial institutions.
A formal platform may also be created by the ministry to ensure that it is involved in all bilateral and multilateral trade negotiations which have an impact on the enterprises.
The governing council shall be chaired by Secretary, MSME and co-chaired by Development Commissioner in MSME Ministry. It shall comprise senior officials and members from MSME Ministry, Commerce Ministry, MSME Export Promotion Councils, Export Development Authorities, Commodity Boards, etc., the MSME Ministry said.
As part of the action plan, National Resource Centre for MSME Exporters will engage with various internatioanl agencies including UN Orgainsations to promote procurement from Indian MSMEs and further enhance their capabilities.
A guide or handbook shall also be developed to help the export community to understand the processes involved in export business, access the potential markets etc. The guide shall consists of practical information which will be useful for exporters.
New Delhi: Indian officials will hold bilateral meetings with a few countries, including China and some ASEAN members, in the coming days to iron out issues hindering negotiations of RCEP mega trade deal, an official said.
The Regional Comprehensive Economic Partnership (RCEP) is a mega free trade agreement, which aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights.
After the bilateral meetings, the RCEP members will meet for the 25th round of negotiations in mid-February in Indonesia, the official added.
RCEP bloc comprises 10 ASEAN members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six FTA partners – India, China, Japan, South Korea, Australiaand New Zealand.
The main issues that needs resolution include number of goods on which import duties should be completely eliminated and norms to relax services trade.
RCEP members want India to eliminate or significantly reduce customs duties on maximum number of goods it traded globally. India’s huge domestic market provides immense opportunity of exports for the member countries.
However, lower level of ambitions in services and investments, a key area of interest for India, does not augur well for the agreement that seeks to be comprehensive in nature.
Under services, India wants greater market access for its professionals in the proposed agreement.
Trade experts have warned that India should negotiate the agreement carefully, as it has trade deficit with as many as 10 RCEP members, including China, South Korea and Australia, among others.
“India should not try to negotiate trade offs between goods and services as it may prove counter-productive in the long run. Trade off should be negotiated either between goods or between services,” an expert, who did not wish to be named, said.
India wants to have a balanced RECP trade agreement as it would cover 40% of the global GDP and over 42% of the world’s population.
India already has a free trade pact with Association of South East Asian Nations (ASEAN), Japan and South Korea. It is also negotiating a similar agreement with Australia and New Zealand but has no such plans for China.
Pharmaceuticals is among the top exports from India to El Salvador, where local population has almost similar disease profile as Indians and has made a huge impact in making healthcare more affordable in his country, says Ariel Andrade Galindo, El Salvador’s Ambassador to India, in conversation with Vivek Ratnakar of Elets News Network (ENN).
The relationship between India and El Salvador is much deeper than what meets the eye, says Ariel Andrade Galindo, El Salvador’s Ambassador to India. “In fact, India played a crucial role in ensuring our freedom from colonial Spain. Indigo was the main agricultural produce of El Salvador during the colonial period but the rise of India as the world’s largest producer of indigo made production of indigo economically unfeasible as we could not produce enough indigo to pay taxes to the colonial masters that gave a push to our Independence movement.”
The Ambassador, who arrived in India this summer to join the Embassy of El Salvador in New Delhi, remembers one more connect with India from his childhood days. He remembers an Indian elephant, named Manjula, which was the main attraction at the Parque Zoologico Nacional de San Salvador—the national zoo in San Salvador—where he would often go as a child. The elephant was purchased by El Salvador in 1955. Reports suggest that upon the death of Manjula in January 2011, her body was kept for night for velacion, a benediction ceremony in El Salvador in which friends and relatives gather around the deceased and sing. She became the first animal to receive the honour of her own velacion.
Now a statue stands in her memory next to the zoo. This story bears the testimony of the impact soft power can have in opening a vast number of possibilities in warming up bilateral ties with countries half way across the world–making distances inconsequential. The Ambassador’s eyes sparkle with hope and excitement when he talks about exploring new possibilities to take India-El Salvador relations to a new height. The three major areas where he looks forward to garner support from India are power, healthcare and education sectors. To put things in perspective, he says: “There is a huge cost difference between common drugs produced in India and those that are available in El Salvador. Pharmaceuticals is among the top exports from India to El Salvador, where local population has almost similar disease profile as Indians.
“The medicines imported from India have brought down the healthcare costs considerably in El Salvador. But we are now looking to further reduce the cost to make medicines more affordable in our country.” Ambassador Galindo, who recently joined the International Solar Alliance (ISA), an alliance of 121 solar resource-rich countries lying fully or partially between the Tropics of Cancer and Capricorn. ISA was jointly launched by Prime Minister Narendra Modi and the then President of France, François Hollande, on November 30, 2015 in Paris, on the side-lines of the 21st Conference of Parties (CoP 21) to the United Nations Framework Convention on Climate Change.
The first assembly of ISA was organised in October this year at India Expo and Mart in Greater Noida. Besides scouting for Indian companies to invest in El Salvador’s power sector, especially solar, one area that has really impressed Galindo is India’s progress in energy efficient electric appliances. “India-made LED bulbs have higher lumens while costing far less than other bulbs,” says the Ambassador, who has been visiting cities like Bengaluru and Kolkata to find the right partner to set up a manufacturing base in El Salvador.
According to the Migration Policy Institute, there were 1.1 million El Salvadorians residing in the United States in 2008. This means that about one of every five Salvadorans resides in the US. “Most El Salvadorians head to the US for education and jobs which gives a unique advantage to El Salvador in terms of availability of skilled manpower, provided there are enough opportunities available back home.” Back in 2008, India and El Salvador signed an MoU on setting up an IT training centre in San Salvador. Accordingly, the IT Centre was established through NIIT and has now been handed over to Salvadoran authorities in June 2011. In 2013, an Indian delegation from the Department of Electronics and IT visited El Salvador and took part in an IT workshop organised by Agency for Science & Technology of Ministry of Education of El Salvador.
They identified three broad areas of cooperation including capacity building, training of trainers, and upgradation of Government of India-established IT centre at ITCA. Ambassador Galindo is keenly looking for IT companies from India who can set up base in his country and help El Salvador develop as a major IT hub in that part of the world. The man power can be drawn from the huge number of expatriates. According to him, there are a number of advantages for investing in El Salvador. “El Salvador has a number of free trade agreements (FTAs) with a number of countries in Americas. Developing a base in El Salvador can give Indian companies access to a huge market,” he says. The trade between India-El Salvador has grown many folds since 2010.
However, the balance of trade is tilted in favour of India. Textiles is the main exporting commodity of this tiny Central American country with a population of around 6.4 million squeezed in a 21,041 sq km area, making it one of the densest populated countries in Americas. With efforts being made by Ambassador Galindo and his predecessors, no distance seems to be far enough to bring India and El Salvador close enough to transform their ties and become partners in growth and ensure prosperity for their people.
The Centre would do well to water down the ‘Angel Tax’ provision, and that too retrospectively,
in the upcoming Budget (Vote on Account) to alleviate the misery of thousands of start-ups that have come under the scrutiny of the taxman, say experts and economy watchers.
As an alternative, the Department of Industrial Policy and Promotion (DIPP) must tweak its criteria for recognising start-ups so that more number of them stand a chance for Angel Tax exemption, they said.
Although there are several reasons why fewer start-ups are getting the exemption from ‘Angel Tax’, tax experts feel that only the Revenue Department is now best suited to remedy the situation for start-ups on a permanent basis.
The main pain point for many start-ups is not that they are not getting recognised as ‘start-ups’ under DIPP norms, but the fact that their capital is getting treated as ‘income’ and brought under the tax net, a tax expert said.
Taxing new investments coming into a start-up by treating capital as income will kill entrepreneurship, the expert added.
Moreover, the DIPP’s norms stipulating that start-ups would be eligible to claim exemption from ‘Angel Tax’ only for proposed issue of shares is a big pain point. Start-ups are ineligible to claim Angel Tax exemptions for shares issued in the past (prior to April 11, 2018), according to DIPP.
Post the DIPP’s April 11 notification, only start-ups recognised by DIPP with a valid certificate of recognition will qualify to be examined (by the Income Tax Department) for Angel Tax exemption under the income tax law. Between April and now, only two start-ups have made the cut in obtaining such exemption.
“The angel tax provision (Section 56 of the income tax law) should get watered down in the upcoming Budget,” Anish Thacker, Tax Partner, EY, told BusinessLine. This is even as the provision was introduced as an anti-money laundering provision.
Aseem Chawla, Managing Partner, ASC Legal, said the instructions of CBDT to its field officers do suggest that the provisions of the Income Tax Act were being applied in a fairly mechanical manner without considering the actual ground realities with such start-ups.
“It is well known that the exemption from Angel Tax levy was given to those start-ups which were recognised by DIPP. It is well known that DIPP criteria has been such that only a handful of start-ups have been able to make it,” Chawla said.
Innovation factor
Another critical aspect for fulfilling the DIPP’s criteria is the “innovation” point that start-ups aspiring for an IMB recognition must establish. Many start-ups are getting rejected on the “innovation” factor and inability to convince the board that the business is scalable in terms of employment generation or wealth creation. Some experts, however, contend that “innovation” is a subjective aspect.
Nakul Saxena, Director Public Policy at the Indian Software Products Industry Round Table (ISPIRT), a think tank that works with companies and government, said: “It is not possible for a third party, who does not have a stake and who does not know about the industry very well to decide if this is innovative enough and if this will survive or not.”
According to Saxena, “When it comes to start-ups, an investor puts in money because he or she sees some value in the start-up where others might not. It could be because he or she has a background that helps in better understanding of the sector.”
‘TN, Kerala, M.P. ranked on top, according to data
The Ministry of Commerce and Industry data show that 230 out of the 373 Special Economic Zones (SEZs) in India are operational and have provided employment to as many as 20 lakh people.
In Chhattisgarh, Odisha, Punjab and Chandigarh all approved SEZs are operational while among four States which have more than 50 approved SEZs, Tamil Nadu tops the chart of operational SEZs with 75 per cent of its SEZs functioning without any hitch. Tamil Nadu has 52 SEZs of which 39 are operational.
In Telangana, which has 57 — the highest number of notified SEZs — only 29 are operational. Karnataka and Maharashtra have 51 SEZs each of which 31 and 30 respectively are operational.
Kerala, West Bengal, Gujarat and Madhya Pradesh are the States where more than 70 per cent SEZs are functioning. Not a single SEZ is operational in the four States of Goa, Nagaland, Jharkhand and Manipur while 71 per cent SEZs in Haryana and 60 per cent in Rajasthan are defunct.
As many as 239 (64 per cent) SEZs are located in five States including Telangana, Tamil Nadu, Maharashtra, Karnataka and Andhra Pradesh. Employment generation through all SEZs across India was 15,91,381 in 2015 -16. Calculated on a cumulative basis, employment through SEZs is 19,96,610 in 2018-2019. Exports in the manufacturing sector from SEZs during the last four years is over ?8 lakh crore, the Ministry of Commerce and Industry told the Lok Sabha.
In addition to 7 Central Government SEZs and 11 State/Private Sector SEZs set-up prior to the enactment of the SEZs Act, 2005, approvals have been accorded to 420 proposals for setting up of SEZs, of which 355 have been notified.
SEZs being set up under the SEZs Act, 2005 and SEZs Rules, 2006 are primarily private investment driven. No funds are sanctioned by the Central Government for setting up of SEZ. However, the fiscal concessions and duty benefits have been allowed to developers/units as per the SEZs Act, 2005 and Rules thereunder.
The government had constituted a Group under the Chairmanship of Baba Kalyani, Chairman, Bharat Forge, to study the Special Economic Zone (SEZ) Policy of India. The Group, which submitted its report in November recommended a framework shift from export growth to broad-based Employment and Economic Growth (Employment and Economic Enclaves-3Es) and formulation of separate rules and procedures for manufacturing and service SEZs.
