HYDERABAD: Splitsville seems to have cost Andhra Pradesh dear in more ways than one. Not only has erstwhile AP lost the tag of being the state with the highest number of notified special economic zones (SEZ) at 76, it has also lost its edge when it comes to operational SEZs and the value of exports.
While composite AP had 38 operational SEZs, post bifurcation Telangana has ended up second in the country with 22 operational SEZs, way behind neighbour Tamil Nadu that tops the charts with 33 functional SEZs. With 16 operational SEZs, residuary AP now lags behind Karnataka, Chhattisgarh, Gujarat and Maharashtra at sixth spot.
The only silver lining for the new states is that while Telangana has an edge when it comes to IT SEZs, most of which are concentrated in the Hyderabad-Ranga Reddy belt, residuary AP has a more diverse mix like textiles and apparel, food processing, footwear and leather products, multi-product, pharma and IT SEZs, among others.
With the
SEZ edge lost, the governments of both the states will now have to focus on boosting the performance of their respective SEZs, feel experts. "The dream run of SEZs abruptly ended in 201112 when UPA-II decided to levy 18.5% minimum alternate tax (MAT) on SEZ units, impacting growth. The economic slowdown also took its toll as nearly 22 SEZs in the state remained non-operational till last fiscal," said Fapcci president Srinivas Ayyadevara Even in united AP, over 90% of the SEZs had mushroomed primarily during 2006-09 when the SEZ Act promised sops like a fiveyear tax holiday on profits and 50% tax exemption on profits after the first five years. After the UPA-II imposed taxes, only seven to eight SEZs were notified in unified AP.
According to CII AP chairman Suresh Chitturi, apart from the high taxation on SEZ units, the major issue was the slow pace of operationalization of units and the inability of the government to hold developers accountable. "However, in Telangana, the developers were in a wait and watch mode due to the heightened political turmoil in the last few years. Now they can start work on a war footing as the uncertainty is over," Chitturi added.
And as the industry bemoans the high taxation and slow growth, some feel that the previous AP government had turned SEZs into a 'land grab' model. "Nearly half of the SEZs are non-operational as the developers, who were hand-in-glove with political leaders are sitting over huge tracts of land and there is no one to question them! Even the 'single window clearance' turned out to be a sham as there were many clearances that were required," said an industry source on conditions of anonymity, citing the example of the Infosys SEZ at Pocharam that got notified in October 2007 but got environmental clearance only in May 2009 and water connection in November 2010.
Source : timesofindia.indiatimes.com