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Why in the news?

On the 75th anniversary of India’s independence, the Prime Minister unveiled the PM Gati Shakti Master Plan.

About Gati Shakti Master Plan:

• The PM Gati Shakti Plan, a national infrastructure master plan worth Rs. 100 lakh crore that would provide the groundwork for holistic infrastructure and provide an integrated route for our economy.
• The Gati Shakti strategy will assist local firms have a global presence and compete with their international competitors. It also opens up the possibility of other economic zones in the future.
• The prime minister also stated that India’s manufacturing and exports must both expand.
• Every product sold in India is associated with India, which means that every product of yours is a brand ambassador for India.

Need for PM Gati Shakti Master Plan:

• India has been striving to restructure its logistics sector, which includes trains, motorways, inland waterways, and airports, in order to create a more efficient transportation network.
• Logistics expenses account for around 13% of Indian firms’ costs, making exports uncompetitive vis-à-vis China.
• India needs to increase both manufacturing and exports because every product that is sold globally from India is attached to India.

Significance of PM Gati Shakti Master Plan:

• It aims to improve road, rail, air, and canal interconnection in order to minimize travel time and increase industrial output.
• Its goal is to break down silos in the transportation network in order to minimize travel time and boost industrial production.
• It seeks to boost industrial productivity, make manufacturing more internationally competitive, open up new economic zones, and create new jobs.

Issues with infrastructure and transport in India:

• Land Purchase: Land acquisition for infrastructure projects is another important difficulty in attaining the infrastructure aim.
• Various agencies have given their approval: In India, the vast majority of infrastructure projects are behind schedule. This is mostly due to a weak regulatory framework and ineffective approval procedures.
• Financing: Infrastructure projects are capital-intensive, and finance is a key roadblock to attaining infrastructure objectives.
• Poor pre-construction planning: The pre-construction phase of infrastructure projects is lengthy due to the existing negative effects of numerous barriers such as land acquisition, statutory clearances, delayed financial closing, and so on.
• Environmental Impact Assessment (EIA) is a term used to describe the process of determining the environmental impact of Environmental protections and rules have been identified as a key cause of infrastructure project delays, particularly in the power sector.

Understanding special economic zone:

What is a special economic zone?

• A special economic zone (SEZ) is a part of a country that operates under distinct economic rules than the rest of the country.
• The economic rules of special economic zones (SEZs) tend to be pro-foreign direct investment and attract it (FDI).
• Special economic zones (SEZs) are generally established to promote rapid economic growth by utilizing tax incentives to attract foreign investment and spur technical innovation.
• While several nations have established special economic zones (SEZs), China has had the most success in attracting international investments through SEZs.

Salient features of SEZ

• Export and import self-certification: The flow of products between the SEZ and the rest of the world is dependent on self-declaration. Unless a special order or authority from the Development Commissioner is given, no routine examination is conducted.
• Subcontracting: A SEZ unit may subcontract a portion of its product or manufacturing process to other units, including those located outside of the SEZ.
• Tax incentives: Purchases of capital assets, consumable goods, and raw materials from the domestic market are free from excise and customs tax. Sales tax, import duty, income tax, minimum alternative tax, and dividend distribution tax are all excluded.
• Single Window Clearance: There is a facility of the submission of documents at single locations on a regular The proceedings are less and time-saving.

Some of important SEZ in India

• Karnataka Biotechnology and Information Technology Services: A 43-acre SEZ dedicated to the biotechnology sector in Bangalore’s Electronics City.
• Shree Renuka Sugars Limited: SEZ on a sugarcane processing complex of 100 hectares in Burlatti, Belgaum district, including a sugar plant, power station, and distillery.
• Wipro Infotech: Electronics City, Sarajpur Banga SEZ on IT/ITES.
• Food processing and associated SEZ: Hewlett Packard India Software Operation Pvt. Ltd. SEZ Hassan covers a total of 157.91 hectares.
• In Hassan, there are SEZs for pharmaceuticals, biotechnology, and chemicals that occupy 281.21 hectares.
• Some other SEZs worth noting are:
  • Navi Mumbai – Multi-product, Mumbai
  • SEEPZ – Andheri (East), Mumbai
  • Manikanchan – Jems and jewellery, West Bengal
  • Salt Lake Electronic City, West Bengal
  • Calcutta Leather Complex, West Bengal
  • Falta Food Processing Unit, West Bengal.

Advantages of SEZ

• Technology and global market exposure: This occurs when a foreign investor enters the Indian market with their technology and best business practices.
• Growth and development: SEZs serve as a centre for a country’s growth and development since the goal is to increase commerce through simplified processes.
• Attract International Direct Investment (FDI): By offering lucrative agreements, relaxed trade restrictions encourage international investors to invest in SEZs.
• Increasing GDP and Economic Model: SEZs serve as growth engines for the economy by assisting in the expansion of economic activity in the area.
• Opportunities for employment are created: With increasing economic activity, job prospects rise as well.

Disadvantages of SEZ

• Land acquisition: Farmers lose cultivated land and money as a result of land acquisition at extremely cheap prices, culminating in violent demonstrations.
• Tax holidays have an impact on GDP: Revenue is lost as a result of different tax exclusions and incentives.
• Many traders are interested in SEZ since it allows them to purchase land at low prices and build a land bank.
• The number of units asking for EOUs is not proportional to the number of applications for SEZs, leading to concerns that the project will fall short of expectations..

Conclusion:

SEZs built along economic corridors and smart cities would not only assist the zones access logistical and social infrastructure, but would also allow them to connect to neighboring industrial clusters. Larger SEZs may be able to benefit from economies of scale. Shift in the framework from export growth to broad-based Employment and Economic Growth (Employment and Economic Enclaves-3).

Additional info:

The Ministry of Commerce and Industry formed a committee led by Baba Kalyani to examine India’s present SEZ policy, and it published its suggestions in November 2018.

Mains oriented question:

Write about The Gati Shakti Master Plan also explains the advantages and disadvantages of the Special Economic zone in detail. (200 words)