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Special SEZs for Services: India’s Experiences and the Way Forward

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Special Economic Zones in India

Part of the book series: India Studies in Business and Economics ((ISBE))

Abstract

Globally, countries are focusing on services SEZs, since services play a key role in establishing GVCs and the WTO is yet to develop a discipline on subsidies in services. India’s growth has been propelled by the services sector, and India enjoys a positive trade balance in services, as opposed to trade in goods. It is, therefore, prudent for the country to promote services SEZs to enhance exports and create employment. The chapter focuses on some sector-specific services SEZs, which have been approved, and some potential services SEZs, which India can experiment with. The chapter recommends how to diversify the export base and create employment by supporting such SEZs through the right policies.

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Notes

  1. 1.

    The share is 61 % of the gross value added including construction services. For details, see Chapter 7, Ministry of Finance (2015a).

  2. 2.

    UNCTAD database on international trade services. http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx (accessed on 17 October 2015). Note that figures for 2014 are estimates in the UNCTAD database.

  3. 3.

    Ministry of Finance (2015a).

  4. 4.

    Note that including intra-EU trade and considering EU states individually will change the rankings accordingly.

  5. 5.

    A.T. Kearney (2014).

  6. 6.

    For details, see Department of Industrial Policy and Promotion, FDI Factsheet for the month of June 2015 available at http://dipp.nic.in/English/Publications/FDI_Statistics/2015/india_FDI_June2015.pdf (accessed on 15 October 2015).

  7. 7.

    Andhra Pradesh refers to the erstwhile Andhra Pradesh prior to the bifurcation of the state into Andhra Pradesh and Telangana in 2014.

  8. 8.

    In simple language, there can be three possible ways in which goods are moving out of the FTWZs. There is little value addition (say repackaging) and the goods are exported; goods are moved for further processing for exports or goods are moved for further processing for domestic consumption. In case goods are meant for domestic consumption, a bill of entry (BoE) is required. If goods are going for value addition out of the FTWZ, then a transshipment certificate is required.

  9. 9.

    Deloitte and ICC (2012).

  10. 10.

    For details, see FTP 2004–09 accessible at http://www.ftwz.com/acts/ftp_2004_09.pdf and FTP 2009–2014 accessible at http://cgibirmingham.org/pdf/ForeignTradePolicy.pdf (accessed on 10 August 2015).

  11. 11.

    McKinsey & Company (2010).

  12. 12.

    GST is a proposed indirect tax that aims to replace the existing indirect taxes such as excise duty, services tax and value added tax. It is proposed to be levied on manufacture, sale and consumption of goods as well as services. It will have two components, namely central GST and state GST.

  13. 13.

    GSP is a preferential tariff system extended by developed (donor) countries to developing (beneficiary) countries. It involves reduced MFN tariffs or duty-free entry of eligible products exported by beneficiary countries to the markets of donor countries.

  14. 14.

    For details, see http://rajtax.gov.in/vatweb/download/forms/CST%20Form%2001.pdf (accessed on 16 November 2015).

  15. 15.

    Double Taxation Avoidance Agreement also referred to as Tax Treaty is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries. For details on India’s Double Taxation Avoidance Agreements, see http://www.incometaxindia.gov.in/Pages/international-taxation/dtaa.aspx (accessed on 14 November 2015).

  16. 16.

    SEBI (2015).

  17. 17.

    Reserve Bank of India (2015a, b).

  18. 18.

    IRDA (2015).

  19. 19.

    Ministry of Finance (2015b).

  20. 20.

    See http://timesofindia.indiatimes.com/city/nagpur/Mihan-power-cost-shoots-up-by-Rs1-a-unit/articleshow/47591933.cms (accessed on 19 October 2015).

  21. 21.

    For details, see http://sezindia.nic.in/writereaddata/GeneralNotifications/Power%20Guidelines.pdf (accessed on 15 October 2015).

  22. 22.

    See http://sezindia.nic.in/writereaddata/GeneralNotifications/Revised_Power_Guidelines.pdf (accessed on 15 October 2015).

  23. 23.

    See http://sezindia.nic.in/writereaddata/GeneralNotifications/1111.pdf ( accessed on 15 October 2015).

  24. 24.

    For details, see http://makeinindia.com/sector/aviation/ (accessed on 15 October 2015).

  25. 25.

    See http://aviationspaceindia.com/content/aviation-mro-india-opportunities-and-challenges (accessed on 15 October 2015).

  26. 26.

    In the absence of such technology, the Directorate General of Civil Aviation has approved 40 overseas MRO providers to extend these services to Indian aircraft.

  27. 27.

    http://aviationspaceindia.com/content/aviation-mro-india-opportunities-and-challenges (accessed on 15 October 2015).

  28. 28.

    See http://www.nagpurtoday.in/work-of-air-indias-mro-in-mihan-sez-starts-with-dgca-issues-commercial-license/06031052 (accessed on 15 October 2015).

  29. 29.

    See http://www.ibnlive.com/news/india/boeing-no-more-associated-with-mro-facility-in-nagpur-nitin-gadkari-1002593.html (accessed on 15 October 2015).

  30. 30.

    For details, see http://www.livemint.com/Companies/TarroVU5YZ4TUPNT0WDYaL/GMR-puts-aircraft-maintenance-unit-on-sale.html (accessed on 15 October 2015).

  31. 31.

    See http://www.thehindubusinessline.com/news/states/ap-cancels-concessions-extended-to-lepakshi-knowledge-hub/article5689139.ece (accessed on 15 October 2015).

  32. 32.

    See http://www.mydigitalfc.com/sectoral-watch/quest-global-launches-aviation-sez-belgaum-641 (accessed on 15 October 2015).

  33. 33.

    See http://www.deccanherald.com/content/461060/aequs-expects-more-business-its.html (accessed on 15 October 2015).

  34. 34.

    See http://indiabudget.nic.in/ub2015-16/bh/bh1.pdf (accessed on 15 October 2015).

  35. 35.

    See http://www.moneylife.in/article/impact-of-union-budget-on-aviation-sector/40615.html (accessed on 15 October 2015).

  36. 36.

    See http://www.thehindubusinessline.com/industry-and-economy/logistics/reducing-tax-on-jet-fuel-will-help-airlines-cut-costs-by-1015/article6719912.ece (accessed on 17 October 2015).

  37. 37.

    http://timesofindia.indiatimes.com/city/nagpur/Finally-maintenance-repair-and-overhaul-takes-off-with-Boeing-landing/articleshow/47020440.cms (accessed on 17 October 2015).

  38. 38.

    For details, refer to PricewaterhouseCoopers (2010).

  39. 39.

    http://www.thehindubusinessline.com/industry-and-economy/logistics/odisha-exempts-vat-on-atf-for-international-flights/article7305801.ece (accessed on 17 October 2015).

  40. 40.

    See http://aviationspaceindia.com/content/aviation-mro-india-opportunities-and-challenges (accessed on 17 October 2015).

  41. 41.

    See http://www.reuters.com/article/2015/05/18/eros-international-idUSnBw185682a+100+BSW20150518 (accessed on 15 October 2015).

  42. 42.

    http://www.bangaloreitbt.in/docs/2012/09/KAVG%20Policy.pdf (accessed on 17 November 2015).

  43. 43.

    See http://www.filmtvguildindia.org/entertainment_tax_in_various_states.html for entertainment tax subsidies (accessed on 15 October 2015).

  44. 44.

    http://sezindia.nic.in/writereaddata/pdf/ListofoperationalSEZs.pdf (accessed on 5 October 2015).

  45. 45.

    See Information Technology, Electronics & Communications (ITE&C) Department (2014) http://www.aponline.gov.in/apportal/Downloads/GAME%20Policy-2014-19.pdf (accessed on 5 October 2015).

  46. 46.

    https://www.plunkettresearch.com/statistics/consulting-market-research/ (accessed on 5 October 2015).

  47. 47.

    See http://www.business-standard.com/article/opinion/liberalising-legal-services-115042600776_1.html (accessed on 5 October 2015).

Author information

Authors and Affiliations

  1. Indian Council for Research on International Economic Relations, New Delhi, Delhi, India

    Arpita Mukherjee & Tanu M. Goyal

  2. Indian Institute of Management, Kolkata, West Bengal, India

    Parthapratim Pal

  3. Economist and Independent Consultant, Kolkata, West Bengal, India

    Saubhik Deb

  4. Economist and Independent Consultant, Gurgaon, Haryana, India

    Subhobrota Ray

Authors
  1. Arpita Mukherjee
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  2. Parthapratim Pal
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  3. Saubhik Deb
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  4. Subhobrota Ray
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  5. Tanu M. Goyal
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Correspondence to Arpita Mukherjee .

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© 2016 Indian Council for Research on International Economic Relations (ICRIER)

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Mukherjee, A., Pal, P., Deb, S., Ray, S., Goyal, T.M. (2016). Special SEZs for Services: India’s Experiences and the Way Forward. In: Special Economic Zones in India. India Studies in Business and Economics. Springer, New Delhi. https://doi.org/10.1007/978-81-322-2806-6_6

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