Research Report - Karnataka

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Research Report No.3/2018-19

Kengeri Post, Bangalore-Mysore Road, Bengaluru-560060

Phone: +91 80 26971000, Fax: +91 80 26971010,

e-Mail: director[at]fpibangalore[dot]gov[dot]in

Research Report

on

‘Status of Special Economic Zones in Karnataka’

Mr. Shivakumar B. P.

Research Consultant

January, 2020

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Table of Content

Chapter-1 Introduction .................................................................................................. 1

1.1 Background ........................................................................................................ 1

1.2 Definition and Meaning of SEZ ......................................................................... 2

1.3 Types of Special Economic Zones ..................................................................... 2

1.4 Characteristics of Special Economic Zones ....................................................... 3

1.5 Significance of the Study ................................................................................... 4

1.6 Objective of the Study ........................................................................................ 4

1.7 Sources of Data and Methodology ..................................................................... 4

1.8 Structure of the report ........................................................................................ 4

Chapter 2 Special Economic Zones ............................................................................... 5

2.1 Introduction ........................................................................................................ 5

2.2 Primary objectives of SEZ Policy ...................................................................... 6

2.3 SEZs in India ...................................................................................................... 7

2.4 SEZs in Karnataka .............................................................................................. 9

2.5 Karnataka State Policy for Special Economic Zones – 2009 ........................... 10

2.6 Important measures taken to promote SEZs in Karnataka ............................... 10

2.7 Types of Zones (SEZ) in Karnataka ................................................................. 12

2.8 Current Status of SEZs in Karnataka ............................................................... 12

2.9 Sector-wise SEZs in Karnataka ........................................................................ 14

Chapter 3 Analysis of Special Economic Zones in Karnataka. ................................ 16

3.1 Introduction ...................................................................................................... 16

3.2 Trends and Growth in Exports from SEZs in Karnataka ................................. 17

3.3 Trends and Growth in Investment made in SEZs in Karnataka ....................... 19

3.4 Trends and Growth in Employment Generated by SEZs in Karnataka ........... 21

3.5 Trends and Growth in Imports from SEZs in Karnataka ................................. 24

3.6 Trade Performance of SEZs in Karnataka ....................................................... 25

3.7 Per Capita Exports and Investment .................................................................. 26

3.8 Trends and Growth in Exports, Investment and Employment by SEZ ............ 28

Chapter 4 Findings and Suggestions ........................................................................... 31

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List of Tables

Sl. No. Name of the Chart Page No

Table 2.1 State-wise distribution of SEZs in India 8

Table 2.2 SEZs in Karnataka and India 12

Table 2.3 Status of SEZs in Karnataka 13

Table 2.4 Sector-Wise distribution of SEZs in Karnataka 14

Table 2.5 District-wise distribution of SEZs 15

Table 3.1 Performance of SEZs in India and Karnataka 17

Table 3.2 Trends in exports from SEZs in Karnataka 18

Table 3.3 Trends in investment made in SEZs in Karnataka 20

Table 3.4 Trends in employment opportunities generated by SEZs in Karnataka 20

Table 3.5 Trends in gender-wise Employment in SEZs during the year in Karnataka 22

Table 3.6 Trend in imports to SEZs from Karnataka 22

Table 3.7 Trends in trade balance of SEZs 23

Table 3.8 Trends in exports performance by SEZs in Karnataka 25

Table 3.9 Trends in investment made in SEZs in Karnataka 26

Table 3.10 Trends in employment generation by SEZs in Karnataka 27

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List of Figures

Sl. No. Title Page No.

Figure 2.1 Status of SEZs in India as on September, 2018 7

Figure 2.2 Top-10 States in terms of Exporting SEZs 9

Figure 2.3 Trends in Notified SEZs in Karnataka 13

Figure 2.4 Trends in Operationalised SEZs in Karnataka 14

Figure 2.5: Sector-wise distribution of SEZ in Karnataka 15

Figure 3.1 Trends in Exports from SEZs in Karnataka, 16

Figure 3.2 Trends in Exports by per SEZ in Karnataka, 17

Figure 3.3 Trends in Investment made in SEZs in Karnataka 19

Figure 3.4 Trends in Investment made in per SEZ in Karnataka 21

Figure 3.5 Trends in Employment Generated by SEZs in Karnataka 23

Figure 3.6 Trends in Employment Generated by Per SEZs in Karnataka 24

Figure 3.7 Trends in Male-Female Gap in Employment provided by SEZs in Karnataka 25

Figure 3.8 Balance of Trade of SEZ in Karnataka 28

Figure 3.9 Trends in Per capita Exports of SEZs in Karnataka 29

Figure 3.10 Trends in Per capita Investment in SEZs in Karnataka 30

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List of Abbreviations & Acronyms

BT Zone Biotechnology

CSEZ Cochin Special Economic Zone

DC Development Commissioner

DTA Domestic Tariff Area

EPZ Export Processing Zone

FDI Foreign Direct Investment

GSDP Gross State Domestic Product

IE Industrial Estates

IT/ITeS Information Technology/ Information Technology Enabled Services

NA Data Not Available

NDML National Database Management Limited

PPP Public Private Partnership

SEEZ) Santa Cruz Electronics Export Zone

SEZ Special Economic Zones

VAT Value-Added Tax

VTPC Visvesvaraya Trade Promotion Centre

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Chapter-1

Introduction

1.1 Background:

Special Economic Zones (SEZs) have been recognised as an important mechanism

for exports and investment promotion, creation of infrastructure, employment generation,

promotion of regional development, increase in foreign exchange earnings, improving

export competitiveness and transfer of skills and technology. The SEZs have been in

existence for decades, but have attracted renewed attention world-wide in recent years

due to globalisation and financial markets. Now, it is a well-recognised fact that the SEZs

are instrumental in developing local and regional infrastructure facilities, which, in turn,

are necessary for overall economic development of a country.

The concept of SEZs in India was introduced in the year 2000 through a revision

in the Export-Import Policy 1997-2002. The objective of the SEZ scheme was to make

the SEZs as engines of economic growth. The SEZ Policy was announced in April 2000.

The Special Economic Zones Act was passed by Parliament in May 2005 and SEZ Rules

in 2006 to support the Act. The main objective of establishing SEZ scheme is to promote

foreign investment and other transactions and create employment opportunities.

The SEZ Act 2005 defines the key role for the state governments to enable export

promotion and creation of high class infrastructure facilities for commercial as well as

residential inhabitation. Units operate in these zones are to be deemed as outside the

country’s customs territory and will have full flexibility of operations. Several measures

have been adopted to improve the quality of governance of the zones.

Growth in exports is necessary to offset the deterioration in the balance of

payments. This is done by establishing of Special Economic Zones. Therefore, there is a

need to understand the contribution of SEZs towards Karnataka’s trade. Against this

background, the present paper analyses the trade performance of SEZs in terms of

exports, investment and employment opportunities in Karnataka.

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1.2 Definition and Meaning of SEZ:

To explain in simple terms, SEZ is a territorial region treated as a foreign territory

for the purpose of industrial, service and trade operations with exemption from customs

duties and a more liberal regime in respect of other levies. To promote foreign investment

and other transactions, and to create of employment opportunities, domestic regulations,

restrictions and infrastructure inadequacies are sought to be eliminated in the SEZs

thereby creating a hassle-free environment. The SEZ scheme seeks to create a simple and

transparent system and procedures for enhancing productivity and the ease of doing

business.

A Special Economic Zone (SEZ) is a demarcated area with quality infrastructure. It is

exempted from all taxes and duties to enable manufacturing and trade in a hassle free

environment for export production.

• Any Company (private / public / joint sector) or State Government or its agencies and

foreign companies can set up SEZ. The SEZ Act 2005, supported by SEZ Rules 2006,

came into effect from 10-2-2006.

• In the case of a SEZ, 100% of land is to be acquired by consent and there is no

compulsory acquisition of land. This besides, R & R Policy would be implemented as per

Government of India guidelines. The SEZ Act provides for state governments to grant

exemption from state taxes, levies and duties. Further, the various state Acts delegate

powers to the Development Commissioner.

1.3 Types of Special Economic Zones:

Special Economic Zone have been developed in many countries, including India. In

India, the Special Economic Zone Act was passed in the year 2005. SEZs were set up in

the private, public, or in the joint sector by the state governments with permission from

the central government. The onus is on the state government to provide an internationally

competitive and comfortable environment for the investors to set up units for

manufacturing goods and rendering of services.

Export Processing Zones (EPZs): EPZ refers to an area that allows aggressive

economic activities in the form of tax exemptions, fiscal incentives and other

benefits to revive weakening export business.

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Free Zones (FZ): FZ is an area where immigration, visa, customs and taxation are

relaxed.

Free Trade Zones (FTZ): FTZ refers to a particular area within a country where

normal trade requirements such as taxes, tariffs, and quotas are either reduced or

relaxed to attract investment.

Industrial Parks or Industrial Estates (IE): Industrial Parks or Industrial Estates,

also known as trading estate, is an area where there are lighter industries such as

offices. These areas are located away from the city’s main residential area but close

to transport facilities such as highways, airports, railroads and ports.

Free Ports: Free Ports refer to a special customs area with releaxed customs

regulations or no customs duties or controls for transhipment.

Urban Enterprise Zones: Urban Enterprise Zone refers to an area that is free of

certain local, state and central taxes and restrictions. Located in the industrial or

commercial areas of a city, the sales tax rate within this zone would be half

compared to other parts and the incentives would be much higher. This is done to

revive the business climate of a city that has been shattered by economic problems.

1.4 Characteristics of Special Economic Zones:

Following are the main characteristics of SEZs;

The SEZs would be a specifically delineated duty-free enclave and shall be deemed

to be foreign territory for the purpose of trade operations and duties and tariffs.

Goods going into the SEZs area from DTA (Domestic Tariff Area) shall be treated

as deemed exports and goods coming from the SEZs area into DTA shall be treated

as imports.

SEZs units can be set up for manufacture of goods and rendering of services,

production, processing, assembling, trading, repair, remaking, reconditioning, and

re-engineering, including making of gold / silver/platinum jewellery and articles

thereof or in connection therewith.

SEZ may be set up in the public, private or joint sector or by state governments.

SEZ should preferably have an area of 1,000 hectares.

SEZ units would have to be positive net foreign exchange earners and would not be

subject to any minimum value-addition norms or export obligations.

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100% FDI would be permitted for all investments in SEZs except for activities under

the negative list.

The Ministry of Commerce and Industry, through issue of a notification, can also

convert existing Export Processing Zones (EPZs) into an SEZ.

The Development Commissioner would be responsible for administrative control of

the zone.

1.5 Significance of the Study:

The study has its own significance. It evaluates the performance of SEZs in

Karnataka by analysing exports from SEZs, investment made, employment

generated, trade gaps and administrative supports. This may be helpful to

government for administrative and technical correction for promotion of SEZs in

Karnataka.

1.6 Objective of the Study:

The study proposes to examine and analyses performance of SEZs in the state. The

primary focus of the study is on the following objective,

To analyse the current status and performance of SEZs in Karnataka in terms

of exports, investment and employment.

1.7 Sources of Data and Methodology:

The source of data on SEZs in Karnataka is from the Cochin SEZ. It is extracted time

series data on SEZs in Karnataka for the period 2006-07 to 2016-17 separately.

The method used to examine the performance of SEZs in the state by analysing the

trends in exports, investment, employment and imports and share of individual SEZ

in total trade.

1.8 Structure of the report:

In the above-mentioned backdrop, this paper attempts to outline the current status of

SEZs in Karnataka. Accordingly, the rest of the paper is organised in four chapters.

Chapter 1 endeavors to track the genesis and evolution of the concept of SEZs.

Chapter 2 attempts to understand current status of SEZs in Karnataka. The

performance of SEZs in terms of exports, investment made in SEZs and employment

opportunities generated by SEZs are reviewed in Chapter 3. Finally, concluding

observations are drawn in Chapter 4.

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Chapter 2

Special Economic Zones

2.1 Introduction:

India is one of the first countries in Asia to recognise the effectiveness of Export

Processing Zone (EPZ) model for promoting exports. Asia’s first EPZ was set up in

Kendal in 1965. This was followed in the 1970s by creation of the Santa Cruz Electronics

Export Zone (SEEZ), in 1980s it was expanded to include gems and jewellery. The 1980s

also the creation of EPZ’s in Noida, Chennai, Cochin, and Falta (West Bengal), followed

by the Vishakhapatnam EPZ in 1994. Immediately thereafter, also in 1994, the Policy

was revised to permit state governments, autonomous agencies, and private sector firms

to develop and operate EPZs. A private sector EPZ in Surat was the first to emerge under

the 1994 EPZ Policy. The primary objective of these EPZs was, to manufacture

commodities for export and earn precious foreign exchange for the country. They offered

fiscal benefits and easier trade procedures.

India’s real push towards a more comprehensive SEZ Policy came following a visit

by the then commerce Minister, Murasoli Maran, to China in 2000. Thus came the new

SEZ Rules notified in the commerce Ministry’s Export-Import Policy of April 2000 –

precursor of what would later become the 2005 SEZ Act. The Exim Policy, 2000,

converted the existing EPZs into SEZs. Under this policy, one of the main features was

that the designated duty-free enclave is to be treated as a foreign territory for the purpose

of trade operations and duties and tariffs. No licence would be required for import. The

manufacturing, trading, or with a view to overcome the shortcomings experienced on

account of the multiplicity of controls and clearances; absence of world-class

infrastructure, an unstable fiscal regime and with a view to attract larger foreign

investments in India, the Special Economic Zones (SEZs) Policy was announced in April

20001.

‘This policy intended to make SEZs an engine for economic growth supported by quality

infrastructure complemented by an attractive fiscal package, both at the Centre and the

state-level, with the minimum possible regulations’2.

1 Prasad, Ravi T C. (2014). ‘Special economic zones’, Bangalore University, Bangalore, Pg. No. 9-12. 2 Prasad, Ravi T C. (2014). ‘Special economic zones’, Bangalore University, Bangalore, Pg. No. 9-12

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With the border aim and objectives, the Government of India enacted the SEZ Act

which was passed by the Parliament in May, 2005 and received Presidential assent on the

following 23rd of June. The SEZ Act 2005 and the SEZ Rules 2006 were notified on June

23, 2005 and February 10, 2006 respectively. Subsequently, three amendments have been

notified on August 10, 2006, March 16, and October 12, 2007.

2.2 Primary objectives of SEZ Policy are as follows;

Generation of additional economic activities.

Promotion of exports of goods and services.

Promotion of investment from domestic and foreign sources.

Creation of employment opportunities.

Development of infrastructure facilities.

According to SEZ Act, 2005 of Government of India guidelines, SEZs can be developed

in the public, private or joint sectors or by the state governments or their agencies or

through PPP basis. The Act also allows promoting establishment of large, self-contained

areas supported by world-class infrastructure oriented towards export production.

Exploiting the full potential of the concept of SEZ would bring large dividends to the

state in terms of economic and industrial development and generation of new

employment opportunities. SEZs are expected to be engines of new economic growth.

The SEZ Act specifies powers of the states to grant following exemptions vide Sec. 50

of Chapter VIII:

Granting exemption from the state taxes, levies and duties to the developer or the

entrepreneur

Delegating the powers conferred upon any person or Authority under any state

Act to the Development Commissioner in relation to the developer or

entrepreneur.

As per Rule 5 (5) of Chapter II of SEZ Rules, 2006, regarding procedure for establishment

of SEZ, the state governments also have been directed to endeavor that the following are

made available in the state for the proposed SEZ units.

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2.3 SEZs in India:

SEZs were introduced to India in 2000, following the already successful SEZ model used

in China. Prior to their introduction, India relied on EPZs which failed to make an impact

on foreign investors. By 2005, all EPZs had been converted to SEZs. As of 2017, there

were 221 SEZs in operation, with a further 194 approved for 2018. For developers to

establish an SEZ in India, applications can be made to the Indian Board of Approval.

Companies, partner firms, and individuals may also apply by completing Form-A which

is available on the Department of Commerce's website. There are four types of SEZs in

India, which are categorised according to size: Multi-sector (1,000+ hectares); Sector-

specific (100+ hectares); Free Trade & Warehousing Zone (FTWZ) (40+ hectares); and

Tech, handicraft, non-conventional energy, gems & jewellery (10+ hectares).[9]

Figure 2.1

Status of SEZs in India as on September, 2018

Source: Author’s computation based on data available or published in ww.sezindia.nic.in, GoI

(as on September, 2018)

Fig 2.1 Status of SEZs in India. In a span of eight years since the SEZs Act and Rules

were enacted, formal approvals have been granted for setting up of 421 SEZs, of which

373 have been notified and 32 have been given In-principal approval as on September,

2018. As many as 231 SEZs are operational and around 5,201 units are functioning in the

SEZs.

Table 2.1

Formal approvals

421 (40%)

Notified SEZs 373

(35%)

In-Principle Approvals

32 ( 3%)

Operational SEZs

231 ( 22%)

https://en.wikipedia.org/wiki/India

https://en.wikipedia.org/wiki/Special_economic_zone#cite_note-9

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State-wise distribution of SEZs as on 31.09.2018

Sl.

No. State

Formal

approvals

In-

principle

approvals

Notified

SEZ's

Operational / Exporting SEZs

(Central Govt. + State

Govt./Pvt. SEZs + under the

SEZ Act, 2005)

1 Telangana 64 0 58 30

2 Karnataka 63 0 51 28

3 Maharashtra 56 12 50 29

4 Tamil Nadu 50 3 47 38

5 Andhra Pradesh 31 4 26 19

6 Kerala 29 0 25 19

7 Gujarat 28 4 24 19

8 Haryana 24 3 21 6

9 Uttar Pradesh 24 1 21 12

10

Madhya

Pradesh 10 0 5 4

11 Goa 7 0 3 0

12 Odisha 7 0 5 4

13 West Bengal 7 2 5 7

14 Punjab 5 0 3 3

15 Rajasthan 5 1 4 2

16 Chandigarh 2 0 2 2

17 Chhattisgarh 2 1 1 1

18 Delhi 2 0 0 0

19 Nagaland 2 0 2 0

20 Jharkhand 1 0 1 0

21 Manipur 1 0 1 0

22 Puducherry 1 1 0 0

Total 421 32 355 223

Source: www.sezindia.nic.in as on 31.09.2018.

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Figure 2.2.

Top 10 States in terms of Exporting SEZs

Source: www.sezindia.nic.in as on 31.09.2018

2.4 SEZs in Karnataka

Karnataka is a most progressive industrialised state in the country as well as in the world.

It is the eighth largest state in terms of geographical area and ninth largest in terms of

population. Industrialisation is supported by several industrial and technological policy

initiations.

Karnataka has excelled in tackling unemployment and creating resources through a mixed

bag of commodities and services viz., resources, skills, technology and knowledge.

Karnataka is host to several information technology-based industry and has recorded a

steady growth thereby contributing to the growth of the economy.

Progress in the field of IT, Biotechnology, R&D have boosted Karnataka achievements

at the domestic and international levels. Electronics and computer software industry has

been the export leader of India’s trade along with textile industry, petrochemicals and

metals besides and precious stones. This has helped Karnataka gain the 4th position in

trade industry. Mutual co-operation in manufacturing, enriched human resources and

healthy atmosphere has been the vital source for FDI in Karnataka. Karnataka has given

Telangana15%

Karnataka14%

Maharashtra14%

Tamil Nadu19%

Andhra Pradesh9%

Kerala9%

Gujarat9%

Haryana

Uttar Madhya Pradesh

Top 10 State's

SEZs Exports in

India

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a hearty welcome to investors to establish major projects by providing infrastructure

facilities.

There is global demand for investing in Karnataka. This is because of its diversified

natural resources.

2.5 Karnataka State Policy for Special Economic Zones – 2009:

After enactment of the SEZ Policy by the Government of India, The Centre

requested all states to enact their own policy on Special Economic Zones according to

the SEZ Policy 2005 and Rules, 2006. In kreeping with the directive, Government of

Karnataka enacted an Act in 2009. This Policy came into force with immediate effect and

governed the development, operation and management of Special Economic Zones and

the SEZ units to be established therein.

The prime objective of the Policy is to facilitate & expedite establishment of SEZs, along

with the responsibility of safeguarding the environment and the interests of land owners.

The Policy provides for a package of incentives, supportive measures besides clarity on

procedural guidelines.

2.6 Important measures taken to promote SEZs in Karnataka

1. Single-Point Clearance: For Single-Point Clearance to SEZ units, the State

Government will consider delegating the power of all its clearances to the Unit

Approval Committee headed by the Development Commissioner, SEZ and the

officers of the concerned departments will be deputed to the Development

Commissioner’s Office to function under the administrative supervision and control

of the designated Development Commissioner of SEZs to accord necessary

clearances and approvals to SEZ units.

2. Land for SEZs: Land conversion has been with immediate approval from

competent Authority. And also, the State Government may acquire the required land

for the SEZ with the approval of SHLCC and would transfer such land to the

Developer/Co-developer of SEZ.

3. Infrastructural Facilities: With a view to create world-class infrastructural

facilities for export-oriented production / operations, the Developer or Co-developer

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is encouraged to develop, construct, install, operate, manage and maintain any or all

of the following infrastructure facilities.

Provision of roads and bridges;

Generation, transmission and distribution of electricity;

Water extraction, treatment, transmission and distribution;

Provision of minor port and related services;

Provision of gas distribution network;

Provision for communication and data network transmission;

Waste water treatment and solid waste management; and

Any other services essential for smooth operations of SEZ units.

4. Labour-related issues: The power of the Labour Commissioner, Government of

Karnataka, shall be delegated to the designated Development Commissioner or other

Authority under the Industrial Dispute Act, 1947 and other related Acts in respect of

the unit and workmen employed by the Developer/ Co-developer. An officer from

the Labour Department will be deputed to function under the administrative

supervision and control of the designated Development Commissioner of the SEZs

to accord all necessary clearances and approval relating to various labour laws.

5. Fiscal Benefits: Following fiscal benefits will be offered to Developer, Co-

developer and Units operating in the SEZ:

SEZs shall be exempted from state and local body taxes or levies or cess such

as Sales Tax, VAT, Entry Tax, and Special Entry Tax.

Exemption of Stamp Duty and Registration fees for Registration of Land and

Loan/Credit Documents.

Exemption of Electricity Duty or Taxes on sale of self-generated or

purchased electric power for use in the processing area of SEZ.

Exemption of 1% Labour Welfare Cess on construction cost incurred by the

developer / co-developer.

6. Law and Order: The State Government will make appropriate and exclusive

arrangements within the SEZs for maintenance of law and order.

7. SEZs as Industrial Townships: SEZs will be declared as Industrial Townships

under the Karnataka Municipalities (Third) Amendment Act, 2002 to enable the

SEZs to function as self-governing and autonomous municipal bodies.

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The Government of Karnataka has set up SEZs across the state attracting more FDI

and generated employment.

2.7 Types of Zones (SEZ) in Karnataka:

Steel Zone: Bellary, Koppal, Raichur district

Cement Zone: Bagalkot, Bijapur, Gulbarga, Bijapur

Food Processing Zone: Shimoga, Mysore, Bijapur, Bagalkot, Kolar, Bangalore

Rural

IT-ITeS/BT Zone: Mangalore, Mysore, Hubli-Dharwad, Belgaum

Automobile Zone: Dharwad and Bangalore

Readymade Garment Zone: Bangalore, Bellary, Mysore

Petroleum, Chemicals And Petrochemicals Complex: Mangalore and Udupi.

2.8 Current Status of SEZs in Karnataka:

Karnataka has been one of the most proactive states in initiating fruitful ventures

and activities on the SEZ front. Such approach of the state has encouraged the SEZ

establishment in the IT, ITeS, apparel and petrochemicals etc. in both private and public

sector.

Table 2.2

SEZs in Karnataka and India (as on September, 2018)

India Karnataka Karnataka (in %)

Formal Approvals 421 63 14.96

Notified SEZs 373 51 13.67

Operational Zones 231 28 12.12

Source: Author’s computation based on data available on www.sezindia.nic.in

Table 2.3

Status of SEZs in Karnataka

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Year

Notified

SEZs

during

the year

Operatio

nalised

SEZs

during

the year

Cumulativ

e Notified

SEZs

Cumulative

Operationali

sed SEZs

Numbe

r of

SEZs

made

Exports

Number

of

Importi

ng

SEZs

Number of

SEZs

Generating

Employmen

t

Number

of

Investin

g SEZs

2006-2007 10 3 10 3 2 2 2 2

2007-2008 8 7 18 10 11 16 10 10

2008-2009 4 3 22 13 14 17 13 11

2009-2010 4 4 26 17 16 19 16 13

2010-2011 6 3 32 20 20 21 16 17

2011-2012 3 3 35 23 19 21 15 17

2012-2013 2 1 37 24 21 22 17 20

2013-2014 0 0 37 24 26 24* 24 24*

2014-2015 0 1 37 25 24 22 24 24*

2015-2016 4 1 41 26 27 24 25 24

2016-2017 10 2 51 28 25 24 26 24

Total 51 28 51 28 25 24 26 24

Source: Author’s Computation based on data obtained from website CSEZ, SEZs in India

*: Data Not Available

Fig 2.3

Trends in Notified SEZs in Karnataka during the year

Source: Author’s computation based on table 2.3

Fig 2.4

Trends in Operationalised SEZs in Karnataka during the year

0

2

4

6

8

10

12

Nu

mb

er o

f SE

Zs

Year

Page | 14


2.9 Sector-wise SEZs in Karnataka;

The sector-wise distribution of SEZ’s clearly shows that nearly 75% of the total

formal approvals granted till date pertains to the IT/ITeS sector.

Other prominent sectors include biotech, textiles, pharma, engineering etc. in addition to

21 formally approved multi-product SEZs. In terms of in-principle approvals, large multi-

product SEZs have a share of more than 50% followed by textile/ biotech sectors.

Table 2.4

Sector-Wise distribution of SEZs in Karnataka

Sl. No. Sector-wise No. of approved

SEZs Operational SEZs

1 IT/ITeS 49 19

2 Biotech 3 1

3 Airport-Based 1 0

4 Aerospace 1 1

5 Pharma 1 1

6 Textiles 1 1

8 Multi-product 1 1

9 Medical Equipment 1 0

10 Engineering 2 2

11 FTWZ 1 0

Total 61 26

Source: Source: VTPC, Bangalore

Figure 2.5

Sector-wise distribution of SEZ in Karnataka

0

1

2

3

4

5

6

7

8

Nu

mb

er o

f SE

Zs

Year

Page | 15

Source: VTPC, Bangalore

Figure 2.5 shows that Karnataka has the highest number of SEZ in the IT/ITeS sector. It

has contributed nearly 90% as Karnataka has been recognised as a IT hub in the world.

Multi-product sector has also contributed 6.69%. Together ithey account for 97% of the

total SEZs in Karnataka. Only 3% constitute other sectors like textile and biotech.

Table 2.5

District-wise Distribution of SEZs

SL. No. District No. of approved SEZs Operational SEZs

1 Bangalore (U) 33 16

2 Bangalore 6 1

3 Mysore 6 2

4 Mangalore 5 2

5 Hassan 3 2

6 Udupi 2 1

7 Mandya 2 0

8 Dharwad 2 0

9 Shivamoga 1 1

10 Belgaum 1 1

Total 61 26


Table 2.3 shows distribution of SEZs across districts in Karnataka.

IT/ITES SEZs, 90.14%

Biotech SEZs, 1.29%

Airport-Based SEZs,

0.00%

Aerospace, 0.01%

Pharma, 0.02%

Textiles, 1.30%

Multiproduct, 6.69%

Medical Equipment,

0.00% Engineering, 0.56%

FTWZ, 0.00%

IT/ITES SEZs

Bio-Tech SEZs

Airport Based SEZs

Aerospace

Pharma

Textiles

Multiproduct

Medical Equipment

Engineering

FTWZ

Page | 16

Chapter 3

Analysis of Special Economic Zones in Karnataka

3.1 Introduction:

The present chapter reviews the performance of SEZs in the state by observing trends and

growth in exports, investment and employment, as well as the trade balance (export-

import gap). In addition to this, the performance of individual SEZ is also evaluated in

the last section of this chapter.

Table 3.1

Performance of SEZs in India and Karnataka -- 2007-08 to 2016-17 (in Rs. Crore)

Year

Total

exports of

India

Total exports

of Karnataka

Total

exports

from SEZs

in India

Total exports

from SEZs in

Karnataka

Exports

from SEZs

in Karnataka

as a ratio to

Total

exports of

India

(4/2*100)

Exports from

SEZs in

Karnataka as a

ratio to Total

exports of

Karnataka

(5/3*100)

Exports from

SEZs in

Karnataka as

ratio to

Exports from

SEZs in India

(5/4*100)

1 2 3 4 5 6 7 8

2007-2008 6,55,864 1,22,703 66,638 1,188 10.2% 1.0% 1.8%

2008-2009 8,40,755 1,34,254 9,989 5,948 11.9% 4.4% 6.0%

2009-2010 8,45,534 1,42,871 2,20,711 11,529 26.1% 8.1% 5.2%

2010-2011 11,36,964 1,65,424 3,15,868 16,840 27.8% 10.2% 5.3%

2011-2012 14,65,959 2,18,838 3,64,478 24,022 24.9% 11.0% 6.6%

2012-2013 16,34,318 2,58,370 4,76,159 34,071 29.1% 13.2% 7.2%

2013-2014 19,05,011 2,90,418 4,94,077 51,179 25.9% 17.6% 10.4%

2014-2015 18,96,348 3,13,570 4,63,770 38,205 24.5% 12.2% 8.2%

2015-2016 17,16,384 3,25,414 4,67,337 62,758 27.2% 19.3% 13.4%

2016-2017 18,49,434 5,00,633 5,23,637 70,185 28.3% 14.0% 13.4%

CAGR 10.9% 15.1% 22.9% 50.4%

Percentage change over previous year

Source: Annual Reports, Ministry of C&I, GoI; Economic Survey, DES, GoK on various years,

VTPC, GoK; SEZ India

Year

Total Exports of India

(Percentage change

over previous year)

Total Exports of

Karnataka

(Percentage change

over previous year)

Total Exports from

SEZs in India

(Percentage change

over previous year)

Total Exports from

SEZs in Karnataka

(Percentage change

over previous year)

2007-2008 - - - -

2008-2009 28.2% 9.4% 49.6% 400.7%

2009-2010 0.6% 6.4% 121.4% 93.8%

2010-2011 34.5% 15.8% 43.1% 46.1%

2011-2012 28.9% 32.3% 15.4% 42.7%

2012-2013 11.5% 18.1% 30.6% 41.8%

2013-2014 16.6% 12.4% 3.8% 50.2%

2014-2015 -0.5% 8.0% -6.1% -25.3%

2015-2016 -9.5% 3.8% 0.8% 64.3%

2016-2017 7.8% 53.8% 12.0% 11.8%

Page | 17

Table 3.1 shows the export performance of SEZs in Karnataka during 2006-07 to 2016-

17. It is computed based on SEZs contribution to total exports of Karnataka and India

over the analysis period.

The percentage share of exports from SEZs in Karnataka as a ratio to exports from SEZs in

India has increased to 13.4% in 2016-17 from 1.8 % in 2006-07.

The percentage share of exports from SEZs in Karnataka as a ratio to total exports of

Karnataka has increased to 14% in 2016-17 from 1% in 2006-07.

The percentage share of exports from SEZs in India as a ratio to total exports of India has

increased to 28.3% in 2016-17 from 10.2% in 2006-07.

3.2 Trends and Growth in Exports from SEZs in Karnataka:

Table 3.2

Trends in exports from SEZs in Karnataka - 2006-07 to 2016-17.

Year

Number of

Exporting SEZs

during the year

Exports Value

( in Rs. crore)

Growth rate

Y-o-Y

(in %)

Cumulative

Exports

( in crore)

Exports per

SEZ

( in crore)

2006-2007 2 52.2 0 52.2 26.10

2007-2008 11 1,188.06 2176.0% 1,240 108.01

2008-2009 14 5,948.29 400.7% 7,189 424.88

2009-2010 16 11,528.86 93.8% 18,717 720.55

2010-2011 20 16,839.65 46.1% 35,557 841.98

2011-2012 19 24,022.34 42.7% 59,579 1,264.33

2012-2013 21 34,071.35 41.8% 93,651 1,622.45

2013-2014 26 51,179.33 50.2% 1,44,830 1,968.44

2014-2015 24 38,205.48 -25.3% 1,83,036 1,591.90

2015-2016 27 62,757.86 64.3% 2,45,793 2,324.37

2016-2017 25 70,184.65 11.8% 3,15,978 2,807.39

CAGR - 105.52% - - 59.65%

Source: Author’s computation based on data obtained from CSEZ website.

Table 3.2 shows eexport performance of SEZs in Karnataka during 2006-07 to 2016-17.

There were only two SEZs exporting in 2006-07 in Karnataka and that number has

increased to 25 in 2016-17.

The value of exports (cumulative) has gone up to INR 3.1 lakh crore from INR 52.2 crore

in 11 years.

The value of exports was INR 52.2crore in 2006-07 (by 2 SEZs). This has increased to

INR 3.1 lakh crore (by 25 SEZs) in 2016-17. The value of exports per SEZs was INR

26.10 crore in 2006-07 which has gone up to INR 2,807 crore in 2016-17.

Page | 18

From 2009-10 onwards, Government of India and all the state governments have taken

many steps to attract more FDI inflow and offered benefits, facilities and incentives to

the developers. With the support, the number of operationalised SEZ has increased from

16 in 2009-10 to 25 in 2016-17. Contribution by SEZs has increased over the years. The

annual growth rate, however, declined from 93% to 11.8% due to land problem, delay in

approval of SEZ and so on.

Figure 3.1

Trends in exports from SEZs in Karnataka

Source: Author’s computation based on table 3.2.

Fig 3.2 shows the growth in exports from SEZs in Karnataka from 2006-07 to 2016-17

(based on table 3.2).

It is observed from the graph (fig 3.1) that the SEZs in Karnataka registered positive

growth in exports except for the year 2014-15.

Figure 3.2

Trends in exports by per SEZs in Karnataka


0

10000

20000

30000

40000

50000

60000

70000

80000

Val

ue

of

Exp

ort

s (i

n R

s. c

rore

)

Year

0

500

1000

1500

2000

2500

3000

Exp

ort

s fr

om

per

SEZ

(in

cro

re)

Year

Page | 19

Figure 3.2 indicates the value of exports by per SEZ in Karnataka during 2006-07 to

2016-17.

It is observed that exports per SEZ is showing an increasing trend over the years except

in the year 2014-15.

3.3 Trends and Growth in Investment made in SEZs in Karnataka:

The SEZ is a trade capacity development tool, with the goal to promote rapid

economic growth by using tax and business incentives to attract foreign investment and

it is one of main objectives of SEZ Act and reduced burden of government in terms of

investment in public and private sector.

Table 3.3

Trends in Investment made in SEZs in Karnataka- 2006-07 to 2016-17

Year Number of

SEZs

Investment

( in Crores)

Growth rate

Y-o-Y

(In %)

Cumulative

Investment

( in Crores)

Investment Per

SEZ (in crore)

2006-2007 2 64.31 NA 64.31 32.16

2007-2008 10 1142.77 1677% 1207.08 114.28

2008-2009 11 1290.90 13% 2497.98 117.35

2009-2010 13 2445.20 89% 4943.18 188.09

2010-2011 17 3424.42 40% 8367.60 201.44

2011-2012 17 4457.88 30% 12825.48 262.23

2012-2013 20 17843.79 300% 30669.27 892.19

2013-2014 24 29188.68 64% 59857.95 1216.19

2014-2015 24 34861.12 19% 94719.06 1452.55

2015-2016 24 40533.56 16% 71202.83 1688.90

2016-2017 24 43799.67 8% 115002.50 1824.99

CAGR 92.01% 49.76%

Source: Author’s computation based on data available in CSEZ website.

Table 3.3 depicts the investment made in SEZs in Karnataka during 2006-07 to 2016-17.

Investment made in 2 SEZs in 2006-07, number of investment attracting SEZs increased

to 25 in 2016-17.

The state has been proactive in encouraging private participation in various sector.

Karnataka is the fourth largest recipient of FDI in the country. Invertor friendly policies

have spurred the growth of MNCs in various sector in the state. Economic fluctuations at

international markets and low rate of returns from SEZ results in less inflow of FDI. The

Karnataka has been recognise as IT hub and expected was higher level of FDI inflow

from international markets. It was achieved negative progress in this regard.

Page | 20

The value of investment made in SEZs gone up to INR 1.15 lakh crore from INR 64.31

crore in 11 years.

The value of investment was INR 64.31 crore in 2006-07(made in 2 SEZs) which has

increased to INR 43800 crore (in 25 SEZs) in 2016-17.

The value of investment in a SEZ (per SEZ) was INR 32.16 crore in 2006-07 which has

gone up to INR 1825 crore in 2016-17.

Fig 3.3

Trends in investment made in SEZs in Karnataka


Fig 3.3 depicts the trends in investment made in SEZs in Karnataka from 2006-07 to

2016-17.

It is observed from graph (fig 3.3) that the SEZs attracted more and more investment

from domestic and as well as foreign countries. It has shown a positive growth in

investment made in SEZs over the years in the state.

Figure 3.4

Trends in Investment made in per SEZ in Karnataka, during the year.

Source: Source: Author’s computation based on table 3.2

0

10000

20000

30000

40000

50000

0100200300400500600700800900

10001100120013001400150016001700180019002000

Inve

stm

ent

(in

Rs.

cro

re)

Year

Page | 21

Figure 3.4 indicates the investment made in per SEZ in Karnataka during 2006-07 to

2016-17.

It is observed that investment made in a SEZ is showing an increasing trend over the

years. It shows a steep increase in investment made in SEZ after 2011-12.

3.4 Trends and Growth in Employment Generated by SEZs in Karnataka

As per SEZ Policy, the creation of employment opportunities at higher level is

one of the main and ultimate goals and objectives. It provides skilled and unskilled labour

opportunity on a larger scale.

Table 3.4

Trends in Employment Opportunities generated by SEZs in Karnataka

Year Number

of SEZs Male Female

Total

Employment

Growth rate

Y-o-Y

(in %)

Cumulative

Employment

Employment

by per SEZ

2006-2007 2 811 322 1133 0 1,133 567

2007-2008 10 8,238 4,416 12,654 1016.9% 13,787 1,265

2008-2009 13 17,335 12,709 30,044 137.4% 43,831 2,311

2009-2010 16 31,699 14,675 42,798 42.5% 86,629 2,675

2010-2011 16 23,468 12,713 36,181 -15.5% 1,22,810 2,261

2011-2012 15 47,398 18,099 65,497 81.0% 1,88,307 4,366

2012-2013 17 60,766 23,846 84,612 29.2% 2,72,919 4,977

2013-2014 24 1,38,014 55,631 1,93,645 128.9% 4,66,564 8,069

2014-2015 24 139351 58,111 1,97,462 2.0% 6,64,026 8,228

2015-2016 25 154488 61,959 2,16,447 9.6% 8,80,473 8,658

2016-2017 26 167188 71,118 ,238,306 10.1% 11,18,779 9,166

CAGR 70.38% 71.56% 70.72% 69.56% 32.10%

Source: Compiled from CSEZ, as on March, 2017

Table 3.4 shows employment generated by SEZs in Karnataka during from 2006-07 to

2016-17. Employment was generated by only 2 SEZs in 2006-07 and now the number

of employment generating SEZs has gone up to 26 in 2016-17.

Employment opportunities were created for 11.87 lakh persons in 11 years by SEZs in

Karnataka.

Two SEZs generated employment opportunities to 1,133 persons in 2006-07 which has

increased to 2.3 lakh persons by 26 SEZs in 2016-17.

Per SEZ employment creation was 567 (persons) in 2006-07 which has risen to 9,166

(persons) in 2016-17.

Page | 22

Figure 3.5

Trends in Employment Generated by SEZs in Karnataka during the year


Fig 3.5 shows employment generated by SEZs in Karnataka during the period 2006-07

to 2016-17 (based on table 3.4).

It is observed from the graph (fig 3.4) that the SEZs generates more and more

employment opportunities during the study period. It has shown a positive growth in

employment generation by SEZs over the years in the state, except in the year 2010-11.

As result of global recession many SEZs resorted to job cutting to reduce their burden.

Figure 3.6

Trends in Employment Generated by Per SEZs in Karnataka


Figure 3.6 shows trends in employment generated by per SEZs in Karnataka during the

year 2006-07 to 2016-17.

0

50000

100000

150000

200000

250000

300000Em

plo

ymen

t (i

n n

um

ber

s)

Year

0500

100015002000250030003500400045005000550060006500700075008000850090009500

10000

Emp

loym

ent

(in

nu

mb

ers)

Year

Page | 23

It is observed that employment creation of individual SEZ has risen over the years except

for the year 2010-11.

Table 3.5

Trends in Gender-wise Employment in SEZs during the year in Karnataka

Year Per SEZ_Male Per SEZ_Female Male-Female Gap

2006-2007 406 161 245

2007-2008 824 442 382

2008-2009 1,333 978 356

2009-2010 1,981 917 1,064

2010-2011 1,467 795 672

2011-2012 3,160 1,207 1,953

2012-2013 3,574 1,403 2,172

2013-2014 5,751 2,318 3,433

2014-2015 5,806 2,421 3,385

2015-2016 6,180 2,478 3,701

2016-2017 6,430 2,735 3,695

CAGR 31.83% 32.74% 32.20%

Source: Author’s computation based on available data in CSEZ

Table 3.5 shows the male-female gap in employment provided by SEZs in Karnataka

during the year 2006-07 to 2016-17.

Male-Female gap was 245 per SEZ in 2006-07 which has increased to 3,695 people in

2016-17. This study has not evaluated the reason behind such phenomena.

Figure 3.7

Trends in Male-Female Gap in Employment provided by SEZs in Karnataka during the year


Figure 3.7 indicates the male-female gap in employment provided by SEZs in Karnataka

during the period from 2006-07 to 2016-17 (based on table 3.5).

0

500

1000

1500

2000

2500

3000

3500

4000

Emp

loym

ent

(in

nu

mb

ers)

Year

Page | 24

It is observed in the above graph (fig 3.6) that male gap has shown a constant rise over the

years.

3.5 Trends and Growth in Imports from SEZs in Karnataka:

As per SEZ Policy of Karnataka SEZ may imports goods and services from DTA

without payment of duty. Goods and service including capital goods, whether new or

second hand, required by it for its activities or in connection therewith.

Table 3.6

Trend in Imports to SEZs from Karnataka

Year Number

of SEZs

Imports

(in Crore)

Cumulative

Imports

(in Crore)

Growth

rate

Imports per

SEZ

(in Crore)

2006-2007 2 25.89 25.89 - 12.95

2007-2008 16 5,128.84 5,154.73 19,810% 320.55

2008-2009 17 12,512.44 17,667.17 243% 736.03

2009-2010 19 22,003.43 39,670.6 125% 1,158.08

2010-2011 21 20,125.95 59,796.55 51% 958.38

2011-2012 21 29,101.39 88,897.94 49% 1,385.78

2012-2013 22 9,525.34 98,423.28 11% 432.97

2013-2014 22 7,377.50 1,05,800.78 7% 335.34

2014-2015 22 5,229.67 1,03,652.95 -2% 237.71

2015-2016 24 5,791.92 1,09,444.87 6% 241.33

2016-2017 24 7,734.08 1,17,178.95 7% 322.25

CAGR 76.82% 37.91%


Table 3.6 showsthe value of imports by SEZs in Karnataka during the years 2006-07 to

2016-17.

The value of imports has gone up to INR 1.1 lakh crore from INR 25.8 crore in 11 years.

The value of imports was INR 26 crore in 2006-07 (by 2 SEZs) which has increased to

INR 29,102 crore in 2011-12 and from then onwards SEZs imports decreased to INR

7,734 crore (by 25 SEZs) in 2016-17.

The value of imports per SEZs was INR 12.95 crore in 2006-07 which has gone up to

INR 1,385 in 2011-12 and then decreased to INR 322 crore in 2016-17.

Page | 25

3.6 Trade Performance of SEZs in Karnataka:

Table 3.7

Trends in Trade Balance of SEZs during the last 11 years

Year Exports Imports Trade Balance

2006-2007 52.2 25.89 26.31

2007-2008 1,188.06 5,128.84 -3,940.78

2008-2009 7,767.89 12,512.44 -4,744.55

2009-2010 1,0672.02 22,003.43 -11,331.41

2010-2011 16,601.52 20,125.95 -3,524.43

2011-2012 23,494.31 29,101.39 -5,607.08

2012-2013 34,534.44 9,525.34 25,009.1

2013-2014 51,197.55 7,377.50 43,820.04

2014-2015 37,827.25 5,229.67 32,597.58

2015-2016 67,392.91 5,791.92 61,600.99

2016-2017 70,114.06 7,734.08 62,379.98


Table 3.7 shows the trends in balance of trade of SEZs during the last 11 years.

During the initial years most of the SEZ imported a number of capital, first and second

hand goods and services, especially manufacturing goods, till 2011-12. As a result the

balance of trade was negative from 2007-08 to 2011-12. However, from 2012-13

onwards, government has favourably promoted and supported SEZ to increase exports

of goods and services and reduce imports. This resulted in a surplus balance of trade

from 2012-13 onwards as shown in in Table 3.7.

Figure 3.8

Balance of Trade of SEZ in Karnataka


-60%

-30%

0%

30%

60%

90%

120%

200

6-2

007

200

7-2

008

200

8-2

009

200

9-2

010

201

0-2

011

201

1-2

012

201

2-2

013

201

3-2

014

201

4-2

015

201

5-2

016

201

6-2

017

Per

centa

ge

Year

Exports Imports Balance of Trade

Page | 26

3.7 Per Capita Exports and Investment

Per capita exports refer to the value of exports by each individual. It is calculated by

dividing total exports from SEZs during the year by the total number of employed in that

particular year. It may also define as contribution to exports by an employee in SEZs.

Per capita investment refers to the investment made on an employee. It is calculated by

dividing the total investment made in SEZs during the year by total employment in that

particular year.

Figure 3.9

Tends in Per capita Exports of SEZs (in Rs Crore) in Karnataka


Figure 3.9 indicates the per capita exports of SEZs in the state from 2006-07 to 2016-

17.

The value of per capita exports increased to INR 0.29 crore in 2016-17 from INR 0.05

crore in 2006-07. It shows an increasing trend up to 2010-11 from 2006-07 from then on

it has been shown a decreasing trend.

0.000.050.100.150.200.250.300.350.400.450.50

Per

Cap

ita

Exp

ort

s in

Rs.

cro

re)

Year

Page | 27

Figure 3.10

Trends in Per capita Investment in SEZs in Karnataka, during the year.


Figure 3.10 shows the per capita investment in SEZs during 2006-07 to 2016-17 in the

state.

0.00

0.05

0.10

0.15

0.20

0.25

0.30

Investment per Employee (in crores)

Page | 28

3.8 Trends and Growth in Exports, Investment and Employment by SEZ from 2006-07 to 2016-17

Table 3.8

Trends in Exports Performance by SEZs in Karnataka during 2006-07 to 2016-17

(in %age)

SEZ 2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017

MILESTONE BBUILDCON SEZ

0.0% 0.0%

KARLE INFRA PVT LTD 0.7% 0.5%

MANGALORE SEZ 0.0% 2.8% 5.8% 5.5%

KIADB AEROSPACE SEZ 0.0% 0.0% 0.0% 0.1%

KEONICS SHIMOGA 0.0% 0.0% 0.0% 0.0%

KIADB PHARAMACEUTICAL SEZ HASSAN

0.0% 0.0% 0.0% 0.0% 0.1%

LARSEN & TURBO SEZ 0.1% 0.0% 0.1% 0.1% 0.1%

HCL TECHONOLOGIES LTD 0.7% 2.8% 2.3% 4.3% 1.5% 2.6% 2.1%

INFOSYS LTD SEZ MYSORE 0.1% 1.1% 1.5% 1.6% 1.1% 1.7% 2.5%

GOPALAN ENTERPRISES PVT LTD (GLOBAL AXIS-HOODI)

0.3% 2.8% 5.0% 4.9% 3.7% 8.0% 8.9%

BAGMANE DEV SEZ-II 1.6% 3.6% 4.1% 5.7% 5.8% 6.5% 7.1% 7.4%

ASPEN SEZ (SUZLON) 15.8% 5.7% 3.0% 0.6% 1.3% 1.8% 0.5% 0.1%

AQUES 0.0% 0.1% 0.1% 0.1% 0.2% 0.3% 0.4% 0.6%

ITPL BANGALORE 11.1% 9.1% 9.7% 9.0% 8.3% 7.2% 11.8% 7.9% 7.2%

PRITECH PARK SEZ (PRIMAL)

0.0% 0.2% 0.4% 4.8% 6.0% 8.2% 5.6% 10.9% 10.4%

WIPRO ELECTRONIC CITY 0.3% 33.3% 19.1% 19.7% 12.0% 13.4% 18.1% 10.4% 8.0% 4.2%

EMBASSY TECH VILLAGE SEZ

0.8% 1.5% 2.6% 5.1% 4.9% 4.7% 3.7% 2.4% 3.2% 2.6%

GLOBAL VILLAGE SEZ 2.2% 3.8% 3.8% 3.5% 4.1% 4.2% 4.4% 3.6% 5.6% 5.8%

INFOSYS LTD SEZ MANGALORE

0.9% 1.6% 2.0% 2.3% 2.5% 2.3% 1.8% 1.3% 1.7% 1.5%

RMZ ECOWORLD INFRASTRUCTURE PVT. LTD (ADARSHA PRIME PROJECT)

7.4% 6.8% 4.9% 4.6% 4.3% 3.7% 3.2% 1.9% 5.1% 5.8%

DIVYASREE TECHNO PARK 6.0% 6.3% 5.7% 7.5% 6.8% 4.7% 3.6% 4.1% 3.6% 3.9%

MANYATA EMBASSY BUSINESS PARK SEZ

24.0% 14.2% 11.5% 12.2% 14.3% 16.3% 13.4% 19.5% 11.0% 11.8%

CESSNA SEZ 20.9% 7.5% 7.1% 8.3% 5.7% 4.9% 4.0% 7.3% 4.9% 8.0%

KIADB TEXTILE SEZ HASSAN

6.3% 4.5% 3.1% 2.1% 2.2% 1.8% 1.6% 1.4% 0.2% 0.1%

BIOCON SEZ 70.2% 26.7% 7.1% 5.8% 3.5% 3.1% 3.0% 2.3% 1.5% 3.1% 2.4%

WIPRO SARJAPUR CITY 29.8% 4.4% 2.3% 7.8% 10.5% 12.4% 11.6% 10.1% 11.3% 8.1% 8.4%

KIADB FOOD PROCESSING SEZ HASSAN

Total Exports 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 3.8 depicts the trends in exports performance of SEZs during the period from 2006-07 to 2016-17

in Karnataka

Page | 29

Table 3.9

Trends in Investment made in SEZs in Karnataka during 2006-07 to 2016-17

(in %age)

SEZ 2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017

MANGALORE SEZ 18.2% 15.6%


KIADB AEROSPACE SEZ 0.3% 0.3%

MILESTONE BBUILDCON SEZ 0.0% 0.0%

KEONICS SHIMOGA 0.0% 0.0%

CESSNA SEZ 66.5% 51.1% 56.2%


0.1% 0.0% 0.1%

LARSEN & TOUBRO SEZ 0.0% 0.0% 0.0%


0.1% 4.3% 1.8% 1.3% 1.3%

INFOSYS LTD SEZ MYSORE 2.7% 2.2% 1.2% 0.6% 0.6%

HCL TECHONOLOGIES LTD 0.6% 1.1% 0.4% 0.4% 0.4%


0.3% 0.0% 0.0% 0.0% 0.0%

AQUES 0.4% 1.1% 0.4% 0.1% 0.6% 0.8%

BAGMANE DEV SEZ-II 6.6% 9.5% 8.9% 0.8% 2.5% 2.8%

ASPEN SEZ (SUZLON) 9.2% 8.1% 5.2% 2.0% 0.0% 0.0%

PRITECH PARK SEZ (PRIMAL) 0.1% 0.0% 0.4% 3.8% 1.8% 2.9% 3.06%

ITPL BANGALORE 3.7% 2.5% 1.9% 1.7% 0.9% 0.8% 0.88%

DIVYASREE TECHNO PARK 7.2% 1.3% 0.0% 0.0% 1.5% 0.1% 0.2% 0.24%

INFOSYS LTD SEZ MANGALORE 5.3% 0.0% 4.5% 3.3% 2.7% 0.7% 0.3% 0.35%

GLOBAL VILLAGE SEZ 2.2% 0.6% 0.9% 2.2% 4.0% 0.7% 0.6% 0.47%

WIPRO ELECTRONIC CITY 1.2% 2.1% 6.5% 5.5% 1.1% 1.2% 0.6% 0.18%


2.0% 4.7% 1.3% 1.9% 1.8% 0.4% 0.9% 2.09%


5.5% 15.7% 8.2% 7.7% 12.0% 3.9% 2.5% 2.50%

EMBASSY TECH VILLAGE SEZ 0.2% 3.5% 3.2% 4.1% 3.0% 5.3% 10.5% 5.87%

KIADB TEXTILE SEZ HASSAN 32.9% 15.7% 19.5% 18.8% 15.0% 2.9% 0.0% 0.02%

BIOCON SEZ 84.8% 42.2% 51.0% 34.7% 27.8% 28.2% 7.5% 4.0% 4.42%

WIPRO SARJAPUR CITY 15.2% 1.2% 1.5% 2.7% 3.8% 3.0% 1.4% 1.1% 1.21%

Total Investment 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.00%

Table 3.9 shows the trends in investment made in SEZs during the period from 2006-07 to 2016-17 in

Karnataka

Page | 30

Table 3.10

Trends in Employment Generation by SEZs in Karnataka during 2006-07 to 2016-17

(in %age)

SEZ 2006-2007

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017


MILESTONE BBUILDCON SEZ 0.0% 0.2%

MANGALORE SEZ 0.5% 0.5% 0.3% 0.2%

KEONICS SHIMOGA 0.1% 0.1% 0.1% 0.3%

KIADB AEROSPACE SEZ 0.0% 0.0% 0.1% 0.1%

LARSEN & TOUBRO SEZ 0.1% 0.1% 0.1% 0.2% 0.1%


0.1% 0.0% 0.0% 0.0% 0.1%


1.1% 6.9% 8.0% 4.8% 4.7% 5.3% 5.8%

HCL TECHONOLOGIES LTD 4.4% 4.0% 2.7% 1.8% 2.0% 3.6% 2.6%

INFOSYS LTD SEZ MYSORE 1.8% 2.2% 3.6% 2.8% 2.7% 1.9% 2.5%


0.3% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0%

BAGMANE DEV SEZ-II 2.7% 8.6% 0.0% 15.5% 8.8% 8.6% 11.3% 10.7%

AQUES 0.1% 0.9% 0.4% 0.5% 0.3% 0.4% 0.6% 0.6%

ASPEN SEZ (SUZLON) 0.0% 0.0% 0.0% 1.4% 0.8% 1.0% 1.0% 0.0% 0.0%

ITPL BANGALORE 8.4% 14.4% 17.6% 10.8% 12.2% 6.4% 6.4% 7.7% 6.7%

PRITECH PARK SEZ (PRIMAL) 0.9% 0.6% 0.7% 0.0% 0.0% 12.6% 14.1% 17.2% 15.0%

GLOBAL VILLAGE SEZ 3.8% 4.0% 2.4% 6.8% 10.6% 8.2% 6.5% 7.3% 7.2% 7.5%


9.3% 6.3% 8.8% 10.7% 6.2% 5.3% 3.1% 3.3% 6.0% 6.7%

CESSNA SEZ 23.4% 9.9% 6.9% 9.6% 1.4% 6.2% 3.6% 3.5% 3.5% 3.5%

EMBASSY TECH VILLAGE SEZ 2.8% 1.2% 1.9% 19.3% 0.0% 0.0% 4.3% 0.0% 3.5% 3.6%

DIVYASREE TECHNO PARK 19.3% 20.0% 11.3% 0.0% 18.4% 13.1% 6.0% 6.7% 2.5% 3.6%

WIPRO ELECTRONIC CITY 8.2% 3.1% 21.2% 0.0% 10.7% 0.0% 5.2% 5.1% 2.1% 2.4%

INFOSYS LTD SEZ MANGALORE 2.5% 0.0% 3.4% 1.7% 4.4% 3.3% 1.4% 1.4% 1.2% 1.1%


0.0% 31.9% 20.6% 0.0% 0.0% 0.0% 21.0% 22.4% 20.6% 18.4%

KIADB TEXTILE SEZ HASSAN 16.5% 6.5% 5.1% 8.3% 4.9% 4.3% 2.1% 2.0% 0.4% 0.2%

WIPRO SARJAPUR CITY 88.1% 8.3% 3.3% 0.0% 7.2% 16.9% 11.9% 5.6% 5.5% 2.2% 4.5%

BIOCON SEZ 11.9% 5.9% 4.7% 0.5% 0.9% 0.6% 4.0% 1.8% 1.9% 2.0% 2.2%

Total Employment 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Table 3.10 depicts the trends in employment generation by SEZs in Karnataka during 2006-07 to 2016-

17.

Page | 31

Chapter 4

Findings and Suggestions

Most of the approved SEZs in pharmaceuticals, textiles, agro and food processing,

engineering, IT/ITeS have remained only on paper. As many at 18 in Bengaluru and

four each in Bengaluru Rural, Dakshina Kannada and Mysuru are yet to take off.

There is huge regional imbalance. Most of the SEZs are located in Bangalore Urban,

Bangalore Rural, Hassan and Mangalore and constituted more than 90% to the total

number SEZ in Karnataka. This has created a lot of imbalance in investment and

employment generations.

Data on SEZs: Data /statistics are crucial in evaluating the performance of SEZs.

However, in this context, the strong argument is for a systematic database that is required

for further research at sub-national level.

Page | i

Bibliography

a) Affairs, Department of Economic (2017-18). Economic Survey. New Delhi: Ministry of

Finance .

b) Bureau, P. R. (2017). Special Economic Zones: Performance, Problem & Opportunities .

New Delhi: PHD Chamber of Commerce and Industires.

c) Centre (VTPC), V. T. (2016-17). Annual Report . Bangalore: Department of Commece and

Industries, GoK.

d) Centre (VTPC), V. T. (2017-18). Annual Report . Bangalore: Department of Commerce and

Industries .

e) Chandra, R. (2014). Special Economic Zones . Bangalore: Bangalore University .

f) Industries, M. o. (2016-17). Annual Report of SEZ . New Delhi: Department of Commece .

g) Industries, M. o. (2017-18). Annual Report of SEZ . New Delhi: Department of Commerce .

h) Industries, M. o. (2018-19). Annual Report of SEZ. New Delhi: Department of Commerce.

i) Ministry of Commerce and Industries, G. (n.d.). Special Economic Zones in India.

Retrieved from http://sezindia.nic.in/

j) Tantri, L. M. (2017, December). Special Economic Zones : through the Lenses of Trade

Facilitation . Policy Brief -14 ISEC, Bangalore, pp. 1-4.

Page | ii

Annexure 1

District-Wise Land Allotment for SEZs in Karnataka (In Ha.)

District Approval land Notified Land Operational

Mysore 75.47 33.46 32.04

Bangalore Urban 540.22 353.48 268.91

Bangalore Rural 257.25 116.60 361.64

Udupi 300.84 259.32

Hassan 441.75 456.18 341.75

Shivamoga 14.5 14.57 14.5

Mangalore 831.96 799.29 779.11

Belgaum 106.33 106.33 106.33

Mandya 74.11 - -

Dharwad 29.572 - -

Total 2,672.00 2,296.38 1,904.77

Source: VTPC, Dpt. C&I, GoK as on March-end, 2016

Annexure 2

Sector-wise land allotment for SEZs (in ha)

Row Labels Approval SEZs Notified SEZs Operational SEZs

Pharmaceuticals 109.3 109.3 109.3

Aerospace 101.98 101.98 101.98

Airport-based SEZ 112.96 - -

Biotechnology 35.55 35.55 35.55

Biotech (Pharma) 10.95 - -

FTWZ 41.2 - -

Hi-Tech Eng. Products 259.64 259.32 259.64

IT / ITeS 892.071 703.1051 403.51

Medical Equipment 100 - -

Petroleum & Petrochemicals

/Multi-product 655.5 655.5 655.5

Precision Eng. Products 106.33 106.33 106.33

Textiles 232.45 248.55 232.45

Food Processing 107.46

Grand Total 2,667.95 2,296.38 1,904.77

Source: VTPC, Dpt. C&I, GoK as on March-end, 2017

Page | iii

Annexure 3

Exports from SEZ

(In Rs. Crore)

SEZ UNIT 2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015-

2016

2016-

2017 CAGR

MILESTONE

BBUILDCON SEZ 2 16 844%

KARLE INFRA PVT LTD 430 333 -22%

MANGALORE SEZ 7 1056 3645 3882 703%

KIADB AEROSPACE SEZ 0 1 18 39 411%

KEONICS SHIMOGA 5 5 6 10 27%

KIADB

PHARAMACEUTICAL

SEZ HASSAN

2 10 3 17 47 114%

LARSEN & TOUBRO SEZ 20 18 27 34 38 18%

HCL TECHONOLOGIES

LTD 118 678 783 2,210 580 1,607 1,501 53%

INFOSYS LTD SEZ

MYSORE 14 259 514 807 420 1,085 1,748 123%

GOPALAN ENTERPRISES

PVT LTD (GLOBAL AXIS-

HOODI)

51 677 1,715 2,493 1,415 5,001 6,232 123%

BAGMANE DEV SEZ-II 190 600 985 1,951 2,970 2,501 4,467 5,200 60%

ASPEN SEZ (SUZLON) 1820 963 725 197 660 676.2 298 71 -37%

AQUES 0 11 26 39 105 121 264 420 254%

ITPL BANGALORE 662 1,047 1,636 2,157 2,826 3,697 4,501 4,947 5,033 29%

PRITECH PARK SEZ

(PRIMAL) 2 19 68 1,144 2,034 4,212 2,143 6,847 7,302 188%

WIPRO ELECTRONIC

CITY 4 1,980 2,202 3,326 2,893 4,550 9,261 3,989 5,029 2,975 111%

EMBASSY TECH

VILLAGE SEZ 10 92 295 854 1,179 1,592 1,911 934 1,984 1,790 78%

GLOBAL VILLAGE SEZ 27 226 441 585 977 1,427 2,272 1,357 3,526 4,039 75%

INFOSYS LTD SEZ

MANGALORE 11 98 226 393 596 773 941 511 1,070 1,070 66%

RMZ ECOWORLD

INFRASTRUCTURE PVT.

LTD (ADARSHA PRIME

PROJECT)

88 406 564 782 1,041 1,257 1,642 710 3,188 4,092 53%

DIVYASREE TECHNO

PARK 71 373 662 1,269 1,642 1,585 1,863 1,570 2,228 2,764 50%

MANYATA EMBASSY

BUSINESS PARK SEZ 285 843 1,324 2,047 34,32 5,555 6,852 7,435 6,884 8,301 45%

CESSNA SEZ 248 445 816 1,393 1366 1,667 2,023 2,807 3,047 5,610 41%

KIADB TEXTILE SEZ

HASSAN 75 266 355 361 526 608 841 539 106 56 -3%

BIOCON SEZ 37 317 420 664 591 735 1,038 1,192 582 1,921 1,690 47%

WIPRO SARJAPUR CITY 16 52 137 905 1,770 2,985 3,938 5,186 4,322 5,107 5,927 81%

KIADB FOOD

PROCESSING SEZ

HASSAN

6

Total Exports 52 1,188 5,948 11,529 16,840 24,022 34,071 51,179 38,205 62,758 70,185

Source: Data obtained from CSEZ website

Page | iv

Annexure 4

Investment made in SEZ

(In Rs. Crore)

SEZ Unit 2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015-

2016

2016-

2017 CAGR

MANGALORE SEZ 7,362 6,833 -7%

KARLE INFRA PVT LTD 200 225 13%

KIADB AEROSPACE SEZ 108 113 5%

MILESTONE BBUILDCON

SEZ

3 3

KEONICS SHIMOGA 2 2

CESSNA SEZ 11,870 0 0 20715 24,627 20%

KIADB

PHARAMACEUTICAL SEZ

HASSAN

13 0 0 15 26 44%

LARSEN & TOUBRO SEZ 2 0 0 5 4 27%

GOPALAN ENTERPRISES

PVT LTD (GLOBAL AXIS-

HOODI)

4 194

326 0 0 507 582 242%

INFOSYS LTD SEZ MYSORE 93 98 221 0 0 262 277 31%

HCL TECHONOLOGIES LTD 22 50 67 0 0 148 175 69%

KIADB FOOD PROCESSING

SEZ HASSAN 11 0

0 0 0

AQUES 9 36 16 16 0 0 258 359

BAGMANE DEV SEZ-II 162 326 396 150 0 0 1,019 1,245

ASPEN SEZ (SUZLON) 224 278 230 363 0 0 0 0

PRITECH PARK SEZ

(PRIMAL) 1 1 14 168

330 0 0 1,172 1,341 135%

ITPL BANGALORE 48 60 66 77 160 0 0 342 383

DIVYASREE TECHNO PARK 82 17 0 0 65 23 0 0 87 104

INFOSYS LTD SEZ

MANGALORE 61 0 109 114 119

129 0 0 133 155

GLOBAL VILLAGE SEZ 25 8 22 75 178 123 0 0 229 206

WIPRO ELECTRONIC CITY 14 27 158 189 50 212 0 0 263 79 28%

RMZ ECOWORLD

INFRASTRUCTURE PVT.

LTD (ADARSHA PRIME

PROJECT)

23 60 33 67 82

77 0 0 374 916 51%

MANYATA EMBASSY

BUSINESS PARK SEZ 63 203 199 263 535

703 0 0 1,006 1,096 37%

EMBASSY TECH VILLAGE

SEZ 2 46 78 142 134

946 0 0 4269 2572

KIADB TEXTILE SEZ

HASSAN 377 203 476 643 671 520 0 0 11 9

BIOCON SEZ 55 482 659 847 953 1,259 1,342 0 0 1,614 1,938

WIPRO SARJAPUR CITY 10 14 20 66 129 136 252 0 0 430 529 44%

Total Investment 64 1,143 1,291 2,445 3,424 4,458 17,844 0 0 40,534 43,800

Page | v

Annexure 5

Employment Generated by SEZ (Persons Male+Female) (in numbers) Employment Total

(Male + Female)

2006-

2007

2007-

2008

2008-

2009

2009-

2010

2010-

2011

2011-

2012

2012-

2013

2013-

2014

2014-

2015

2015-

2016

2016-

2017 CAGR

KARLE INFRA PVT

LTD 1,330 3,635 173%

MILESTONE

BBUILDCON SEZ 67 475 609%

MANGALORE SEZ 929 929 560 554 -16%

KEONICS SHIMOGA 121 121 286 670 77%

KIADB AEROSPACE

SEZ 60 60 123 143 34%

LARSEN & TOUBRO

SEZ 110 274 264 355 269 25%

KIADB

PHARAMACEUTICAL

SEZ HASSAN

49 69 2 75 146 31%

GOPALAN

ENTERPRISES PVT

LTD (GLOBAL AXIS-

HOODI)

413 4,497 6,746 9,337 9,337 11,391 13,736 65%

HCL

TECHONOLOGIES

LTD

1,597 2,635 2,301 3,553 4,042 7,845 6,220 21%

INFOSYS LTD SEZ

MYSORE 665 1,466 3,063 5,372 5,372 4,068 5,851 44%

KIADB FOOD

PROCESSING SEZ

HASAAN

91 0 0 101 0 0 0

BAGMANE DEV SEZ-

II 1,155 3,107 0 13,142 17,018 17,018 24,434 25,509 56%

AQUES 25 309 294 395 633 873 1,234 1,419 78%

ASPEN SEZ

(SUZLON) 14 19 18 944 716 2,029 2,029 0 NA 129%

ITPL BANGALORE 2,509 6,171 6,385 7,088 10,364 12,340 12,555 16,592 15,979 50%

PRITECH PARK SEZ

(PRIMAL) 256 256 255 0 0 24,464 27,925 37,219 35,740 42%

GLOBAL VILLAGE

SEZ 478 1,198 1,008 2,449 6,946 6,968 12,508 14,428 15,672 17,952 50%

RMZ ECOWORLD

INFRASTRUCTURE

PVT. LTD (ADARSHA

PRIME PROJECT)

1,175 1,887 3,754 3,869 4,087 4,508 6,084 6,525 12,969 15,862 34%

CESSNA SEZ 2,963 2,963 2,963 3,462 886 5,211 6,980 6,980 7,674 8,404 12%

EMBASSY TECH

VILLAGE SEZ 359 374 811 6,997 0 0 8,361 0 7,651 8,616 42%

DIVYASREE

TECHNO PARK 2,445 5,997 4,847 0 12024 11,090 11,665 13,168 5,375 8,522 15%

WIPRO ELECTRONIC

CITY 1,037 946 9,066 0 7,030 0 10,094 10,094 4,502 5,682 21%

INFOSYS LTD SEZ

MANGALORE 311 0 1472 612 2,909 2,826 2,682 2,682 2,612 2,732 129%

MANYATA

EMBASSY BUSINESS

PARK SEZ

0 9,572 8,829 0 0 0 40,643 44,320 44,537 43,780 36%

KIADB TEXTILE SEZ

HASSAN 2,086 1,946 2,200 3,005 3,226 3,667 4,016 4,016 782 409 -15%

WIPRO SARJAPUR

CITY 998 1,055 981 4 2,620 11,045 1,0088 10,920 10,920 4,780 10,732 27%

Page | vi

BIOCON SEZ 135 745 1,401 218 327 420 33,68 3,493 37,01 4,314 5,269 44%

Total Employment 1,133 12,654 30,044 42,798 36,181 65,497 84,612 1,93,645 1,97,462 2,16,447 2,38,306 0