Small firms seek SEZ quota

With land prices hitting the roof, expanding operations even outside the export zones is an unviable option for them.

If you can't beat them, join them. Small and medium enterprises (SMEs) have urged the Centre to provide reservations for them in special economic zones (SEZs) through a proper policy framework.

Small industry captains note that till date, SEZs have not proved useful to them. Besides, skyrocketing land prices caused by rampant SEZ promotion is affecting small industry growth, industry bodies say.

Small industry bodies are pointing out, that with land prices hitting the roof, expansion of operations even outside the SEZs is proving to be unviable for micro, small and medium enterprises.

Small and medium industries are seeking government support by way of land and want the Centre to provide 20 to 30 per cent reservation of allot-able area to them within the premises of specialised manufacturing SEZs.

"The earlier concept of 100 per cent export processing zones accommodated all types of industries and helped small and medium units grow by availing of fiscal and non-fiscal incentives. But the present SEZ model has benefited only the large industries and multinationals. As land prices have shot up to unimaginable levels, we request the government to provide a quota for SMEs within SEZs, or acquire lands and make them available for SMEs on lease as done during the sixties," says K V Kanakambaram, president, Guindy Industrial Estate Manufacturers' Association.

De Ramakrishnan, president, Industrial and Financial Reconstruction Association of Small and Tiny Enterprises (IFRASTE), also says that the previous model of 100 per cent export-oriented units was focused on real export needs and benefited a lot of micro and small enterprises.

But, the focus of SEZs seems to be on replicating the Shenzhen (China) model, which was related more to Shenzen's geographical proximity to Hong Kong.

The ongoing promotion of hundreds of SEZs in India seems to be a handout of concessions centred on real estate and small industries feel that a step-motherly treatment is being meted out to them, he adds.

Some quota could be effected for small industries via a well-defined policy framework to help them avail of benefits and grow with the larger industries. This would be most apt as many of the small and medium units have upgraded their technology to match global standards and are gearing-up to tap export opportunities, Kanakambaram points out.

Growing industrial demand has fuelled expansion of operations for several units in the industrial estates, which are considered the growth engines of small and medium entrepreneurs in and around Chennai. However, lands are not readily available for these units, and hence, the request for government support, he adds.

Lauding the Tamil Nadu government's announcement of 20 per cent reservation of allotted space for SMEs in the new industrial policy for 2007, Ramakrishnan says the Centre should have ideally laid a SEZ policy framework with provisions for SME quotas in SEZs.

Small industry should be encouraged within the SEZ premises so that SEZs would not be a real estate bonanza for a select few, he said, adding, "All we need is growth linkages for small units in SEZ promotion so that small industry will have a better chance to avail of concessions and grow their operations."

S Srinivasan, president, Ambattur Industrial Estate Manufacturers' Association, points out that though reservation for SMEs in SEZs are welcome, the government should also focus on removing restrictions and hassles for SMEs outside SEZ areas.

While special incentives such as land at cheaper prices, fluctuation-free power, among other facilities, provided for SEZ units, will help them become more competitive and meet delivery commitments for the global market, the government should also extend such fiscal and non-fiscal incentives to small and medium units outside the SEZ ambit, Srinivasan said.

Ramakrishnan adds that while SEZs continue to be welcome, equal or more attention should be paid to existing set-ups like industrial estates and skills development.

"The Centre should also lay emphasis on manpower retaining and skills development in a big way, as small and medium units have become poaching grounds for trained talent by large industries," Ramakrishnan said.