Serving export units

Open storage facilities at Mundra port. - PARAS SHAH

The Mundra and Kandla Special Economic Zones provide excellent infrastructure and other facilities for the industries they serve.

DO we have a Special Economic Zone (SEZ), in the real sense of the term in India? That may appear to be an odd question, with 35 SEZs, each claiming to have the required administrative and logistic framework in place, in different stages of development across the country. But the Mundra SEZ, being developed by the Adani group, begs to differ. In terms of the total offering that SEZs across the world make to companies and users, India does not have any facility that is up to the mark, say officials at the Adani group.

"SEZs across the world offer to meet all possible requirements under one roof as a single package. From plots to ready-built spaces and associated power, water, energy and IT backbone to housing, healthcare and even training and education as an inherent part of the package. Such facilities in China took its manufacturing activity to the great heights it is now perched at," says Sanjay Gupta, Chief Executive Officer (Infrastructure) of the Adani Group. If an SEZ project has to deliver value to units, it must at least have all infrastructure within the zone or in the immediate vicinity. The most successful zones have always leveraged an existing port and have added the rest.

The correct model to follow in India would be an SEZ with an in-zone port, its own rail link and even a container terminal, along with an abundant supply of low-cost land. With the Mundra port and P&O-operated Mundra International Container Terminal, the Mundra SEZ aims at exactly that. "We will be the only SEZ that will come into the market and offer the entire gamut of services through one source. The stack of services includes abundant developed land, connectivity through port, road and rail, and common facilities such as warehousing and regulatory agencies. In addition, what is required is recreational facilities, housing, schools and hospitals," says Gupta.

Apart from these, the regular components of incentives, exemptions, concessions and privileges that form a part of any SEZ facility would be available. The Mundra SEZ, the first private-sector SEZ in the country, will be developed in 30 years, spread over three phases. The promoters are looking at 10,000 hectares of land for the project, of which 3,500 hectares will be ready in the first phase itself. The targeted industries include textiles, light chemicals, food processing, pharmaceuticals, light metallurgy and Information Technology.

FOR an entrepreneur who wants to set up an export-oriented business in an SEZ, there seems to be plenty of choice. There are eight SEZs already in operation and another 27 in various stages of development. So, what should be the most important consideration while choosing a location, assuming that basics such as services, logistics and regulatory agencies are already in place? Cost, says Yogendra Garg, Kandla's SEZ Development Commissioner. The chief of Asia's oldest SEZ, which is currently celebrating its 40th anniversary, should know what it takes to serve export-oriented units. "Our rentals at 30 cents (Rs.13) per square metre a year are one-eighth of Jebel Ali. Our cost of land has been spread over 40 years and that is why nobody can beat us on pricing. Even the next government-owned SEZ in India is five times more expensive than us," says Garg. But that does not mean that an entrepreneur will be saddled with poor-quality services or infrastructure at the 1,000-acre SEZ.

"We understand that we are in the service industry and are trying to be more competitive by continuously improving our services. Our team believes in service without expectation. We believe in relationship building and not every action has to be accounted for in terms of revenues generated by the SEZ," he says. The SEZ will spend Rs.65 crores in the next four years to improve the infrastructure in the complex. It has already started developing 300 acres of land, which it had acquired from its neighbour, the Kandla port. The Kandla SEZ has also applied for a distribution licence for power, which will enable it to bring down the cost of electricity for units located inside the complex. The SEZ authorities are simultaneously negotiating with electricity companies, and if they are allowed to distribute power, the cost to the consumers will come down to below Rs.3.25 as against Rs.4.17 at present.

Similarly, the Kandla SEZ has been trying to impress upon commercial airlines the need to revive the Kandla airport. As of now, the only airport serving the area is at Bhuj, 60 km away. Moreover, the flight timings are more suited to the non-resident Indian traffic instead of business visitors, who would like to come in early in the morning and leave the same evening. "We already have excellent road connectivity. Kandla port, which is the second largest in terms of cargo volumes among major ports, is next door. If we can have an airport close by, it will help industries dealing in high-value products such as gems and jewellery and diamonds," Garg said.