SEZ

Exploring the Trillion $

Opportunity
“India has a potential to lead the world in 2022 with its
predicted largest pool of manpower consisting of 200
million college graduates and 500 million trained and
skilled workforce. It could be home for at least 30 of the
Fortune 100 companies of the world and generate over
10% of the world trade. …….. This is possible in next
fifteen years provided leaders focus on this goal

as a priority. ”
C.K.Prahlad
In his vision of India @ 75
The Chinese Experience
Do not repeat the tactics which have gained you one victory,
but let your methods be regulated by the infinite variety of
circumstances.”
- The Art of War, Sun Tzu

China celebrates its 30th Anniversary of SEZ in

September 2010. The stark divergence between the
figures of India and China in terms of GDP and Exports
shows that SEZ strategy has been very successful in
China. Even in India, we have seen a couple of success
stories in the field of SEZ. However, as right propounded
by Sun Tzu we need not replicate the SEZ model of
China but need to customize it in consonance with the
facts abd circumstances in India
 SEZs
Giving exporters the Competitive Edge
Indian Model for SEZ is different from China but it is capable of being as
effective.
As against one large SEZ, India has numerous relatively small sized SEZ. This
causes anxiety amongst certain factions in India about the potential benefits and
advantages of SEZ that will accrue to India. However the fears are unwarranted.
Firstly, our key focus is not just on manufacturing sector. Services sector holds
immense potential and SEZ policy is also devised to cater to this sector.
Services SEZ do not require large parcels of land. In fact small SEZs close to
the city is advantageous.
Further, multiplicity of SEZ ensures competition amongst developers.
Competition is virtuous and is ultimately beneficial to exporters. The advantages
of competition will accrue in the medium to long run.
In contrast to certain other countries, MSME sector is one of a predominant
contributors to GDP and employment. Using this analogy, small may indeed be
beautiful and the large number of small sized SEZ can help India achieve the a
greater share in the pie of world trade.
Competing with China
 Apply our Strengths against their Weaknesses

 Win Without Fighting

 Cooperation

 Complete Solutions

 Value for Money

Our Strengths against Their Weaknesses

Weaknesses of China
 Fragmented Markets
 Awareness about Quality

 Lack of Commitment

 IPR protection Regime

 Lack of a Strong Labour Regime

 Language Barriers

 WTO Violations
Our Strengths against Their Weaknesses

Strengths of India
 Proven Delivery Capabilities
 Quality Manpower
 Political Stability
 Telecom Infrastructure
 IPR/ Data Security
 Communication Skills
 Lower Wages
 Relatively Strong and Developed Financial System
 “Win Without Fighting”

Service
Sector
holds
immense
potential

India can use its competency, experience, good will and

expertise in grabbing a major share in the increasing pie of
service exports
“Win Without Fighting”

Service Sector constitutes a major portion in the GDP

of Developed Countries. Its share in the GDP of
developing countries is steadily increasing. This opens
a wealth of opportunities for India
Providing Complete Solutions

EXPERIENCE OF AUTO AND PHARMA SECTOR

Providing a slightly expensive

product with great service is the
key
The Pharma Experience
 SEZ
A Potent Tool To Compete With
China
SEZs
….Giving exporters the Competitive Edge
20% savings in constructions
Tax exempt earning
Faster clearances
Low cost finance
Local tax and duties exempt
Spill over effect of
benefits to Third
Party Suppliers
The process streamlines
More activities permitted to be
sourced and outsourced
Indirect tax exemption
Deemed exporter status
Trickle down effect of Exempt earning
benefits to SEZ Indirect tax exemptions
developers Local taxes exempt
Export Obligations Manageable and
flexible
Faster clearances
Lesser legal formalities
More funding options
More flexibility
Export Reliable and cost competitive utilities
Competitiveness better infrastructure
better logistics
Direct Benefits to
Exporters
Development Strategies:
Key Takeaways
"Strategy rests on choosing a unique
position by offering a different mix of
value than competitors“
Prof. Michael E. Porter
Theme Based Development
 Mahindra’s “ Work, live, learn & play
 Mundra SEZ’s “ One Levelling and Seven
Connections
 Brandix’s “ Vertically Integrated SEZ”
Leveraging Flexibilities in SEZ Development **
 Change the type of SEZ.
 Increase and decrease the size of SEZ
 Denofity the SEZ
 Construct structure for which you have general
 Transfer SEZ to SPV created for the SEZ
 Create more than one processing within your SEZ
 Broadband sector
 Change type of sector*
 Combine two or more SEZ if contiguity established
 Services to other SEZ
 Have any number of co-developer
 Accept any person whether Indian or foreign or even unit as your co-developer
 Create SEZ on Land acquired by statutory corporations like MIDC
 Create SEZ on leasehold or freehold land
 Have DTA area around SEZ
 Use FSI of NPA for PA

. ** Such flexibilities have been permitted in select cases. This list is based on
experience of various developers. It is based on minutes of Board of Approval.
 Key Learnings
Redefine
Profit
Centres
Alternate
Cross-
Business
Structures
Subsidization

Henzberg’s Development Right Client

Strategy Strategies Mix

Optimum Client
Land Use Mining
Business
Models

Key strategies evolved from the experiences of successful

SEZ Developers in India
 Business Model For SEZ
SEZ is like hybrid industry with
characteristic features of three
sectors namely Infrastructure,
Real Estate, Services. Devising a
unique Business Model for your
SEZ is a important ingredient in
the success and profitability of
SEZ. We try to explore the
business models of existing
successful SEZ in India which will
give an insight into the key
processes and decisions that a
company will have to take to
devise a good business model.
 Steps to Devising a Great Business Model

Understand the
Customer value
proposition Determine Key Resources and
• Identifying needs & Processes
demands • People
Identify Profit
• Technology
• Identifying problems formula
• Products,
that you seek to • Revenue Model • Facilities
resolve • Utilities
• Cost Structures
• Identifying the • Brand and Expertise
Motivations and • Margins • Processes to leverage
Initiative resources.

Example
Thanking You

Ms. Prachi Manekar

Director, Estopia SEZ Consultants Private Limited
Senior Consultant, Trans India Law Associates
Expert Panel Member, Legalpundits