China has been the world’s largest exporter since 2009, and the country accounts for one-third of the global manufacturing exports. The COVID-19 pandemic has allowed countries across the globe to realise the importance of local manufacturing. The pandemic has brought to halt the entire global supply chain as many countries were reliant on a single country for their manufacturing needs. Here is the impact of COVID-19 on the SEZ sector and how will it drive the economy once the pandemic gets over.
India has been touted as the next global manufacturing hub. Moreover, COVID-19 offers a unique proposition to investors and companies to invest and manufacture here. Also, the industries have a good opportunity to export their products to the world, besides supplying to the growing domestic market.
According to the UBS report, India continues to be among the top destinations in Asia for manufacturing shift. Also, a recent report by the Government states that Special Economic Zones (SEZs) have continued to lead in increasing the exports for the country. Despite a slow global economy, SEZs in India have managed to achieve USD 100 billion worth of exports in FY 2019-20 by mid-February. The numbers echo the interest created by the sector in the past decade.
During the pandemic, Indian SEZs have lost more than 50 percent export orders to the pandemic, and the pain was furthered by logistics and supply chain roadblocks, inter-state restrictions, mass exodus of migrant workforce, and cash flow issues. All these created severe bottlenecks and crippled the state of Indian manufacturing. But, there is an underlying silver lining to the whole situation, as COVID-19 brings along an opportunity for the Government and the sector to finally realise the potential of SEZs as it can become a robust alternative for foreign investors. The investors who wish to set up new manufacturing units will find SEZs as an attractive investment hub with good infrastructure with last -mile connectivity. The recent amendments proposed by the Government for the sector will play a vital role in boosting investments in the manufacturing sector, generate greater employment, and trigger the growth in export volumes post COVID-19. The potential of SEZs has been furthered by providing relaxation and simplifying the provisions for setting up of multisector SEZs.
Post the lockdown, the country is likely to tap the unrealised potential of warehousing, logistics infrastructure and transportation sector. Creating a superior trading infrastructure, building a seamless interface of single-window clearances, harnessing technology, and advantages such as skilled workforce at competitive rates, along with other domestic resources can substantially make a strong case for a robust SEZ ecosystem. It will help in attracting more players and boost levels of international trade and investments. Ease of doing business for domestic and international players will make SEZs global manufacturing and distribution hubs in the coming years.
SEZ sector continues to garner the interest required, which is apparent from the flow of investment, jump in exports, creation of employment, and encouragement to manufacturing in the country. Additionally, SEZs have had a substantial impact with the emergence of new economic activities, redefining local pockets and human life, among others. There is a need for unrestricted support from the Government and the local authorities to retain investor interest in SEZs, provide greater flexibility and improved ease of doing business. This is not only critical to power the growth of the SEZ sector, but also to boost the growth of the country.