The Special Economic Zones Bill 2005 was passed by both Houses of Parliament and is awaiting the approval of the President. The purpose of having a separate Bill on Special Economic Zones (SEZs) is to clarify all policy initiatives relating to such special zones so that many more foreign and domestic investors can establish their units in these areas. There are 11 functioning SEZs in the country already and they are producing 5 percent of Indias total exports. Yet it has been felt (by exporting firms mostly) that there are certain areas that need attention in order to make Indias SEZs as attractive as those do located in China. With better and clear-cut incentives, the government hopes to attract $2 billion more in foreign direct investment.

All the countries in South Asia have been able to cut costs by locating their industries in these special zones where many tax concessions and holidays are available. In these special Economic zones, a different set of laws are applicable and a smooth and well functioning infrastructure is specially created to meet the needs of different exporting units. Indias special economic zones are scattered around the country from Surat, to Kochi to Noida near Delhi. However, they have not been as successful as those in some of the neighboring countries there will be quick disposal of trials and disputes, which will make foreign firms happy because they can exit quickly if they wish.

Multinational corporations have typically set up their factories in these special zones in most of South Asian countries and they employ thousands of women but their work is mostly repetitive in nature like knitting, sewing or fixing small parts. As a result, women often suffer from chronic illnesses because of the monotony and repetitive nature of their jobs and the highly restricted spaces in which they are confined to during work hours. They suffer from various problems related to night shifts and close monitoring by tyrannical supervisors. They are also not given proper contracts and are hired and fired easily. No health benefits are usually given to women workers and with marriage or pregnancy, their contracts are often terminated. The special zones indeed do provide jobs to women from the neighboring towns but they have to be given more job security and health insurance to maintain the quality of the labor force. What is also required is proper training and skill up gradation so that there is scope for promotion and improvement in job profiles for women over time.

There is another danger in having too many of these economic zones because India is inviting multinational companies on terms that are on par with those existing in all our neighboring countries. China has by far the most attractive terms and conditions. In this intense competition, there has been a tendency for the multinational companies to keep changing their locations whenever they see a slight cost advantage. This can result in sudden closure of factories and resulting unemployment.

Though there are 21 notified Greenfield SEZs in the country, not one of them is operational. The ones that call themselves SEZs are, in fact, export processing zones that have been converted into SEZs over the past four years-like the ones at Kandla and Noida. The Indian SEZ sector has so far been a non-starter. Last year, the commerce ministry publicly admitted that most SEZ projects were bogged down due to delays in land acquisition. Indian exports would still be battling cheaper products from China. Sample this: Chinese SEZs have attracted about $71 billion of foreign direct investment and their share of the country's exports is 40 per cent, adding up to $12 billion.

In 2000, the government introduced the concept of SEZs - specifically delineated duty-free enclaves that are to be deemed foreign territory for the purpose of trade operations, duties and tariffs. Foreign investment was to be allowed until 100 per cent, income tax was exempted, single-window clearances were introduced, and a host preferential policies and tax breaks were announced for SEZ developers and tenants.

The approval of Central Act on Special Economic Zones (SEZs) promised in the 2003-04 Union Budget remained a non-starter even after the passage of the Budget in May 2003. So far four State Governments Uttar Pradesh, Madhya Pradesh, Rajasthan and Karnataka have passed State SEZ Acts despite the promise of Central Legislation for SEZs. The sources said the turf war between the Revenue and Commerce Departments on the tax benefits to be conferred on units located in SEZs has come in the way of going ahead with the Central legislation.

In order to improve India's trade with neighboring countries as well as to reduce transaction cost of exports, external infrastructure in terms of road, rail and connectivity as well as availability of power and water supply are essential for SEZs as well as Land Custom Stations. The infrastructure so funded would vastly improve the competitiveness of Indian goods and services in the world market, leading to creation of more employment and funneling investment into India.

OFFSHORE banking units (OBUs) are getting popular among Indian banks as many of them queue-up to establish such units in the Special Economic Zones (SEZs) of the country.

The scheme was perhaps a necessity, when it was introduced more than two decades back and continued to remain relevant until a few years ago. However, of late, many EOUs have come up merely to take advantage of the income-tax exemption. The Special Economic Zones (SEZ) scheme is a non-starter so far.

The idea to revamp the scheme of Export Processing Zones (EPZ) scheme was mooted in 1998. Seven years later, all that the government has to show is the renaming of the seven EPZs that already existed. The private SEZ at Surat has attracted very little attention from manufacturers and is, in any case, too small.

Similarly, the joint-sector SEZ project at Pithampur has attracted little investment. The rest of the SEZ proposals exist merely on paper.

Special economic zones for education (SEZE): India sent about 76,000 students to the US in 2002-03. If each parent remitted an average of Rs 15 lakh a year, India's contribution to the US economy was about $2.6 billion. Most students go abroad because the demand for quality education exceeds supply. Further, seat availability is reduced by reservations. Conversely, college managements complain they are not allowed to fix fees that reflect actual costs and are subject to excessive government control.

These centers of excellence would be governed by the Central government and administered by a regulator. There would be no restrictions on fees/ salary for the faculty or tie-ups/equity investment by foreign universities. Admission would be on merit only.These SEZE's should be able to not only retain at least 40 per cent of the students in India but attract foreign students, too.