Effectiveness OF SEZs Over EPZs Structure: The Performance at Aggregate Level

Empirical evidence on the effectiveness of SEZs policy over EPZs structure is analysed in this paper by aggregating data of seven conventional SEZs from 1986-87 to 2007-08. The study reveals that the introduction of SEZs in place of its predecessor, the EPZs, is having a significant and positive impact on its performance at the aggregate level. However, in terms of contribution to national trade, the Indian SEZs are lagging way beyond the expectations of policymakers. Further, the SEZ policy does not seem to be successful in diversifying exports basket, which in turn has affected the direction of exports by SEZs. Moreover, these zones were found to be highly susceptible to external shocks. Thus, we strongly argue in favour of a care in deciding the sectoral choice of SEZs and careful scrutiny of its approval across major Indian States.