Ease of doing business paves way for VSEZ to achieve ₹ 1 trn turnover

Himachal Pradesh cadre 1988 batch IFS officer A Rama Mohan Reddy, who was recently promoted as the Principal Chief Conservator of Forests, being on deputation as the Development Commissioner of Visakhapatnam Special Economic Zone (VSEZ), is going great guns in increasing its multifold performance since he took charge in March, 2019. The zone put up a spectacular performance during 2020-21 by crossing a turnover of one lakh crore. Despite the challenges posed by the pandemic, the zone registered an increase in exports by 14.5 per cent. In an exclusive interview to Bizz Buzz, he exuded confidence that with rich resources and availability of talent pool, strategic location and pro-active governments, both the Telugu States have a bright future ahead in contributing to the GDP by enhancing the foreign exchange earnings

How do you see the future of SEZs in Andhra Pradesh and Telangana?

As on date, VSEZ, has 61 SEZs operational (out of a total of 265 operational in India), with 523 units spread over AP, Telangana and Chhattisgarh, and the zone has achieved exports to the tune of Rs. 96,886 crore ($13,826 million) during 2019-20 and achieved an export growth of 32.79 per cent compared to 2018-19, which was the highest among all the seven zones of the country. In the given circumstances, the SEZs are maintaining status quo though a little growth is also observed as in every unit approval committee meeting some new units are being approved for setting up or expansion is taking place. Especially in the IT /ITeS sector constant request for the expansion of existing spaces is being received.

In which field you expect growth keeping in view the challenges posed by the pandemic?

Constant growth is seen only in the pharma sector and IT/ITES sector or services sector. Of course, the gems and jewellery sector is going on normal here with a growth of 13 per cent. I don't see any depletion in the growth rate. As the goods produced are mostly exported from SEZs abroad, we would not have any impact with the circumstances in India. Of course, the lockdown may prevent some logistic issues but this time, the lockdown is not so stringent and everything i.e. cargo is moving as usual. Even, labour attending shifts are not obstructed by police, so the works are going on normally. We have not come across any unit saying that they have shut down their unit. But, in a recent meeting with pharma units they expressed their desire to adjust the shift timings to 12 hours and two shifts a day and give off to them accordingly, which was agreed by VSEZ. So, there are no labour issues and no transportation issues, and the impact of curfew is minimal.

What incentives are expected from AP and Telangana governments to encourage investments in SEZs?

So far, no incentives have been announced by any of the States under VSEZ. However, the GoI has instructed all the Development Commissioners to facilitate the units/developers not to take punitive actions where, the units have not met with mandatory compliances such as submission of APRs, Softex Filing, submission of QPRs, and to give automatic extensions where the units are expiring their Letter of Approvals during lockdown, up to June 30. Also facilitate the units which are still in the process of development or yet to commence their operations etc.

What are the highlights of VSEZ Visakhapatnam during 2020-21?

During 2020-21, VSEZ registered an increase in the exports of 14.50 per cent to Rs. 1,13,975 crore ($14,188 million) and it has seen 26.95 per cent growth in merchandise (the highest in the country) and 9.61 per cent growth in services sector. So far, an investment of Rs 64,148 crore has been made in VSEZ, and employment provided is to 4,32,924 persons on a regular basis which is 10 per cent more than last year. VSEZ has broken the records of all 32 years in achieving the exports and crossed one trillion mark, the highest rate of growth among all the zones in the country.

Where do VSEZ stand at the national level?

If we look at the national perspective, SEZs in the country earned Rs 7,22,401 crore foreign exchange and provided direct employment to 22.15 lakh individuals directly, with an investment of Rs. 5.75 lakh crore during 2019-20. It has come down to Rs. 5.53 lakh crore which is 7.25 per cent on the lower side, during the current fiscal year due to pandemic. Compared to national perspective VSEZ has recorded an overall growth of 14.5 per cent and is the only zone among all other zones which has recorded highest positive growth especially in the merchandise sector due to its unique contribution from the Pharma sector with a contribution of 19 per cent. VSEZs contribution to national exports was 20.61 per cent during the year ending March 2021.

What one has to do to get a vacant site or built-up space allotted at VSEZ? What is the lease rental and incentives offered to investors?

The ease of doing business has been made very effective in VSEZ. Anyone can apply for a vacant built-up space, site or plot in any of the SEZs or VSEZ at Visakhapatnam either online or offline on simple plain paper, with minimum details and offer their quote of lease rentals based on the previous recorded highest lease rent approved, and the business intended to do, along with Aadhar, PAN Card and GST number and IT Returns of last three years. They can get provisional allotment within just two days and approval of the unit within a months' time. There is enough plug and play built-up space, available in VSEZ at Visakhapatnam to the tune of 20,000 sq. mt. Lease rentals are lowest among all SEZs in the country at Rs. 163 per sq. m per annum of vacant space and Rs. 1,260 per sq mt per annum of built-up space with warm shell. Incentives include bulk water from GVMC measured at 7 paisa per litre on actual consumption basis. All supplies within SEZs are GST exempted and all imports and exports from SEZs are duty free. All services supplied to SEZs are exempted from duty. No excise duty on diesel supplied to units in the SEZs. All the units are eligible to claim Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) benefits in the shape of scrips adjustable against GST in other units, as incentives for exports.