January 16, 2019

The US-China trade war is an opportunity for India

Associate Tinaz Mistry and Senior Associate Avanti Durani write in Hindustan Times on setting up functional and more encompassing special governance zones in India in the background of trade wars.

 

"India’s experiment with special governance zones began with the enactment of the Special Economic Zone (SEZ) Act in 2005. The major focus of this legislation was to incubate export-oriented industries within exclusive zones by granting them special concessions. Studies show poor performance of SEZs, especially in investment growth and employment generation. This, it seems, is a consequence of the legislation establishing these zones. The SEZ Act exhibits an inherent aversion to institutionalised legal as well as regulatory reforms, reducing these zones to mere tax havens for rent-seeking industries. For special governance zones to thrive, India needs to cast aside this approach for a more holistic one with a focus on rule of law and governance that can unleash economic freedom.

 

Engaging in holistic reforms that value economic freedom and are entrenched in the rule of law will not only enable faster development, economic and export growth but also create employment opportunities and accelerate poverty alleviation. And with a large labour force, India is well positioned to capture the market of larger firms exiting China for greener economic pastures. While the government must offer strong commitment and support, the zones should have institutional and economic autonomy. Redefining the role of the government, civil services and civil servants will be key to unleashing its potential for economic growth."

 

Read the full article here.

Topic : State Capacity / In : OP-EDS
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