SEZ

Exploring the Trillion $ Opportunity

“India has a potential to lead the world in 2022 with its predicted largest pool of manpower consisting of 200 million college graduates and 500 million trained and

skilled workforce. It could be home for at least 30 of the Fortune 100 companies of the world and generate over 10% of the world trade. …….. This is possible in next

fifteen years provided leaders focus on this goal

as a priority.”

C.K.Prahlad In his vision of India @ 75

The Chinese Experience

China celebrates its 30th Anniversary of SEZ in September 2010. The stark divergence between the figures of India and China in terms of GDP and Exports shows that SEZ strategy has been very successful in China. Even in India, we have seen a couple of success stories in the field of SEZ. However, as right propounded by Sun Tzu we need not replicate the SEZ model of China but need to customize it in consonance with the facts abd circumstances in India

“

Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of

circumstances.”- The Art of War, Sun Tzu

SEZs Giving exporters the Competitive Edge

Indian Model for SEZ is different from China but it is capable of being as effective.

As against one large SEZ, India has numerous relatively small sized SEZ. This causes anxiety amongst certain factions in India about the potential benefits and advantages of SEZ that will accrue to India. However the fears are unwarranted.

Firstly, our key focus is not just on manufacturing sector. Services sector holds immense potential and SEZ policy is also devised to cater to this sector. Services SEZ do not require large parcels of land. In fact small SEZs close to the city is advantageous.

Further, multiplicity of SEZ ensures competition amongst developers. Competition is virtuous and is ultimately beneficial to exporters. The advantages of competition will accrue in the medium to long run.

In contrast to certain other countries, MSME sector is one of a predominant contributors to GDP and employment. Using this analogy, small may indeed be beautiful and the large number of small sized SEZ can help India achieve the a greater share in the pie of world trade.

Competing with China

Apply our Strengths against their Weaknesses

Win Without Fighting

Cooperation

Complete Solutions

Value for Money

Weaknesses of China

Fragmented Markets Awareness about Quality Lack of Commitment IPR protection Regime Lack of a Strong Labour Regime Language Barriers WTO Violations

Our Strengths against Their Weaknesses

Strengths of India

Proven Delivery Capabilities Quality Manpower Political Stability Telecom Infrastructure IPR/ Data Security Communication Skills Lower Wages Relatively Strong and Developed Financial System

Our Strengths against Their Weaknesses

“Win Without Fighting”

India can use its competency, experience, good will and expertise in grabbing a major share in the increasing pie of service exports

Service Sector holds immense potential

Service Sector constitutes a major portion in the GDP of Developed Countries. Its share in the GDP of developing countries is steadily increasing. This opens a wealth of opportunities for India

“Win

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Providing Complete Solutions

EXPERIENCE OF AUTO AND PHARMA SECTOR

Providing a slightly expensive product with great service is the

key

The Pharma Experience

SEZ

A Potent Tool To Compete With China

Export Competitiveness

Spill over effect of benefits to Third Party Suppliers

Direct Benefits to Exporters

Trickle down effect of benefits to SEZ

developers

20% savings in constructions

Tax exempt earning

Faster clearances

Low cost finance

Local tax and duties exempt

Exempt earning

Indirect tax exemptions

Local taxes exempt

Export Obligations Manageable and flexible

Faster clearances

Lesser legal formalities

More funding options

More flexibility

Reliable and cost competitive utilities

better infrastructure

better logistics

The process streamlines

More activities permitted to be sourced and outsourced

Indirect tax exemption

Deemed exporter status

SEZs ….Giving exporters the Competitive Edge

Development Strategies: Key Takeaways

"Strategy rests on choosing a unique position by offering a different mix of

value than competitors“

Prof. Michael E. Porter

Theme Based Development

Mahindra’s “ Work, live, learn & play Mundra SEZ’s “ One Levelling and Seven

Connections Brandix’s “ Vertically Integrated SEZ”

Leveraging Flexibilities in SEZ Development**

Change the type of SEZ. Increase and decrease the size of SEZ Denofity the SEZ Construct structure for which you have general Transfer SEZ to SPV created for the SEZ Create more than one processing within your SEZ Broadband sector Change type of sector* Combine two or more SEZ if contiguity established Services to other SEZ Have any number of co-developer Accept any person whether Indian or foreign or even unit as your co-developer Create SEZ on Land acquired by statutory corporations like MIDC Create SEZ on leasehold or freehold land Have DTA area around SEZ Use FSI of NPA for PA

. ** Such flexibilities have been permitted in select cases. This list is based on experience of various developers. It is based on minutes of Board of Approval.

Key Learnings

Alternate Business Structures

Henzberg’s Strategy

Optimum Land Use

Business Models

Client Mining

Right Client Mix

Cross- Subsidization

Redefine Profit

Centres

Development Strategies

Key strategies evolved from the experiences of successful SEZ Developers in India

Business Model For SEZ

SEZ is like hybrid industry with characteristic features of three sectors namely Infrastructure, Real Estate, Services. Devising a unique Business Model for your SEZ is a important ingredient in the success and profitability of SEZ. We try to explore the business models of existing successful SEZ in India which will give an insight into the key processes and decisions that a company will have to take to devise a good business model.

Steps to Devising a Great Business Model

Understand the Customer value proposition

• Identifying needs & demands

• Identifying problems that you seek to resolve

• Identifying the Motivations and Initiative

Identify Profit formula

• Revenue Model

• Cost Structures

• Margins

Determine Key Resources and Processes• People• Technology• Products, • Facilities• Utilities • Brand and Expertise • Processes to leverage resources.

Example

Thanking You

Ms. Prachi Manekar Director, Estopia SEZ Consultants Private Limited

Senior Consultant, Trans India Law Associates

Expert Panel Member, Legalpundits