The Union Ministry of Commerce and Industry notified a 50.70-hectare area in Ganeshnagar under Dhansiri sub-division in Dimapur district as a Special Economic Zone (SEZ) on July 9, 2009. The Agro & Food Processing SEZ at Ganeshnagar, located in Dimapur , Nagaland, was hailed as the first and only SEZ in NE India, specializing in agro-food products and covering an extensive area of 125 acres.
However, fast forward to 2023, and the dream seems to be on hold. The Parliament’s Standing Committee on Commerce, in its report titled ‘Development of Trade and Industries in the North Eastern Region,’ submitted in August 2023, has revealed a disconcerting reality: none of the five approved SEZs in the NER, authorized between 2007 and 2021, have become operational.
Expressing concern, the committee urged the government to formulate a new industrial development scheme for the NER, noting that the previous scheme, introduced in 2017, had expired in March 2022. Two IT SEZs in Imphal, Manipur, and Sikkim, as well as two SEZs in Nagaland (including the Ganeshnagar SEZ) approved between 2007 and 2009, remain dormant. The delays echo in the agro-products zone approved in Tripura in 2019.
While SEZs present an appealing prospect for investors with fiscal incentives and infrastructural support, the report emphasizes that operational delays stem from bureaucratic hurdles, changes in the global economic climate, and alterations in fiscal incentives. The committee stressed that private investment should spearhead the establishment of units in SEZs.
The committee stressed on the need for targeted policies focusing on the strengths and weaknesses of the Northeast region, leveraging the Act East policy as a gateway to East and Southeast Asia.
It also recommended exploring the proposed Act of Development of Enterprise and Service Hub (DESH) in place of the SEZ Act, specifically for industrially backward states in India, particularly in the NER.
The report sheds light on untapped opportunities, notably in the bamboo industry. It also advocated for a national policy on bamboo. The absence of tourism facilities in the region, and receiving less than 1% of the total FDI in the country, was flagged as a concern.
Nonetheless, the report observed that the surplus agricultural and horticultural produce in the region presents a golden opportunity to develop the food processing industry. The report recommended creating mega food parks and integrated cold chain facilities as essential components for boosting this sector.
The report also recommended the government to refrain from withdrawing direct tax benefits provided in these zones until new legislation replaces the existing SEZ Act of 2005. It urged the government to consider extending the sunset clause, especially for SEZs approved before the sunset date, to prevent any adverse impact on their development.