Special Economic Zone (SEZ)

Government of India first introduced the concept of SEZ in the export import policy 2000 with a view to provide an internationally competitive and hassle-free environment for exports. SEZ refers to a specially demarcated territory usually known as ‘deemed foreign territory’ with tax holidays, exemption from duties for export and import, world level economic and social infrastructure for production and augmentation of export activities within the territory along with facilities like abundant and relatively cheap labour, strategic location and market access, etc.

• The first Export Processing Zone (EPZ) was set up in 1959 at Shannon, in Ireland. India is one of the first countries in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting export.
• India was inspired by China for setting up of SEZ. Asia’s First EPZ was set up in Kandla in 1965.
• The Special Economic Zone Act 2005 provides the umbrella legal framework, covering all important legal and regulatory aspects for setting up of SEZ’s as well units operating in SEZ.

Major Objectives of SEZ

• The major objectives of setting up a SEZ are to attract Foreign Direct Investment (FDI), earn foreign exchange and contribute to exchange rate stability, boost the export sector especially non-traditional exports, to create employment opportunities, introduce new technology, develop backward regions, etc. by stimulating sectors as electronics, information technology, R & D, tourism, infrastructure and human resource development that are regarded as strategically important to the economy.

Present Status of SEZs in India

• In addition to Seven Central Government Special Economic Zones (SEZs) and 11 State/Private Sector SEZs set-up prior to the enactment of the SEZs Act, 2005, approvals have been accorded to 405 proposals for setting up of SEZs in the country. Presently, out of 331 notified SEZs a total of 206 SEZs are operational.
• As on 30.09.2016, an investment of Rs 4,06,690 crore has been made in different SEZs and an employment for about 16.88 lakh persons has been generated. The various steps taken to strengthen SEZs in the country are as under:
  • Minimum Land Area requirement for setting up of new SEZs has been reduced to 50% for Multi-product and Sector-specific SEZs.
  • Sectoral broad-banding has been introduced to encompass similar / related areas under the same Sector.
  • A new sector ‘agro-based food processing’ sector has been introduced to encourage agro-based industries in SEZs.
  • Dual use of facilities like Social & Commercial infrastructure by SEZs and non-SEZs entities has been allowed in order to make SEZ operations more viable.