by SEZ stands for Special Economic Zone. It is a geographical region in India that is designed to promote foreign investment and boost exports. SEZs are established with the objective of creating an environment that is conducive to trade and investment by providing a range of incentives and facilities to businesses operating within their boundaries.
SEZs were first introduced in India in 2005 as a part of the country’s economic liberalization and globalisation efforts. The government of India has set up several SEZs across the country with the aim of promoting exports and increasing foreign investment.
The history of Special Economic Zones (SEZs) in India dates back to the early 1960s, when the government of India first introduced the Export Processing Zones (EPZ) policy. The EPZs were created with the objective of promoting exports by providing various incentives and facilities to businesses.
The first EPZ in India was set up in Kandla, Gujarat, in 1965. Over the years, several EPZs were established in different parts of the country. However, due to various issues such as bureaucratic red tape and lack of infrastructure, the EPZs failed to achieve their full potential.
In 2000, the government of India introduced the Special Economic Zone (SEZ) policy, which aimed to address the shortcomings of the EPZs and provide a more business-friendly environment for companies to operate in. Under the SEZ policy, the government offered several incentives such as tax exemptions, duty-free imports, and simplified procedures for setting up and running a business.
The SEZ policy was further liberalized in 2005, with the passing of the Special Economic Zones Act, which provided a legal framework for the establishment and operation of SEZs in the country. Since then, several SEZs have been set up across the country, and they have played a significant role in boosting India’s exports and attracting foreign investment.
In recent years, however, there have been some challenges faced by SEZs in India, such as land acquisition issues, environmental concerns, and policy changes. The government of India is working towards addressing these challenges and ensuring that SEZs continue to play a crucial role in promoting India’s international trade and economic growth.
The Key Features of SEZs include:
- Tax Incentives: SEZs are exempted from various taxes such as income tax, corporate tax, and service tax for a certain period, which makes it attractive for businesses to invest in SEZs.
- Duty-free imports and exports: SEZs are allowed to import and export goods duty-free. This benefit reduces the cost of production for businesses operating in SEZs and helps them to become more competitive in the global market.
- Infrastructure: SEZs provide world-class infrastructure facilities such as roads, power, water, and communication networks that are essential for businesses to operate effectively.
- Simplified procedures: SEZs offer simplified procedures for obtaining licenses, permits, and clearances, which reduces the time and cost involved in setting up and running a business.
- Employment opportunities: SEZs generate employment opportunities by attracting investments and creating a demand for skilled and unskilled workers.
- Foreign investment: SEZs are aimed at attracting foreign investment by providing a business-friendly environment.
Objectives
- To promote exports: The primary objective of SEZs is to promote exports by providing a conducive environment for businesses to operate and by offering various incentives such as tax exemptions, duty-free imports, and simplified procedures.
- To attract foreign investment: SEZs are designed to attract foreign investment by offering a business-friendly environment and providing world-class infrastructure facilities.
- To create employment opportunities: SEZs are aimed at generating employment opportunities by attracting investments and creating a demand for skilled and unskilled workers.
- To promote economic growth: SEZs are expected to contribute to India’s economic growth by increasing exports, attracting foreign investment, and generating employment opportunities.
- To encourage technology transfer: SEZs are expected to encourage technology transfer by attracting foreign companies that can bring in advanced technologies and best practices.
- To promote balanced regional development: SEZs are expected to promote balanced regional development by creating economic opportunities in underdeveloped regions and by encouraging the growth of ancillary industries.
