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DAILY NEWS ANALYSIS

  • 24 July, 2021

  • 5 Min Read

Special Economic Zones (SEZ)

Special Economic Zones (SEZ)

  1. The 1st Export Processing Zone (EPZ) was set up in 1959 at Shannon, in Ireland. India realised how effective EPZ is in promoting Exports.
  2. India was inspired by China for setting up of SEZ. Asia’s First EPZ was set up in Kandla in 1965.
  3. India 1st introduced the concept of SEZ in the EXIM policy 2000. SEZ Act, 2005 is an umbrella legal framework for SEZ.
  4. SEZ refers to a specially demarcated territory usually known as ‘deemed foreign territory’ with
    1. Tax holidays, exemption from duties for export and import,
    2. World level economic and social infrastructure for exports along with
    3. Facilities like cheap labour, strategic location and market access.
    4. Center gives SEZ, Special tax incentives for foreign investments in the SEZs, greater independence on international trade activities.
  5. The major objectives of setting up a SEZ are
    1. Generate additional economic activity; promotion of exports of goods and services; investment from domestic and foreign sources; creation of employment opportunities and development of infrastructure.
    2. To attract FDI, earn foreign exchange and contribute to exchange rate stability, boost the export sector especially non traditional exports, introduce new technology, develop backward regions.
  6. Ex. are Kandla SEZ, Noida SEZ, Falta SEZ, Vishakhapatnam SEZ, Cochin SEZ, Madras SEZ etc.
  7. Special Investment Regions are similar concept like SEZ but is a unique term applied in Gujarat - IFSC.
  8. SEZs have touched new heights in terms of performance in Exports, Investment and Employment viz. Exports of Rs. 22,840 Crore in 2005-06 has increased to Rs. 7,59,524 Crore in 2020-21; Investment of Rs. 4,035.51 Crore in 2005-06 has increased to Rs. 6,17,499 Crore (cumulative basis) by 2020-21 andEmployment provided to 1,34,704 persons in 2005-06 has increased to 23,58,136 persons (cumulative basis) in 2020-21. The fiscal concessions and duty benefits allowed to SEZs are inbuilt into the SEZ Act, 2005 and are consistent with the guidelines for setting up SEZs as the larger economic initiatives of the Government in general. However, there is no provision to grant additional fiscal incentives at present.

Source: PIB


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