• With a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000. The Special Economic Zones Act was enacted in 2005 and the SEZ Rules came into effect in 2006. 

Salient features of the SEZ Scheme

• SEZ is a specifically delineated duty-free enclave and deemed to be foreign territory for the purposes of trade operations and duties and tariffs.
• SEZs’ economic laws are more liberal than a country’s typical economic laws. 
• No licence required for import;
• Manufacturing or service activities allowed;
• The Unit shall achieve Positive Net Foreign Exchange to be calculated cumulatively for a period of five years from the commencement of production;
• Domestic sales subject to full customs duty and import policy in force;
• No routine examination by customs authorities of export/import cargo;
• SEZ Developers /Co-Developers and Units enjoy tax benefits as prescribed in the SEZs Act, 2005.
• India’s SEZ policy offers various fiscal and regulatory incentives to the developers within the zone like exemption from customs duties, central excise duties.
• The idea was to create a level playing field to the domestic enterprises and manufacturers to be competitive globally.

The main objectives of the SEZ Act are:

• • Generation of additional economic activity

• Promotion of exports of goods and services. 

• To develop backward regions. 

• Contribute towards exchange rate stability. 

• Promotion of investment from domestic and foreign sources

• Creation of employment opportunities
• Development of infrastructure facilities
  

Reference:

1. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1697015