About SEZs

• Special Economic Zone (SEZ) is a geographic area in which the business and trade laws are different from the rest of the country. 
• The objective of developing SEZs include increasing the balance of trade and attracting newer inward-investments into the country, and creating newer jobs. 
• Financial incentives are granted to those setting up SEZs and cover a wider gamut of benefits for investors across taxation, customs, labour regulations, etc. 
• The Special Economic Zones Act, 2005, provides the umbrella legal framework, covering all important legal and regulatory aspects of SEZ development in the country. 
• Presently, 378 SEZs are notified, out of which 265 are operational.  

Salient Features

• The salient features of the SEZ scheme are:-

• A designated duty free enclave to be treated as a territory outside the customs territory of India for the purpose of authorised operations in the SEZ;
• 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;
• SEZ units will have freedom for subcontracting;
• 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.

Objectives

• The notification of SEZs in the country is guided by the following:-
  • generation of additional economic activity;
  • promotion of exports of goods and services;
  • promotion of investment from domestic and foreign sources;
  • creation of employment opportunities;
  • development of infrastructure facilities.

Why in News?

• Union Minister for Finance and Corporate Affairs Nirmala Sitharaman announced that the Special Economic Zones Act will be replaced with a new legislation that will enable the states to become partners in Development of Enterprise and Service Hubs.
• She added that this would cover all large existing and new industrial enclaves to optimally utilize available infrastructure and enhance competitiveness of exports.

Reference:

1. https://pib.gov.in/PressReleasePage.aspx?PRID=1794135