- 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.
- 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.
- 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.