Special Economic Zone (SEZ) is a geographical region governed by more liberal economic laws than the country’s economic laws. The main aim of SEZ is to increase foreign investment which will result in greater economic activity and employment. It helps in promotion of exports of goods and services, and infrastructure development.
Special Economic Zones (SEZ)
It covers a broad range of zone types including Free trade zones, Export processing zones, Free zones, Industrial estates, Free ports and urban enterprise zones. The SEZ policy has provision for setting up of SEZs in the public, private or joint sectors.
The special economic zone act was passed by parliament in May, 2005 which came into effect on 10th February, 2006. A board of approval has been constituted under this act. This 19 member committee takes all decision regarding SEZ by consensus.
Following facilities are offered in the SEZ act:
- Duty free import of goods for development, operation and maintenance of SEZ unit.
- 100% income tax exemption on export income for first five years.
- Exemption from minimum alternate tax.
- External commercial borrowing by SEZ units upto $ 500 million per year without any maturity restriction through banking channels.
- Exemption from Central sales tax and Service tax.
- Single window clearance on the matters related to central and state governments.
- Exemption from State sales tax and other levies proposed by the state governments
The SEZ scheme has been a great success in India resulting huge investment. Some SEZ zones in India are: Nokia SEZ in Tamil Nadu, Quark City SEZ in Chandigarh, Flextronics SEZ in Tamil Nadu, Mahindra world city in Tamil Nadu, ETL infrastructure SEZ in Chennai. Currently, India has 1022 units in operation in 9 functional SEZs.
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