Daily News Analysis


8th September, 2021 Economy

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  • Government measures to support producers in Special Economic Zones (SEZs).


  • The government is considering several proposals to help the producers operating from SEZs.
  • One such proposal is to allow producers in SEZs to sell their output to the domestic market without treating them as imports.This will help them widen their market access without having to bear additional duties.
  • The government is also considering the request to include export-oriented units (EOUs) and SEZs under the recently notified tax refund scheme for exports.
  • EOU units had not been given benefits under the Remission of Taxes and Duties on Export Products (RoDTEP) scheme.

About Special Economic Zone

  • A special economic zone is a region in the country that is subject to unique economic rules and regulations that differ from other regions of the same country.
  • Traditionally the biggest deterrents to foreign investment in India have been high tariffs and taxes, red tape and strict labour laws. The SEZ regulations were made conducive to foreign direct investment (FDI).
  • These areas have developed infrastructure, liberal economic policy, and concession tax rates for the firms.
  • SEZ Policy was introduced to India in 2000. Prior to SEZ introduction, India relied on export processing zones (EPZ) which failed to make an impact on foreign investors.
  • To instill confidence in investors and highlight the Government's commitment to a stable SEZ policy regime. In May 2005, parliament passed The Special Economic Zones Act, 2005.
  • The key objectives of the SEZ Act 2005 include:
    • Creation             of           additional            economic activities.
    • Promoting exports of goods and services.
    • Promoting investment from domestic and foreign sources.
    • Creation of employment opportunities.
    • Development of infrastructure facilities.

SEZ can be set up by:

  • Public/State government or its agencies
  • Private/Joint sector
  • Foreign agency

Types of SEZ

  • According the SEZ Act there are four types of SEZs in India, classified according to their size:
  • Multi-sector (1,000+ hectares).
  • Sector-specific (100+ hectares).
  • Free Trade & Warehousing Zone (FTWZ) (40+ hectares).
  • Tech, handicraft, non-conventional energy, gems & jewellery (10+ hectares)
  • Presently, 351 SEZs are notified, out of which 232 SEZs are operational.