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Current Affairs


Date : Dec 11, 2021

Description :

What are SEZ:


  • A Special Economic Zone (SEZ) is a part of a country that is usually duty-free (Fiscal Concession) and has its own set of business and commercial rules, primarily to attract investment and job creation.
  • SEZs are also formed to improve the administration of these areas, making doing business easier.


India's Special Economic Zones (SEZs):


  • In 1965, Kandla, Gujarat, became Asia's first EPZ (Export Processing Zone).
  • While these EPZs had a framework similar to SEZs, the government started establishing SEZs in 2000 under the Foreign Trade Policy to address the infrastructural and bureaucratic obstacles that were perceived as limiting EPZ performance.
  • In 2005, the Special Economic Zones Act was passed.
  • In 2006, the Act and the SEZ Rules went into effect.
  • SEZs, on the other hand, were operational in India from 2000 to 2006. (under the Foreign Trade Policy).
  • India's special economic zones were modelled after China's successful model.
  • Currently, 379 SEZs have been notified, with 265 of them active. SEZs are concentrated in five states: Tamil Nadu, Telangana, Karnataka, Andhra Pradesh, and Maharashtra, accounting for 64 percent of all SEZs.
  • The apex body is the Board of Approval, which is led by the Secretary of Commerce (Ministry of Commerce and Industry).
  • The Ministry of Commerce and Industry formed a committee led by Baba Kalyani to evaluate India's present SEZ policy, and it published its suggestions in November 2018.
  • It was established with the general goal of evaluating SEZ policies in order to make it WTO (World Trade Organization) compatible, as well as bringing in global best practises to maximise capacity utilisation and potential output of SEZs.




The SEZ Act's goals are as follows:


  • To generate more economic activity.
  • To increase the amount of goods and services exported.
  • To create work opportunities.
  • To increase both domestic and international investment.
  • Infrastructure facilities to be developed


The following are some of the major incentives and facilities available to SEZs:


  • Goods for the creation, operation, and maintenance of SEZ units can be imported duty-free or purchased domestically.
  • Exemption from taxes such as income tax, minimum alternate tax, and others.
  • External commercial borrowing by SEZ units up to US $ 500 million per year through recognised banking channels, with no maturity restrictions.
  • For approvals at the federal and state levels, there is a single point of contact.


So far, the results have been:


  • Exports: From Rs. 22,840 crore in 2005-06 to Rs. 7,59,524 crore in 2006-07. (2020-21).
  • Investment: From Rs. 4,035.51 crore in 2005-06 to Rs. 6,17,499 crore in 2007-08. (2020-21).
  • Employment: From 1,34,704 people in 2005-06, there are now 23,58,136 people employed (2020-21).




  • Unused Land in Special Economic Zones (SEZs):
  • Due to a lack of demand for SEZ space and pandemic-related interruptions.
  • Multiple Models: Multiple economic zone models exist, including SEZs, coastal economic zones, the Delhi-Mumbai Industrial Corridor, the National Investment and Manufacturing Zone, food parks, and textile parks, all of which face issues in integrating the various models.
  • Competition from ASEAN countries: Over the last few years, many ASEAN countries have modified their policies in order to lure global players to invest in their SEZs, as well as working on a series of developmental skilling projects.
  • As a result, Indian SEZs have lost some of their worldwide competitive advantages, necessitating new rules.


Next Steps:


  • The Baba Kalyani Committee on SEZs has made several recommendations, including promoting MSME investments in SEZs by partnering with MSME initiatives and allowing alternate industries to invest in sector-specific SEZs.
  • It also requested further enablers and procedural relaxations, as well as infrastructure status for SEZs to increase their access to capital and allow long-term borrowings.


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