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SPECIAL ECONOMIC ZONE

A Special Economic Zone (SEZ) is a geographical region that has economic and

other laws that are more free-market-oriented than a country's typical or national

laws. "Nationwide" laws may be suspended inside a special economic zone.

Usually the goal of a structure is to increase foreign direct investment by foreign

investors, typically an international business or a multinational corporation (MNC).

The SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th February,

2006, providing for drastic simplification of procedures and for single window

clearance on matters relating to central as well as state governments.

Approval mechanism

The developer submits the proposal for establishment of SEZ to the concerned

State Government. The State Government has to forward the proposal with its

recommendation within 45 days from the date of receipt of such proposal to the

Board of Approval. The applicant also has the option to submit the proposal

directly to the Board of Approval. The Board of Approval has been constituted by

the Central Government in exercise of the powers conferred under the SEZ Act.

All the decisions are taken in the Board of approval by consensus.

The objectives of SEZ ACT can be clearly explained as the following:

(a) Generation of additional economic activity

(b) Promotion of exports of goods and services;

(c) Promotion of investment from domestic and foreign sources;

(d) Creation of employment opportunities;

(e) Development of infrastructure facilities.

The major incentives and facilities available to SEZ developers include:-

  Exemption from customs/excise duties for development of SEZs for

authorized operations approved.

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  Income Tax exemption on income derived from the business of development of

the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income

Tax Act.

  Exemption from minimum alternate tax under Section 115 JB of the Income

Tax Act.  Exemption from dividend distribution tax under Section 115O of the Income

Tax Act.

  Exemption from Central Sales Tax (CST).

  Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ

Act).

List of Special Economic Zones in India 

Currently there are 143 SEZs (as of February 2012) operating throughout India in

the following states; Tamil Nadu - 20: Karnataka - 18; Kerala - 6; Chandigarh -1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajasthan- 1; Uttar Pradesh -

4; West Bengal - 2: Orissa - 1. And so on.

SWOT ANALYSIS FOR INDIAN SEZs

Strengths:

1.  Skilled manpower

2.  Financial and other institutional networks like stock exchanges, insurance

companies, educational institutes.

3.  Worldwide acceptance of capabilities in fields like pharmaceutical

manufacturing and research, manufacturing auto parts, entertainment,etc.

Weakness:

1.  Infrastructure bottlenecks

2.  Political changes

3.  Convertibility of currency on capital A/c

4.  Inappropriate locations.

Opportunities:

1.  An alternative manufacturing base,particularly comparedto Chinese SEZs.2.  New small ports and airports are also being developed keeping SEZ concept

in mind.

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Threats:

1.  Loosing edge of low labour costs – many countries are competing.

2.  Formation of economic blocks, effect on government revenues.

3.  The pattern of buying and selling may not continue. With relocations of

industries in other third world countries, new competitors will emerge.

To conclude 

The SEZ’s could drastically improve the economic activity in the country, make the

country’s export competitive and globally noticeable, be net foreign exchange

earner and provide immense employment opportunity. But this should not be done

at the cost of bringing down the agricultural activities, Land grabbing and realestate mafia should be properly regulated so that the common man is not the net

sufferer to get the net foreign exchange earner up and running.