Trade ChakraIndia Trade ChakraIndia Business Trade Chakra
Trade Chakra

The article gives an insight into the reason for creating of SEZís in India,the advantage of SEZís, prominent developers in SEZís and the growth trend for business in SEZís

Special Economic Zone (SEZ)

India was among the first countries to value the merit of Export Processing Zone (EPZ).The first special economic zone in India was set up in Kandla in 1965.The government was keen to remove the hurdles to export in India which existed in the form of multitude of controls and clearances, lack of international standard infrastructure and inefficient fiscal regime. Keeping in mind foreign investors, the country announced the formation of Special Economic Zones (SEZs) in April 2000.

The Special Economic Zone act 2005 was passed by the government to instill confidence among investors about the governmentís commitment in ensuring stability and progress of SEZ's. The highlights of the SEZ Act are:
  • Additional economic activity.
  • Encourage exports of goods and services.
  • Encourage investment from domestic and foreign sources.
  • Generate employment opportunities
  • Improve infrastructure facilities.
This in turn would lead to large scale investments from both foreign and domestic companies in SEZ's in India. The SEZ Act 2005 signifies the importance of state governments in export promotion and in creating the necessary infrastructure. Through a 19 member inter ministerial SEZ board a single window SEZ approval mechanism has been formed to make decisions with regards to applications.

The SEZ rules suggest different minimum land requirement for different class of SEZ's. Each SEZ is divided into a processing area where only SEZ's units can be set up and non processing area where supporting infrastructure can be set up. The SEZ rules provide:
  • Simple procedures for development, operation and maintenance of SEZ's.
  • Single window clearance for setting a SEZ.
  • Single window clearance for setting up a unit in SEZ and for clearance from Central and State governments.
  • Easier compliance procedures and documentation.
Incentives And Facilities Offered To The SEZ's

They are:
  • Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.
  • Income Tax exemption up to 100 per cent on any export from SEZ under Section 10AA of the Income Tax Act for first five years, 50 per cent for next five years and 50 per cent of ploughed back export profit for next five years.
  • SEZ units were given permission to borrow externally up to US $ 500 million in a year without any maturity restriction through authorized banks.
  • Exempted from Central sales and service tax.
  • Single window clearance.
Prominent Developers In SEZ's

Some of the prominent developers in SEZ's are
  • Nokia SEZ in Tamil Nadu 
  • Quark City SEZ in Chandigarh
  • Flextronics SEZ in Tamil Nadu
  • Mahindra World City in Tamil Nadu
  • Motorola, DELL and Foxconn 
  • Apache SEZ (Adidas Group) in Andhra Pradesh
  • Divvy's Laboratories, Andhra Pradesh
  • Rajiv Gandhi Technology Park, Chandigarh
  • ETL Infrastructure IT SEZ, Chennai
  • Hyderabad Gems Limited, Hyderabad
Benefits From SEZís

Year Value (Rs Crore) Growth Rate Over Previous Year
2003-2004 13,854 39%
2004-2005 18,314 32%
2005-2006 22,840 25%
2006-2007 34,615 52%
2007-2008 66,638 92%

Recent Additions