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Article on SEZ

Article on SEZ

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Published by: Sasanka Pritom Bhuyan on Jul 16, 2012
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Assignment on Business Environment ArticleOn the topic
SEZ in India: Inception, Evolution, Sector-wise contributionand reforms/amendment of rules for promotion of IT centricSEZs
Submitted as partial fulfillment of Course Assessment For the Internal Course 02074110Called Introduction to Business Environment
SIOM 2012-2014Dated: 16-06-2012
Submitted to
Mrs. Paluri Achuta Ratna
 Assistant Professor "Finance"
Submitted by 
Neha Kale 032Sumedha Gole 104Sasanka Pritom Bhuyan 053Gaurav Upadhayay 017Pranay Gossain 043Ali Maruf Hassan 005
 
 
SIOM 2012-2014Article on Business Environment: Assignment submitted on 16-06-2012 by team
Business Strategists
 
1
SEZ in India: Inception, Evolution, Sector-wise contribution andreforms/amendment of rules for promotion of IT centric SEZs
 
What is an SEZ?
SEZs are designated areas in countries that possess special economic regulations, different fromthose existing for other areas in the same country. Moreover, these regulations tend to containmeasures that are conducive to foreign direct investment. Conducting business in an SEZ usuallymeans that a company will receive tax incentives with the opportunity to pay lower tariffs. Inshort, SEZ is a geographical region where economic laws are more liberal than the usualeconomic laws in the country. The basic motto behind this is to increase foreign investment,augment development of infrastructure, create job opportunities and increase the income level of the people. So, SEZs are basically the blocks of land that the government allocates to theinvestors to set-up industries by offering enticing breaks like tax benefits and land at cheaperrates among various other incentives.
SEZ in India
Govt. of India guidelines define SEZ as Special Economic Zones (SEZs) which are specificallydelineated duty-free enclaves and which are treated as a foreign territory for the purpose of industrial, service and trade operations, with exemption from customs duties and a more liberalregime in respect of other levies, foreign investment and other transactions.The Special Economic Zone (SEZ) policy in India first came into inception on April 1, 2000.The prime objective was to enhance foreign investment and provide an internationallycompetitive and hassle free environment for exports. The idea was to promote exports from thecountry and realizing the need that level playing field must be made available to the domesticenterprises and manufacturers to be competitive globally.Legislation has been passed permitting SEZs to offer tax breaks to foreign investors. Over half adecade has passed since its inception, but the SEZ Bill has certain drawbacks due to the omissionof key provisions that would have relaxed rigid labor rules. This has lessened India's chance of 
 
SIOM 2012-2014Article on Business Environment: Assignment submitted on 16-06-2012 by team
Business Strategists
 
2
emulating the success of the Chinese SEZ model, through foreign direct investment (FDI) inexport-oriented manufacturing.In India, the first zone was set up in Kandla as early as 1965. It was followed by the Santacruzexport processing zone which came into operation in 1973. The government set up five morezones during the late 1980s. These were at Noida (Uttar Pradesh), Falta (West Bengal) Cochin(Kerala), Chennai (Tamil Nadu) and Visakhapatnam (Andhra Pradesh). Surat EPZ becameoperational in 1998. The EXIM Policy, 2000 launched a new scheme of Special Economic Zones(SEZs). Under this scheme, EPZs at Kandla, Santa Cruz, Cochin and Surat were converted intoSEZs. In 2003, other existing EPZs namely, Noida, Falta, Chennai, Vizag were also convertedinto SEZs. In addition, approval has been given for the setting up of 26 SEZs in various parts of the country. Apparently, India is now promoting the EPZ program much more vigorously than inthe initial phases of their evolution. Huge amounts of public resources are being invested in thezones.SEZs in India were announced by the government in March 2000. To provide a stable economicenvironment for the promotion of Export-import of goods in a quick, efficient andHassle-free manner, Government of India enacted the SEZ Act, which received the assent of the
President of India on June 23, 2005. The SEZ Act and the SEZ Rules, 2006 (“SEZ Rules”) were
notified on February 10, 2006. Since then 15 SEZs including 8 EPZs (Export Processing Zones)have been set up at Kandla, Surat, Mumbai, Kochi, Noida, Chennai (3 SEZs), Visakhapatnam,Indore, Jaipur and Jodhpur, Falta, Manikanchan, and Salt Lake.
Objectives of SEZ
The objective behind an SEZ is to enhance foreign investment, increase exports, create jobs andpromote regional development. To put i
n the government‟s own words, the main objectives of 
the SEZs are:(a) Generation of additional economic activity;(b) Promotion of exports of goods and services;

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