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project report on SEZ

project report on SEZ

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Published by: anandsabbani on Sep 16, 2009
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06/18/2013

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Executive Summary 
Special Economic Zones (SEZs) were established in many countries as testinggrounds for implementation of liberal market economy principles. SEZs are viewed as instruments enhancing the acceptability and credibility of transformation policies, attracting domestic and foreign investment and also forthe opening upon the economy. SEZs in India seek to promote the value additioncomponent in exports, generate employment as well as mobilize foreignexchange. Globally, many countries initiated Free Trade Agreements (FTAs) which eventually led to a spurt in investments in infrastructure developments forFree Trade Zones (FTZs) and SEZs. A close examination of the evolution of SEZsin countries with similar economies as India eg; China, Iran, UAE and Jordan, will help us to understand their success stories and thereby implement thosefactors, in order to curb the SEZ bottlenecks faced by India today. The ShenzhenSEZ in China is a perfect example of a SEZ success story. In India, thegovernment has been proactive in the development of SEZs. They haveformulated policies, reviewed them occasionally and also ensured that amplefacilities are provided to the SEZ developers as well as the companies setting upunits in SEZs. These favourable conditions resulted in the biggest ever corporaterush for the development of SEZs in India. Over 234 companies received formalapproval, 162 companies received in-principle approval and 100 companiesreceived notification to set up SEZs. The Indian government is expecting aninvestment to the tune of Rs.53,561 crore (USD 13274 million) and an additional job creation for 15,75,452 individuals in SEZs by December 2009. Despite all theefforts, SEZ development has become the most controversial issue for Indiatoday. It is very important to understand all aspects of SEZs such as basicconcepts, its various models and the life cycle of its business before initiating any policy or investments for these projects. Despite the fact that the existing SEZ Actand FDI Policies for SEZs are very lucrative; the rationale behind the rapideconomic and industrial growth of the Indian SEZ policy is being questioned. Thediagram below is a snapshot of the different typesof SEZs. With the unending listof trouble-shooting problems in India, it becomes very important to understand
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the business of SEZs in India. The report emphasizes on certain issues which brings clarity to the SEZissue. The report helps you answer questions like:Special Economic Zone (SEZ) is a duty free area which is meant for the purposesof trade operations, duties and tariffs for investors. SEZs are specifically demarcated areas within the country where raw materials and capital goods can be imported duty free from abroad or the domestic market and a special packageof tax holiday and incentives are given with a view to boost exports from thecountry. Manufacturing and Services operations are allowed in an SEZ.TheForeign Trade Policy of Government of India provides for setting up of SpecialEconomic Zones (SEZ) in the country with a view to provide an hassle freeenvironment for exports. Units may be set up in SEZ for manufacture of goodsand rendering of services. The units in SEZs have to be a net foreign exchangeearner but they are not subjected to any pre-determined value addition orminimum export performance requirements. SEZs could be set up in public,private, joint sector or by State governments. 100% FDI is allowed in setting up of SEZs. The government of India has also converted existing Export ProcessingZones into SEZs. The minimum size of the SEZs shall be 1000 hectares except inproduct specific and port/airport based SEZs. Approval for setting up of new SEZs is given by Department of Commerce, Government of India. For setting upunits in SEZs, all approvals are given by a Committee headed by DevelopmentCommissioner of the concerned SEZ. For setting up a unit in SEZ, application inprescribed format should be submitted to the development Commissioner. A 
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large number of new SEZs have come up in private sector in India including SEZsset up by foreign companies.
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