Special Economic Zone

M-i

Presented by:
Gagan Singh
What is an SEZ?

“….it is a specifically sketched duty-free

enclave and shall deemed to be a foreign
territory for the purposes of trade operations
and duties and tariffs”

The purpose - “... to provide an

internationally competitive and hassle-free
environment for exports”
What is special?
 duty-free! exemption from taxes, various subsidies and
tax sops
 hassle-free! exemption from stringent labour and
environment regulations
 foreign enclave!
 single window clearance! BOA_& APPROVAL COMMITTE
 land acquisition upto 1000 ha
 Only 25% of the area for industrial activity – the rest of
the area for entertainment and residential as well as
other commercial activities!
History of Special Economic Zones SEZ. :

 First known SEZ- Puerto Rico-1947

 Ireland & Taiwan followed-1960’s
 China made the SEZ’s global currency with its
largest SEZ- Shenzen 1980
 revolution came in 2000- incorporation of
SEZ in Exim policy.
5 years later- SEZ Act(2005) introduced
History

All 8 EPZs converted into SEZs :-

 Kandla ( Gujarat) : 1965 (625 Acres)

 Seepz( Maharashtra) : 1975 (110 Acres)
 Noida (U P) : 1986 (310 Acres)
 Madras ( T N) : 1986 (262 Acres)
 Cochin ( Kerala ) : 1986 (103 Acres)
 Falta ( W B) : 1986 (280 Acres)
 Visakhapatnam( AP) : 1994 (360 Acres)
 Surat ( Gujarat ) : 1998 (103 Acres)
Special Economic Zones Terms And Conditions. :

 Only units approved under SEZ scheme

would be permitted to be located in SEZ.
 Shall abide by local laws, rules, regulations .
 Fulfill all the requirements applicable to such
SEZ.
 Minimum area of 1000 hectares and at least
35 % of the area is to be developing industrial
area.
Advantages :

 15 year corporate tax holiday on export profit.

 Allowed to carry forward losses.
 No licence required for import made under SEZ units.
 Duty free import of goods for setting up of the SEZ
units
 Exemption from payment of Service Tax.
 Setting up Off-shore Banking Units (OBU) allowed in
SEZs.
 External Commercial Borrowings up to $ 500 million a
year allowed without any maturity restrictions.
Disadvantages :

 Revenue losses because of the various tax

exemptions and incentives.
 Acquire land at cheap rates and create a land
bank .
 This project may not match up to
expectations.
Administrative Set up for SEZ :

The functioning of SEZs is governed by a three-

tier administrative set-up

 Board of Approval Unit

 Approval Committee
 Development Commissioner
Special Economic Zones SEZ Act 2005. :

 The policy relating to SEZs was earlier contained

in Foreign Trade Policy.
 In 2005, a comprehensive Special Economic
Zones Act 2005 was passed by Parliament in May
2005..
 Investment of the order of Rs 100,000 crore over
the next three years with an employment
potential of over 500,000 was also expected from
the new SEZs
 Benefits :

Direct Indirect
 Foreign exchange

• indirect employment
Employment generation
 Employment for Females • Investment
 Skill Up gradation • Skill spillovers
 FDI • Technology spillovers
 Tech. transfers and creation

• Ind. growth
• Productive Diversification
• Human development
• Revenue generation for govt.

Quantifiable : static :Foreign Ex earnings, Net Non quantifiable : other direct and indirect
value addition, I, employ, Dynamic : Income effects
generation
Special Economic Zones SEZ Controversy. :

 Land, especially agricultural land is a very

sensitive issue in India. There are millions of
people whose livelihood depends on
agricultural land.
 Jamnagar Incidence
 Nandigram Violence
Thank you…