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Exports from Special Economic Zones had registered an

extraordinary growth rate of 92% in 2007-08 while it was 52% in the previous
year of 2006-07. The major share of SEZs exports are Gems & Jewellery,
Trade and Service, Computer/Electronic Software and Hardware sectors. The
exports has grown from Rs. 34,615 Crores (2006-07) to Rs.66,638 Crores in
India was one of the first in Asia to recognize the effectiveness of the Export
Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set
up in Kandla in 1965. With a view to overcome the shortcomings
experienced on account of the multiplicity of controls and clearances;
absence of world-class infrastructure, and an unstable fiscal regime and with
a view to attract larger foreign investments in India, the Special Economic
Zones (SEZs) Policy was announced in April 2000.
This policy intended to make SEZs an engine for economic growth supported
by quality infrastructure complemented by an attractive fiscal package, both
at the Centre and the State level, with the minimum possible regulations.
SEZs in India functioned from 1.11.2000 to 09.02.2006 under the provisions
of the Foreign Trade Policy and fiscal incentives were made effective through
the provisions of relevant statutes
Exports from the functioning SEZs during the previous years are as

Year Value (Rs. Growth Rate

Crore) ( over
year )
2003-2004 13,854 39%

2004-2005 18,314 32%

2005-2006 22 840 25%

2006-07 34,615 52%

2007-08 66,638 92%

Gem and Jewellery, Trade and Service, Computer/Electronic Software and
Hardware are the major share of exports in SEZs. Its share was 82.5% out of
its total exports. The others are textiles. Chemicals, engineering, etc. and
these sectors share was 17.5%. Some of the sectors like ceramics, tobacco
had minimal share in the total exports.
Sectorwise breakup of Physical Exports (2007-08)
from Special Economic Zones in india

Govt. State SEZs Total

SEZs Govt/Pvt notified
SEZs under
prior to
SEZ Act.
SEZ Act,

Biotech 159.45 159.45

Computer/ 2663.38 1046.24 275.64 3985.26
Elecronic software
Electronics 1408.53 6313.34 3399.45 11121.3
hardware 2
Electronics 518.71 518.71
Engineering 886.81 421.87 343 1651.68
Gems and 15979.9 7025.93 0.15 23006.0
Jewellery 8 6
Chemicals & 1069.49 20.33 333.23 1423.05
Handicrafts 30.33 30.33
Plastic and rubber 354.97 302.69 657.66
Leather, footwear 190.79 46.23 237.02
and sports goods
Ceramics 24 24
Food and Agro 645.58 645.58
Non-conventional 126.01 126.01
Trading and 14073.2 6793.75 20866.9
service 2 7
Textiles and 1135.69 101.16 79.76 1316.61
Tobacco related 9.5 8.98 18.48
Misc 314.66 103.23 431.59 849.48
Total 39275. 22167.8 5194.51 66637.
31 5 68

Total employment in SEZs: 3,36,235 Lakh persons

Total incremental employment generated in SEZs since Feb., 2006:
2,01,531 persons

Total investment in Special Economic Zones as of 31.3. 2008: Rs.

77210 crore

Incentives and facilities offered to the SEZs

The incentives and facilities offered to the units in SEZs for attracting
investments into the SEZs, including foreign investment include:-
• Duty free import/domestic procurement of goods for development,
operation and maintenance of SEZ units
• 100% Income Tax exemption on export income for SEZ units under
Section 10AA of the Income Tax Act for first 5 years, 50% for next 5
years thereafter and 50% of the ploughed back export profit for next 5
• Exemption from minimum alternate tax under section 115JB of the
Income Tax Act.
• External commercial borrowing by SEZ units upto US $ 500 million in a
year without any maturity restriction through recognized banking
• Exemption from Central Sales Tax.
• Exemption from Service Tax.
• Single window clearance for Central and State level approvals.
• Exemption from State sales tax and other levies as extended by the
respective State Governments.
The major incentives and facilities available to SEZ developers include:-
• Exemption from customs/excise duties for development of SEZs for
authorized operations approved by the BOA.
• 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).