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 2007-08. 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 under: Year Value (Rs. Crore) Growth Rate ( over previous year ) 39% 32% 25% 52% 92%

2003-2004 2004-2005 2005-2006 2006-07 2007-08

13,854 18,314 22 840 34,615 66,638


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. SEZs State SEZs Govt/Pvt notified SEZs under prior to SEZ Act. SEZ Act, 2005 159.45 275.64 3399.45 Total

Biotech Computer/ Elecronic software Electronics hardware Electronics Engineering Gems and Jewellery Chemicals & Pharmaceuticals Handicrafts Plastic and rubber Leather, footwear and sports goods Ceramics Food and Agro Industry Non-conventional Energy Trading and service Textiles and garmerns Tobacco related products

2663.38 1408.53 518.71 886.81 15979.9 8 1069.49

1046.24 6313.34

159.45 3985.26 11121.3 2 518.71 1651.68 23006.0 6 1423.05 30.33 657.66 237.02 24 645.58

421.87 7025.93 20.33 30.33 302.69

343 0.15 333.23

354.97 190.79 24 645.58


126.01 14073.2 2 1135.69 9.5 6793.75 101.16 8.98 79.76

126.01 20866.9 7 1316.61 18.48

Misc Total

314.66 39275. 31

103.23 22167.8 5

431.59 5194.51

849.48 66637. 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 years. 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 channels. 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. 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.

• • • •

The major incentives and facilities available to SEZ developers include:• •

• • •

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).

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