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Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a
country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types,
including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE),
Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign
direct investment by foreign investors, typically an international business or a multinational corporation
(MNC).
as SEZ) is a geographical region that has economic laws that are more liberal than a country's typical
economic laws. An SEZ is a trade capacity development tool, with the goal to promote rapid economic
growth by using tax and business incentives to attract foreign investment and technology. Today, there
are approximately 3,000 SEZs operating in 120 countries, which account for over US$ 600 billion in
exports and about 50 million jobs. By offering privileged terms, SEZs attract investment and foreign
exchange, spur employment and boost the development of improved technologies and infrastructure.
There are 13 functional SEZs and about 61 SEZs, which have been approved and are under the process of
establishment in India.
Fiscal incentives such as stamp duty exemption have not been uniformly implemented in all states which
lead us to the contentionv that even if provided, these are just ephemeral incentives. With respect to
land, there is no earmarking of sites for SEZs by the Govt or provision of initial infrastructurevi. The long
gestation period (single window clearance is almost a farce) till notification further makes the land
unusable. Moreover, there is no clear exit mechanism for the SEZ developers in the policy.vii Some
experts have also expressed concern that there is probably too much emphasis on products from SEZs
being used for exports only, in our policy . At the application stage, some experts question the necessity
for a two-stage process itself. Why should we have in-principle approvals at all?
Economic Zone
(1) The Approval Committee may approve or approve with modification or reject
a proposal placed before it under sub-rule (2) of rule 17, within fifteen days of its
receipt:
Provided that where the approval is to be granted by the Board in terms of
sub-rule (3) of rule 17, the Board shall approve or approve with modification or
Provided further that the Approval Committee or the Board, as the case may
be, shall record the reasons, in writing, where it approves a proposal with
by order shall communicate such reasons to the person making the proposal.
(2) The Approval Committee shall approve the proposal if it fulfills the following
requirements, namely:
(i) the proposal meets with the positive net foreign exchange earning
space:
PROVIDED that the Developer shall enter into a lease agreement and give
possession of the space in the Special Economic Zone to the entrepreneur only
[1] Provided further that a copy of the registered lease deed shall be furnished
issuance of the Letter of Approval and failure to do so, the Approval Committee
may take action to withdraw the Letter of Approval after giving an opportunity of
being heard;
(iii) the applicant undertakes to fulfill the environmental and pollution control
(iv) the applicant submits proof of residence, namely, passport or ration card or
driving licence or voter identify card or any other proof of the proprietor or the
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1 Substituted by the Special Economic Zones (Amendment) Rules, 2009, w.e.f. 3 -2-
2009
Commissioner;
(3) The proposal shall also fulfill the following sector specific
requirements, namely:
(a) export of high-grade iron ore, that is sixty-four per cent. Fe and
above, except iron ore of Goa origin and Redi origin, which
Provided that this restriction shall not apply to the Units which
shawls:
be permitted subject to the condition that exports shall have one to one
(5) The Units in Free Trade and Warehousing Zones or Units in Free
shall be allowed to hold the goods on account of the foreign supplier for
processing:
allowed by the Free Trade and Warehousing units undertaking the said
activities:
1 Omitted by the Special Economic Zones (Amendment) Rules 2007, w.e.f. 12-10-
(g) the use of any plant or machinery previously used for any purpose in Domestic
Tariff Area as inserted by the Special Economic Zones (Amendment) Rules, 2006
w.e.f. 10-8-2006.
25(6) Units may also be set up for providing services or manufacturing services to
or lease basis, provided the notional value of such capital goods shall be
(c) finished goods shall be exported out of the country or transferred to the
(d) the Unit shall receive the consideration for its manufacturing services in
(e) in case the said manufacturing facility is used by the Unit for carrying out
2)