1 What is a Special Economic Zone ? what are the various issues of SEZs in India?

Special Economic Zone (SEZ) is a specifically delineated duty free enclave and shall be deemed
to be foreign territory for the purposes of trade operations and duties and tariffs. The category
'SEZ' covers, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free
Zones (FZ), Industrial parks or Industrial Estates (IE),Free Ports, Urban Enterprise Zones and
others. Designated areas in countries that possess special economic regulations that are different
from other areas in the same country. Moreover, these regulations tend to contain measures that
are conducive to foreign direct investment. Conducting business in a SEZ usually means that a
company will receive tax incentives and the opportunity to pay lower tariffs. Special economic
zone is a particular area inside a state which acts as foreign territory for tariff and trade
operations. Govt. provides tax exemption (IT, Excise, customs, sales etc.), subsidised water and
electricity etc.
SEZ can be sector specific or multi product sez. It helps in the development of infrastructure of
the area around the SEZ, provides employment to ppl, makes the exports more viable. All this
will helps the country's products to become mor competitive vis-a-vis providing all round
development of region. Special Economic Zones (SEZs) have been recognised as an important
mechanism for trade and investment promotion, creation of infrastructure, employment
generation, promotion of regional development, increase in foreign exchange earnings,
improving export competitiveness and transfer of skills and technology. These are considered as
growth drivers in the developing countries. The SEZs have been in existence for decades, but
have attracted renewed attention world-wide in recent years due to globalisation of trade and
financial markets. Historically, SEZs were the result of the spurt in economic growth. It is well
recognised that the SEZs are instrumental in developing local and regional infrastructure
facilities, which in turn are necessary for overall economic development of a country.
In India, the concept of free zone - Export Processing Zone (EPZ) -emerged during the 1960s
when the first EPZ was set up in Gujarat. Subsequently, Santacruz EPZ was established. The
basic objectives of these zones were to promote exports and employment opportunities.
Investors interest in setting up of SEZs in India has increased many folds during the recent
period since the enactment of SEZ Act 2005 and subsequent announcement of SEZ rules, which

came into existence in February 2006. Various concessions offered by the Government with the
intention of promoting manufacturing industries, exports and employment in order to pave way
for overall economic growth catalysed the investors interest to view the process of SEZ
development as a business proposition. At the same time, the critics voiced concerns that creation
of large number of SEZs may not be desirable as this would result in agricultural land grabbing
on account of huge land requirement for such ventures; revenue loss to the Government due to
excessive fiscal concessions and tax holidays; massive gains to few private business enterprises,
etc. The IMF also opined that the planned private sector-led SEZs could be helpful in attracting
Foreign Direct Investment (FDI) and promoting exports in India, particularly if close links were
developed with the rest of the economy, but stressed that care was needed to avoid a complex
and biased tax incentive system that could lead to substantial revenue losses.

Fishermen, MSEZ at loggerheads The talks between the traditional fishermen and the
promoters of the Mangalohttp://www.dnaindia.com/bangalore/report_fishermen-msez-atloggerheads_1676104
Telugu Desam Party joins anti- Special Economic Zone agitation. KAKINADA: The Telugu
Desam Party (TDP) has demanded that the state government return to farmers land acquired for
various SEZs claiming that most of it was anyway lying vacant. Land taken in the name of SEZs
is being given away to realtors, said former minister Kodela Siva Prasad. He added that the
government should restore land to farmers wherever the proposed projects have failed to come
up. Link: http://timesofindia.indiatimes.com/articleshow/12668502.cms
Treat SEZs on a par with domestic tariff areas in terms of incentives: Industry. With special
economic zones (SEZs) likely to be brought on a par with domestic tariff area (DTA) post-direct
taxes code (DTC), the industry and economists have demanded that it be given similar treatment
with the latter in terms of export promotion schemes like focus product scheme (FPS) and focus
market scheme (FMS) and free trade agreements (FTAs). The Confederation of Indian Industry
(CII) said Rs 2.12 lakh crore of investment was locked in various SEZs which could not be
ignored mid-way.

Andhra: CPI Demands Scrapping of Kakinada SEZ. CPI state general secretary Dr Narayana
demanded this evening that Kakinada SEZ be scrapped and the land acquired for it be restored to
the farmers. Addressing a press conference here, Narayana alleged that rules and laws were
flouted during the land acquisition.
The CPI leader toured the SEZ-affected villages earlier in the day are Special Economic Zone
Limited (MSEZL) seem to have reached an impasse.

2.what are its various consideration?

To provide a stable economic environment for the promotion of Export-import of goods in a
quick, efficient and hassle-free manner, Government of India enacted the SEZ Act, which
received the assent of the President of India on June 23, 2005. The SEZ Act and the SEZ Rules,
2006 (SEZ Rules) were notified on February 10, 2006. The SEZ Act is expected to give a big
thrust to exports and consequently to the foreign direct investment (FDI) inflows into India,
and is considered to be one of the finest pieces of legislation that may well represent the future of
the industrial development strategy in India. The new law is aimed at encouraging public-private
partnership to develop world-class infrastructure and attract private investment (domestic and
foreign), boosting economic growth, exports and employment.
The Ministry of Commerce and Industry lays down the regulations that govern the setting up and
administering of the SEZs. The Central Government isfunctioning, while the State Governments
play a significant lead role in the development of SEZs in their respective States by stipulating
the conditions to be adhered to by an SEZ and granting the necessary approvals. The policy
framework for SEZs has been enacted in the SEZ Act and the supporting procedures are laid
down in SEZ Rules.
The Special Economic Zone Act 2005 came into force with effect from 10th February 2006, with
SEZs Rules legally vetted and approved for notification. The SEZs Rules, inter-alia, provide for
drastic simplification of procedures and for single window clearance on matters relating to
central as well as state governments. Investment of the order of Rs.100, 000 crores over the next
3 years with an employment potential of over 5 lakh is expected from the new SEZs apart from

indirect employment during the construction period of the SEZs. Heavy investments are
expected in sectors like IT, Pharma, Bio-technology, Textiles, Petro-chemicals, Autocomponents, etc. The SEZ Rules provides the simplification of procedures for development,
operation, and maintenance of the Special Economic Zones and for setting up and conducting
business in SEZs. This includes simplified compliance procedures and documentation with an
emphasis on self-certification; single window clearance for setting up of an SEZ, setting up a
unit in SEZs and clearance on matters relating to Central as well as State Governments; no
requirement for providing bank guarantees; contract manufacturing for foreign principals with
option to obtain sub-contracting permission at the initial approval stage; and Import-Export of all
items through personal baggage.