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.
A Special Economic Zone (SEZ) is a geographical region that has economic laws that
are more liberal than a country's typical economic laws.
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.
To instill confidence in investors and signal the Government's commitment to a stable
SEZ policy regime and with a view to impart stability to the SEZ regime thereby
generating greater economic activity and employment through the establishment of SEZs,
The Special Economic Zones Act, 2005, was passed in 2005, which came in to effect on
10th February, 2006, providing for drastic simplification of procedures and for single
window clearance on matters relating to central as well as state governments.
The main objectives of the SEZ Act are:
(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;

The SEZ Act 2005 envisages key role for the State Governments in Export Promotion
and creation of related infrastructure.

The SEZ Rules provide for:

• " Simplified procedures for development, operation, and maintenance of the

Special Economic Zones and for setting up units and conducting business in
SEZs;

• Single window clearance for setting up of an SEZ;

• Single window clearance for setting up a unit in a Special Economic Zone;

• Single Window clearance on matters relating to Central as well as State

Governments;

• Simplified compliance procedures and documentation with an emphasis on self

 certification

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.
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).
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.
The SEZ policy was first introduced in India in April 2000, as a part of the Export-Import
(“EXIM”) policy of India.

Important SEZs in India

• Belgaum Aerospace SEZ Operational SEZ in Karnataka

• Chennai One in Thoraipakkam, Chennai

• ETA Technopark in Navalur, Chennai

• Falta in West Bengal

• Kensington in Powai, Mumbai

• Mahindra World City in Chennai and Jaipur

• MARG Swarnabhoomi in Tamil Nadu

• MIHAN in Pune

• SEEPZ in Mumbai

• Greater NOIDA in Uttar Pradesh

• Pharma and Biotech SEZ in Aurangabad, Maharashtra

SEZs in India
SEZ's are located in the states of Andhra Pradesh, Chandigarh, Gujarat, Haryana,
Karnataka, Kerala, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh & West
Bengal in India. Also see the complete List of SEZs in India.
Currently, India has more than 1022 units in operations in over 9 functional SEZs, each
an average size of 200 acres (0.81 km2). 8 Export Processing Zones (EPZs) have been
converted into SEZs.
These are fully functional. All these SEZs are in various parts of the country in the
private/joint sectors or by the State Government. But this process of planning and
development is under question, as the states in which the SEZs have been approved are
facing intense protests, from the farming community, accusing the government of
forcibly snatching fertile land from them, at heavily discounted prices as against the
prevailing prices in the commercial real estate industry. Also some reputed companies
like Bajaj and others have commented against this policy and have suggested using
barren and wasteland for setting up of SEZs.
Top Cities in India with SEZ Infrastructure

• Chennai - Chennai has been an attractive SEZ destination thanks to its prodigous
availability in Infrastructure, highly efficient man-power & potential resources

• Hyderabad - Hyderabad has been another cosmopolitan city that has a prominent
quantity of SEZs and Business Chambers with plenty of recreational
activities.Hyderabad stands second only to Chennai in terms of no. SEZs.

• New Delhi - New Delhi along with the National Capital Region comprising
Faridabad ,Gurgaon ,Noida ,Greater Noida & Ghzidabad is another emerging
destination for outsourcing.

• Coimbatore - Coimbatore is a visible and emerging destination for Information

Technology and Economic Zones with enormous potential and manpower.

• Pune - Pune along with Mumbai's financial support is a viable contender to the
SEZ Capital of India.The infrastructure and resources
In recent time SEZ is also launched in Ahmedabad in region name Changodar. available
in Pune can one-day challenge the likes of Chennai and Hyderabad.