NAME: MUBINA RAFIQUE SHAIKH

CLASS: M.COM PART II

ROLL NO:4306
SUBJECT:INDUSTRIAL ECONOMICS
TOPIC:SPECIALISED ECONOMIC ZONE
PROF.INCHARGE:DR.SHAHID JAMAL
Meaning of special economic zone -
SEZ
 Meaning :
Special Economic Zone (SEZ) is a scheme to attract investment in a
particular area. Backward areas where business and commerce can't
reach are promoted to do business in a particular area. Through such
scheme, government attracts industrialists to start factory in such areas
and they would be given tax concession etc.
Such area is termed as SEZ;
This is regulated by the Ministry of Commerce and Industry. The Ministry
of Commerce and Industry takes decisions with regards to SEZ. Facilities
are provided in SEZ by the government to promote the business and
employment.
What is SEZ?

Special Economic Zones are marked places meant for having cluster of
same type production entities. For example, IT SEZ , it harbours only
information technology oriented item manufacturing or service
providing. Glass SEZ means, it consists of only glass making industries
and nothing else. The use of it is that government can provide whatever
wanted by certain industry. If they are together, it is to provide all
whatever is necessary
Benefits to common through SEZs :

 There is no direct benefit to common man through this, but has direct
loss (Land grabbing).

 Jobs can be provided to the persons who sacrificed their lands for this
cause.

 Infrastructure will be developed. New roads and facilities are provided

around SEZs.

 Exports can be increased.

 Chance of available cheaply the goods prepared in local area.

The main objectives of the SEZ Scheme are:

 Generation of additional economic activity

 Promotion of exports of goods and services
 Promotion of investment from domestic and foreign
sources
 Creation of employment opportunities
 Development of infrastructure facilities
The main features of Indian Special
Economic Zones are as follows -
 Modern harbor - Artificial harbor and handling bulk containers made operational through out
the year
 Airport - Houses both domestic and international air terminals to facilitate transit, to and
from major domestic and international destinations
 Financial Institutions - Has host of Public and Private Bank chains to offer financial assistance
for business houses
 A vibrant industrial city with abundant supply of skilled manpower, covering the entire
spectrum of industrial and business expertise
 Other Advantages - Well connected with network of public transport, local railways and cabs
 Pollution free environment with proper drainage and sewage system
 In-house Customs clearance facilities
 Uninterrupted power supply
 Abundant supply of technically skilled manpower
 Abundant supply of semi-skilled labor across all industry vertical
 Easy access to airport and local Railway Station
ADVANTAGES OF SEZ
 15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the
next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed
back for investment.
 Allowed to carry forward losses.
 No licence required for import made under SEZ units.
 Duty free import  or domestic procurement of goods for setting up of the SEZ units.
 Goods imported/procured locally are duty free and could be utilized over the
approval period of 5 years.
 Exemption from customs duty on import of capital goods, raw materials,
consumables, spares, etc.
 Exemption from Central Excise duty on the procurement of capital goods, raw
materials, and consumable spares, etc. from the domestic market.
 Exemption from payment of Central Sales Tax on the sale or purchase of goods,
provided that, the goods are meant for undertaking authorized operations.
 Exemption from payment of Service Tax.
Disadvantages

 Revenue losses because of the various tax exemptions and incentives.

 Many traders are interested in SEZ, so that they can acquire at cheap rates
and create a land bank for themselves.
 The number of units applying for setting up EOU's is not commensurate to
the number of applications for setting up SEZ's leading to a belief that this
project may not match up to expectations.
 Facilities and Incentives:
 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. (Sunset Clause for Units will become
effective from 01.04.2020)
 Exemption from Minimum Alternate Tax (MAT) under section 115JB of the Income Tax
Act. (withdrawn w.e.f. 1.4.2012)
 Exemption from Central Sales Tax, Exemption from Service Tax and Exemption from
State sales tax. These have now subsumed into GST and supplies to SEZs are zero rated
under IGST Act, 2017. 
 Other levies as imposed by the respective State Governments.  
 Single window clearance for Central and State level approvals.
 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. (Sunset Clause for Developers has become effective from
01.04.2017)
 Exemption from Minimum Alternate Tax (MAT) under Section 115 JB of the
Income Tax Act. (withdrawn w.e.f. 1.4.2012)
 Exemption from Dividend Distribution Tax (DDT) under Section 115O of the
Income Tax Act. (withdrawn w.e.f. 1.6.2011)
 Exemption from Central Sales Tax (CST).
 Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ
Act).
Conclusion:
The SEZ's could drastically improve the
economic activity in the country, make the
country's export competitive and globally
noticeable, be net foreign exchange earner
and provide immense employment
opportunity
THANK YOU