1.

Introduction and History 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. The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules. After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into 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. 2.What is SEZ? An SEZ is a geographically remarked region that has economic laws that are more liberal than the countries typical economic laws and where all the units there in have specific privilege. SEZ is a specifically delivered duty free enclave and shall be deemed to be foreign territory for purposes of trade operation and duties and tariffs

3.SEZ and its Features 1. Create additional economic activity. 2. To promote export of goods and services 3. Promotion of investment for domestic and foreign sources. 4. Creation of employment opportunities. 5. Development infrastructure facilities. 6. To attract foreign direct investment ( FDI ) 7. Earn foreign exchange and contribute it exchange rate stability. 8. To promote nontraditional export sectors. 9. To introduce new technology. 10. To develop backward regions.

4.SEZ RulesThe SEZ Rules provide for 1. Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs; 2. Single window clearance for setting up of an SEZ; Single window clearance for setting up a unit in a Special Economic Zone; 3. Single Window clearance on matters relating to Central as well as State Governments; 4. Simplified compliance procedures and documentation with an emphasis on self certification

5.SETTING UP OF SEZ SEZ are notified by the Ministry of commerce and can be set up by private developers or by the Central / State Government or jointly by any two or more of the above. SEZs are required to have a minimum area of 1000 hectares of land.

Areas Specification for SEZ Minimum area requirement stipulated for various categories of SEZs are: Type For states other than special category states/UTs Minimum Processin total area g area requireme requireme nt nt 1000 35% Hectares 100 50% hectares 100 hectares 10 hectares with minimum built up area of one lakh sq.metre 50% Areas for category states/UTs Minimum total area requireme nt 200 hectares 100 hectares 50 hectares 10 hectares with minimum built up area of 1 lakh sq.mt Processin g area requireme nt 35% 35% 50%

Multi-product One/more services Sector specific/port/airp ort Electronic hardware & software or information technology enabled services

50%

50%

10 hectares with minimum built up Gems &jewellery area of 50 thousand sq.metre

50%

10 hectares with minimum built up area of 50 thousand sq.metre 10 hectares(an d minimum built up area of 1 lakh sq.mts for IT) 40 hectares(mi n. built up area of 1 lakh sq.metres)

50%

10 Bio-tech/nonhectares(an conventional d minimum energy including built up solar energy area of 1 equipments/cells lakh sq.mts for IT) 40 hectares(mi Free trade n. built up warehousing area of 1 zone lakh sq.metres)

50%

50%

50%

50%

6.INCENTIVE AND FACILITIES OFFERED THE SEZs The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:1) Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units. 2) 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. 3) Exemption from minimum alternate tax under section 115JB of the Income Tax Act.

4) External commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels. 5) 6) 7) Exemption from Central Sales Tax. Exemption from Service Tax. Single window clearance for Central and State level approvals.

8) Exemption from State sales tax and other levies as extended by the respective State Governments. 9) 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. 10) No license required for import

11) Exemption from the central excise duty on import of capital goods, raw materials consumables spares etc. 12) The government has exempted sez units from the payment of stamp duty and registration fees on the lease / license of plots 13) No routine examination by customs officials of export and import cargo. 14) Exemption from the restriction under Drugs and Cosmetic Rules

7.Benefits derived from SEZs SEZs are good from the point of view of growth and development. It increases income level of citizens, encourages competition and lowers labor costs. 1.Export Performances Exports from the functioning SEZs during the last six years are as under:

Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Value (Rs. Crore) 13,854 18,314 22 840 34,615 66,638 99,689

Growth Rate ( over previous year ) 39% 32% 25% 52% 93% 93%

Source : Economic Survey 2009-2010 2.Attracts FDI and exchange earnings: FDI spells long term capital that can help sustain solvency. Also FDI will ensure meaningful ownership, in times of adverse claims pay put, it is only through the FDI route that foreign stake holders will infuse capital to come over the adverse situation The state id well informed about the latest technology and also relevant information regarding the trade that goes on all over the world and how the domestic producers can penetrate into several markets. And private businesss can position them in the world market and boost the standard of living of citizens. 3.SEZs also create a lot of job opportunities: Also when SEZs become a success it increases the GDP, and acts as a good economic model for the policy makers to mimic. 8.DISADVATAGES 1.First and main loss of SEZ is large scale acquisition of land takes place which results in displacement of farmers and alternate means of livelihood are not available for them. This issue is a major problem; it is tough to relocate them to other jobs. It has to be seemed that it could create socio-economic disparities as the SEZ would accommodate the high and mighty the poor people will be pushed towards poverty and unemployment. 2.Second is lack of cultivable land, if cultivable land should be short than growth of agriculture should be reduced. Thats why the prices of food grains should be more up and inflation rate will be at top.

3.Third in the area of employment the disadvantage of SEZ is quite similar to the disadvantages of Wal-Mart entering retail business. New jobs are created and working conditions improve, but for whom? It is for the educated masses and the literate people and not for the laborers. Laborers suffer in the form of; forced overtime, exhausting work schedules; poverty pay, and unhealthy working conditions. The majority of workers in the SEZ units are women who are exposed to the most humiliating sexual harassment s. Free trade creates a race to the bottom, whereby developing countries lower their labor charges and environmental standards in an effort to attract foreign investment. 4.Fourth, Companies would like to simply relocate to SEZ to take advantage of the tax concessions being offered. This will bring about a significant revenue loss to the government. The companies that incorporate under SEZ enjoy a lot of tax holidays, this will result in a kind of disguised industry just as disguised unemployment. The Finance Ministry has estimated that SEZs could run up a revenue loss of Rs 1, 75,000 crore in direct taxes, custom and excise duties over the next five years. At in the last, question is that what is the importance and necessity of SEZ in India? Is SEZ compulsory on the cost of thousand acres cultivable land, and the livelihood of farmers? Due to this sage government bare the lot of revenues losses, Farmers are fighting with the government and government surrendered in front of industrialist. Why is SEZ important? 9.Investment and employment in the SEZs set up prior to the SEZ Act,2005 At present, 1943 units are in operation in the SEZs. In the SEZs established prior to the Act coming into force, there are 1143 units providing direct employment to over 1.97 lacks persons; about 37%of whom are women. Private investment in these SEZs established prior to the SEZ Act is of the order of over Rs.5626.24crore.

10. CURRENT INVESTMENT AND EMPLOYMENT INVESTMENT: Rs.83450Crore EMPLOYMENT: 113426 persons 11.Challenges before SEZ 1) All Indians want to countries economic development, this is main dream of our citizen but benefits of SEZ will not get to pour people SEZ has to solve it. 2) With the acceptance of globalization we are making big valley between rich and poor and it is reverse effect to our democracy. 3) SEZ will end all labors welfare policy which is not suitable for democracy. 4) All over India farmer are making strong appose to SEZ because Govt. acquiring their under fertility land, therefore proper channel of acquisition is important to govt. 5) Which solutions govt. will choose for loosed revenue from SEZ? 12. Measures to Improvement 1) Govt. has to acquire fallow ground not under fertilizer lands. 2) When acquisition of land of farmer govt.have to take reliable steps for rehabilitation of farmer and give rational cost of their lands. 3) Govt.have to decide perfect rules and regulation for acquisition of land for SEZ. 4) For which purpose land is being acquired only that purpose land should be used.

13. CONCLUSIONS: The above explanation, it is indicated that there are some disadvantages of SEZ and also some advantages. When in 1991 we accepted the policy of LPG (Liberalization, Privatization and Globalization) there was much crises and protest against it. But today we are getting its fruits. In the same way if we avoid the disadvantages of SEZ, and accepted SEZ, it will definitely help to develop Economic growth.