SEZs (Special economic

zones)
INTRODUCTION
Special Economic Zone (refereed as “SEZs”) is a geographical
region that has economic laws that are more liberal than a
country's typical economic laws.
An SEZs 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.
 EVOLUTION-FROM EPZs TO
SEZs
 The first EPZ in India was set up in Kandla, Gujarat in 1965.

 The Santacruz EPZ in Mumbai came into operation in 1973.

 However, the EPZ policy was deficient by several factors

like limited power of zonal authorities,absence of single
window facility, rigid custom procedures for bank
guarantees, restrictive FDI policy, procedural constraints
and severe infrastructural deficiencies.

 Thus, the EXIM Policy (1997-2002) introduced a new

scheme from April 1, 2000 for establishment of the Special
Economic Zones (SEZs) in different parts of the country.
 The SEZs Policy

1. An SEZs may be set-up in the public, private, or joint

sector and/or by a state government.

2. The policy requires the minimum size of an SEZs to be

1000 hectares.

 3. Within these zones, units may be set-up for the

manufacture of goods, provisioning of services, and other
activities including processing, assembling, trading,
repairing, reconditioning, making of gold/silver, platinum
jewellery etc.
 NORMS FOR SETTING UP SEZ –

1. Every unit in an SEZ is required to make a minimum

investment of Rs 5 million (around USD 100,000) towards
plant & machinery.

  2.Units within SEZs are required to be net foreign

exchange earners, cumulatively in the first five years of
operation.

3. Trading units within SEZs are required to ensure a

turnover of at least USD 1 million within five years from the
commencement of operation.
 APPROVAL MECHANISM
OF SEZS

 Any proposal for setting up of SEZ in the Private/Joint/State

Sector is routed through the concerned State government
who in turn forwards the same to the Department of
Commerce with its recommendations for consideration of
the Board of Approval.
 On the other hand, any proposals for setting up of units in
the SEZ are approved at the Zonal level by the Approval
Committee consisting of Development Commissioner,
Customs Authorities and representatives of State
Government.
 Approvals have so far been given for setting up over 180
new Special Economic Zones spread over 15 States and 2
Union Territories in the Private/Joint Sector or by the State
Governments and its agencies.
 BENEFITS TO UNITS
AND DEVELOPERS

1. Tenants within the SEZs can procure goods required for setting up of
units, from domestic or foreign markets, without payment of any
customs/import duties.

2. No requirement of minimum net foreign exchange earning, as

percentage of exports.

3. Duty-free material is permitted to be utilized over a period of five

years, unlike EOU/EPZ schemes where the period is limited to one
year.

4. 100 per cent FDI to be allowed under the automatic route in the
manufacturing sector.

5. Developers of SEZs will be granted full autonomy to develop

townships within SEZs. Allocation and pricing of land, facilities and
services in SEZs are not governed by existing regulation.

6. SEZ developers would be accorded infrastructure status, and thereby

entitled to claim all concessions and incentives available to
 BENEFITS DERIVED FROM SEZ

1. Investment of the order of Rs.100,000 crores including

FDI of US $ 5 – 6 billion is expected by the end of December
2007.
2. 500,000 direct jobs are expected to be created by
December 2007

3. Exports
Year from the functioning
Value (Rs. Crore)SEZs during the
Growth Ratelast three
( over previous
years are as under: year )
2003-2004 13,854 39%
2004-2005 18,314 32%
2005-2006 22 840 24.7
2006-07 34,787 52.3%

4. Projected exports from all SEZs for 2007-08:     Rs. 67088 crores
 Investment and employment in the SEZs
set up prior to the SEZ Act, 2005:

 At present, 1087 units are in operation in the SEZs

providing direct employment to over 1.85 lakh persons;
about 40% of whom  are women.  

 (c) Investment and employment in the SEZs notified under

the SEZ Act 2005:
 
Current investment and employment:  
 Investment:                 Rs. 43123 crores
 Employment:               35053 persons
 Expected investment and employment (by December
2009):
 Investment:                 Rs. 2,59,159 crores
 Employment:               17,43,530 additional jobs
 (d) Expected investment and employment if 341
formal approvals becomes operational:
 Investment:     Rs. 3,00,000 crores
 Employment:  4 million additional jobs
 Special Economic
Zones
Boon or Disaster?
1. The Commerce Ministry says it is a great real estate
opportunity for commercial complexes, offices, malls, golf
courses and so on but SEZ’s need land to build such a
massive infrastructure but all the contiguous land that is
easily available and connected to the mainland is
productive, fertile, agricultural land.

2. SEZ’s are estimated to end up with the Finance Ministry

losing revenue to the tune of over Rs. 1,00,000 crore
annually once the zones are up and running,
with its huge fiscal deficit, India can hardly afford the loss.

3. The SEZ’s will mainly come up in Maharashtra, Gujarat,

Uttar Pradesh, Tamilnadu, Orissa, Karnataka and Haryana.
Many backward states that are underdeveloped will
continue to be sentenced to remain so. This could lead to
regional imbalances that will throw up complicated
problems. NO SEZ for example, will come up in the north-
 The enthusiasm that the government has in setting up the
SEZ’s underline an ugly fact that even after five long
decades of independence, we still do not have the kind of
decent infrastructure in the country that should have
normally been the case.
 Many of them are IT related software parks and technology
hubs. The argument put forward by critics is that there is no
need for a SEZ for IT as they would have done well.
 In India, farmers are emotional about the land that they
have farmed for years and just giving it up so that industry
can be set up, is not something that can be easily digested.
 Another argument being used to dent the critics is how
farmers could be rehabilitated with jobs in the zones. Most
of them are going to be Information Technology related and
how are farmers going to do a nine to six job at a desk or
with machines they do not understand?
 Nandigram SEZs controversy
 The Nandigram SEZs controversy started when the
West Bengal government decided that the Salim Group of
Indonesia would set up a chemical hub under the SEZs
policy at Nandigram, a rural area in the district of
Purba Medinipur
 The chemical hub would require the acquisition of over
14,000 acres (57 km²) of land. The special economic zone
would be spread over 29 mouzas (villages) of which 27 are
in Nandigram.
 Probodh Panda, a CPI MP from the district has said that
most of the land to be acquired is multi crop and would
affect over 40,000 people.
 Expectedly, the villagers, who had been predominantly
supporters of the party in power, CPI(M), turned against it
and organized a resistance movement under the banner of
the newly formed Bhumi Uchhed Pratirodh Committee or
BUPC (literally, Committee for the Resistance to Eviction
from Land).
 The differences soon heated up and from remaining a
 CONCLUSION

The establishment of SEZs has helped to increase

international trade,exports,employment in the
country and boost the Indian economy.
Due to the policy of SEZs India gain the foreign
investment technology in the country but their are
still some arguments in this policy which has to be
clear by the Government.
It is better if we establish the SEZs in few places due
to which no crime or exploitation of peoples will be
occur by SEZs.