What do you know about a Special Economic Zones or SEZ?

What is a 'Special Economic Zone - SEZ'?

Special Economic Zones (SEZ) are uniquely demarcated areas that are treated as foreign territories with regards to trade and tariff laws.

We can also define SEZ as, a Special Economic Zone is a specified zone deemed to be a foreign territory inside the country which is subject to unique economic regulations that vary from other areas in the same country. They receive wide variety of special exemptions, relating to taxes, quotas, customs and even labor regulations in some cases. SEZ enjoys Indirect tax exemptions include customs duty, central excise duty, central sales tax, service tax,  stamp duty and other miscellaneous taxes and duties. Direct tax exemptions include income tax, dividend distribution tax, and securities transaction tax.

Its economic laws are more liberal than a country's typical economic laws.  The prime goal was to enhance or flourish foreign investment and provide an internationally competitive and hassle free environment for exports. SEZs play a key role in rapid economic development of a country.

 The other objectives of SEZ includes,

  • Promotion of goods and services leading to incresed economic activities,
  • Investment promotion, development of infrastructure,
  • Creation of employment opportunities etc.

In India, the performance of the SEZ units is monitored by a unit approval committee consisting of development commissioner, custom and representative of state government on an annual basis.

Business units that set up establishments in an SEZ would be entitled for a package of incentives and a simplified operating environment. Besides, no license is required for imports, including second hand machineries.

Types of SEZ

  • Free Trade Zones (FTZ) /Free Port
  • Export Processing Zones (EPZ)
  • Free zones/ Free economic zones (FZ/ FEZ)
  • Industrial Parks / industrial estates (IE)
  • Bonded Logistic Park (BLP)
  • Urban Enterprise Zone


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