2.0 SPECIAL ECONOMIC ZONES (SEZ)
3.0 FREE TRADE AND WAREHOUSING ZONES (FTWZ)
4.0 ADMINISTRATION FRAMEWORK OF SEZ
5.0 SETTING UP A SEZ
6.0 MINIMUM AREA REQUIREMENTS FOR SETTING UP A SEZ
7.0 EXIT POLICY OF SEZ
8.0 TAX AND DUTY EXEMPTIONS TO SEZ UNITS
9.0 FOREIGN DIRECT INVESTMENTS IN SEZ
India’s Foreign Trade Policy 2015-2020, which is currently in force, aims at boosting India’s exports. The Government has given in the past and is still providing various export promotion measures, and the schemes and initiatives related to various centers of export-oriented production are one of them.
Units undertaking to export their entire production of goods and services (except permissible sales in Domestic Tariff Area), may be set up under the Export Oriented Unit (EOU) scheme, Electronic Hardware Technology Parks (EHTP),
Software Technology Parks (STP) or Bio-Technology Parks (BTP) Scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering and rendering of services, development of software, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Trading units are not covered under these schemes. These units are entitled to certain privileges and exemptions.
Similarly, the Special Economic Zone (SEZ) – specifically delineated duty-free enclaves – and policy related to them first came into inception in the year 2000. The prime objective was to enhance foreign investment and provide an internationally competitive and hassle free environment for exports. The idea behind the SEZ scheme was to promote exports from the country and create equal opportunities for the domestic enterprises and manufacturers to be competitive globally.
A SEZ is a region that has economic laws that are more liberal than the country’s typical economic laws and where all the units therein have specific privileges. SEZs are specific enclaves and are exempt from most restrictive laws regarding taxes, quotas, FDI-bans, labour laws etc to make them globally competitive.
SEZ is a special demarcated area in a State and the rest of the state where the SEZ is located is legally referred to as the Domestic Tariff Area (DTA).
Through setting up a SEZ in any state, the state can earn increased export earnings, benefit from increased employment opportunities etc. To enable this, foreign investors are offered incentives such as tax exemptions, duty free imports, exemptions from import quotas, capital mobility to remit profits, export allowances and subsidised interest rates within the SEZ.
The SEZ Policy was announced in April 2000 with the purpose of making the Special Economic Zones an engine for economic growth which would give a boost to exports, employment and investment generation, and would be supported by quality infrastructure and an attractive fiscal package both at the Central and State level with a single-window clearance.
With effect from 10th February, 2006 the activities relating to Special Economic Zones are guided by the provisions contained in the Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006.
Before the enactment of the SEZ Act, the SEZs in India were governed by Chapter 7 and 7A of Foreign Trade Policy.
The Government of India has delegated control of different aspects of the SEZ to three different Ministries. The Ministry of Commerce and Industry formulates the regulatory provisions pertaining to the Special Economic Zones and EXIM Policy in India. The Ministry of Environment & Forests is concerned with the environmental clearances for the SEZ units. The Ministry of Finance is concerned with the financial and taxation aspects of the SEZ.
Since the Special Economic Zones Act, 2005 is the governing legislation for SEZ in India, the functioning of the SEZ is administered by the Board of Approval (BOA) set up under the Act as the apex body to administer SEZ and is headed by the Secretary, Department of Commerce. The Approval Committee at the Zone level deals with approval of units in the SEZs and other related issues. Each Zone is headed by a Development Commissioner, who is ex-officio chairperson of the Approval Committee.