Pros and Cons of SEZ Policy

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The pros and cons of SEZ policy of India identify the developmental area of Indian industries, especially the fast growing sectors.

The pros and cons of SEZ policy as implemented from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Policy, offers fiscal incentives through the provisions of relevant Special Economic Zones (SEZ) Acts and Rules. The Indian Special Economic Zones policy intends to make SEZs a powerhouse for economic growth. These SEZs are supported by world class infrastructure coupled with attractive fiscal incentives and tax rebates, both at the Central and the State level. Further the Indian Special Economic Zones policy attracts minimum possible regulations.

The main pros and cons of SEZ policy of India are described as follows -
  • Generation of additional economic activity
  • Promotion of exports of goods and services
  • Promotion of investment from domestic and foreign sources
  • Creation of employment
  • Development of infrastructure facilities
  • Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business
  • Single window clearance for setting up of a SEZ and an unit in SEZ
  • Single Window clearance on matters relating to Central as well as State Governments
  • Easy and simplified compliance procedures and documentations with stress on self certification
The SEZ Rules provide different minimum land requirements for different types of Special Economic Zones. To create an investor friendly environment, the Government of India formulated a stable SEZ policy regime and this is done with a view to impart stability to these SEZ units. A number of meetings across the country led to the formulation of - 'The Special Economic Zones Act, 2005', which was subsequently passed by Parliament in May, 2005. The SEZ Act, 2005 and SEZ Rules became effective on and from 10th February, 2006. The SEZ Act 2005 envisages key role for the State Governments in Export Promotion and creation of infrastructure. A Single Window SEZ approval mechanism has been provided through a 19 member inter-ministerial SEZ Board of Approval. The applications duly recommended by the respective State Governments/Union Territories Administration are considered by this board, periodically. All decisions of the Board of approvals are with consensus. The SEZ Rules provide for different minimum land requirement for different class of SEZs. Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing area where the supporting infrastructure is to be created.

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
The successful implementation of Indian SEZ Policy is evident from the facts which are enumerated as follows -
  • Projected exports from all SEZs for 2007-08 is ` 67300 crore
  • Presently, 1016 units are in operation and providing direct employment to over 1.79 lakh people of which around 40% are women
  • Private investment by entrepreneurs before the SEZ Act was around ` 4400 crore. In the 63 notified SEZs which have come up after
  • 10th February 06, investment of ` 13,435 crore has already been made in less than a year
  • Have created direct employment for around 18,457 people
Last Updated on May 29, 2015