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Meaning of Special Economic Zone

A Special Economic Zone or SEZ refers to a specifically defined geographical area from which trade, economic activity, production conducted. These areas are developed to encourage commercial activities, keeping in mind the special economic rules and regulations within the border of the top countries that set up such geographical units specifically to promote industries and trade activities. India is the first Asian country to establish a special area in Kandla in 1965 to increase exports. It was named Export Processing Zone (EPZ). The government passed an important act in 2005.

The main objectives of SEZ

  1. Conduct of additional economic activities.
  2. Promotion of export of goods and services.
  3. Encourage investment from domestic and foreign sources.
  4. Creation of employment opportunities.
  5. For the development of Infrastructure.

In India, during the past few years, not only in the economic world, but also in the political world, the plan which has received widespread support as well as widespread opposition is special economic zones. If farmers are opposed to oppose to special economic zones, then a group of economists supporting industrial progress also supports their establishment. As a result of this opposition and support, the Special Economic Zone has been in the discussion point in India.

Special Economic Zone

Development of Special Economic Zone

SEZ, the particular industrial area which is developed keeping in mind the special economic rules to encourage trade, economic activities, production and other business activities. These areas can be from 10 to 10,000 hectares or even more. These areas have excellent facilities like infrastructure, building, factory energy, roads, transport, communication etc. Special Economic Zones are established in almost all developed countries.

On 17 July 2013, a total of 576 SEZs has been approved by the Government. Andhra Pradesh has the highest number of 109 SEZs. During this period, 102 SEZs were cleared in Maharashtra. Thereafter 67 SEZs was approved in Tamil Nadu, 61 in Karnataka and 31 in Uttar Pradesh. In the eastern states, West Bengal received the approval of 18 SEZs.

Under the sanctioned SEZ, 353 units have been set up in the Semi-Thermal and Electrical Conductor Group, 21 in Engineering, 32 Biotechnology and 23 in Pharmaceutical and Chemical Group. The SEZ section has a major share of the gems and jewelry sector. It has 13 units installed.

There are 6 Special Economic Zones operating in India

Their names are as follows: –

1. Kandla Special Economic Zone

2. Kochi Special Economic Zone – 93 units are functioning under this zone.

3. Madras Special Economic Zone

4. Visakhapatnam Special Economic Zone – 106 units are functioning under this zone

5. Phalta Special Economic Zone – 6 units are functioning under this area.

6. Noida Special Economic Zone – 20 units are functioning under this area.


The Rajya Sabha has approved the Special Economic Zones (Amendment) Bill, 2019 which allows industries to set up units in special economic zones.

Key points of Special Economic Zones (Amendment) Bill, 2019

1. The bill will replace the Special Economic Zones (Amendment) Ordinance, 2019 publicly announce in March 2019 and will become law after approval from the President.

2. The Government believes that the current provisions of the SEZ Act, 2005 (SEZs Act, 2005) do not allow trading entities to set up business units in special economic zones. But in the Special Economic Zones (Amendment) Bill, 2019 SEZ, permission can be considered for setting up units.

3. This amendment will provide flexibility to the Central Government in relation to defining an individual or any institution which the Central Government may notify from time to time. The government believes that this amendment will also increase investment in SEZ.

4. By law, a person, a Hindu divided family, a company, a cooperative society or a firm is covered under the definition of person.

5. According to the Ministry of Commerce, this is a small amendment that will have a major impact on investment, jobs and development.

Incentives for setting up in an Indian SEZ

There are some important incentives for setting up provides in sourcing or manufacturing area included in SEZ:

1. Import and domestic procurement of goods for the enhancement, operation and their maintenance of the company, become duty free.

2. In the income tax on export for five years is 100 % tax exempted, 50 percent for five years thereafter, and another 50 % of the export profit make reinvested for the next 5 years in business.

3. Levies which are imposed by the state government become exempt from the Goods and Service Tax (GST).

4. Single window clearance for all government approvals in the state.

After making a short list of SEZs for further examination, investors may find that specific SEZs offer other advantages that complement their business plans in India. The benefits of India’s Special Economic Zone policy have been considerable importance and have already served to increase the amount of foreign firms which is regulated and operating in India. Since 2005, exports from the country have increased substantially, largely due to the rise in sourcing and manufacturing platforms.


India got the inspiration for setting up SEZ but India could not consider that there are favorable conditions for fast establishment in China, like there is a lot of non-agricultural workable land, on the other hand there is also relatively lending law related to land acquisition. But Scene was able to make Special Economic Zone is a great source of profit, whereas the situation here is contrary to ours because of the agrarian economy.

1. Vacant land is less as well as the land acquisition law is also complicated about which there is a lot of discussion these days in Parliament.

2. We have a tradition of grabbing of agricultural land by giving compensation for the establishment of industries. Due to the increase in the area of ​​agricultural fertilized land in the country, there is a continuous decrease in the agricultural on the other hand; people dependent on agriculture are wandering for livelihood. It is not even that SEZ was successful in its objective.

3. Recently, the CAG report also did not consider it beneficial. According to the CAG report, the country suffered a loss of Rs. 13850 Crores annually due to SEZ suit, but instead of setting up SEZ encouraging agro-based industries. If given, it could have been a profitable deal.

4. About 52% of the total labor force of the country makes its living from agriculture and related industries. If arable land was used for Special Economic Zones then many types of problems may arise for them.

5. The establishment of a large number of Special Economic Zones is necessary from the point of view of improvement in the economy of the country and industrial progress, but only barren and unused land should be used for this, only then its purpose will be meaningful.

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Special Economic Zone in India is located within a country geographically area with single management are administrated in increased trade balance, investment etc.
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Dasharath Maurya

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