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(FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban
Enterprise Zones and others. Usually the goal of a structure is to increase foreign investment. One of the
earliest and the most famous Special Economic Zones were found by the government of the People’s
Republic of China under Deng Xiaoping in the early 1980s. The most successful Special Economic
Zone in China, Shenzhen, has developed from a small village into a city with a population over 10
million within 20 years. Following the Chinese examples, Special Economic Zones have been
established in several countries including Brazil, India, & Russia.
Body—The main objectives of the SEZ Act are :
(a) Generation of additional economic activity
(b) Promotion of exports of goods and services
(c) Promotion of investment from domestic and foreign sources
(d) Creation of employment opportunities
(e) Development of Infrastructure facilities
India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone
(EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965. With a view to
overcome the shortcomings such as absence of world-class infrastructure, and an unstable fiscal regime
and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs)
Policy was announced in April 2000.SEZs in India functioned from 1.11.2000 to 09.02.2006 under the
provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions
of relevant statutes. The Special Economic Zones Act. 2005, was passed by Parliament in May. After
extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10th
February, 2006.
The incentives and facilities offered to the units in SEZs for attracting investments are—
● Duty free import/domestic procurement of goods for development operation and maintenance of
SEZ units.
● 100% Income Tax exemption on export income for SEZ units for first 5 years, 50% for next
5 years thereafter and 50% of the ploughed back export profit for next 5 years.
● Exemption from minimum alternate tax.
● External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity
restriction through recognized banks.
● Exemption from Central Sales Tax.
● Exemption from Service Tax.
The major incentives and facilities available to SEZ developers include—
● Exemption from customs/excise.
● Income Tax exemption on income derived from the business of development of the SEZ in a block
of 10–15 years.
● Exemption from dividend distribution tax.
● Exemption from Central Sales Tax (CST).
● Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
Conclusion—The SEZ scheme has generated tremendous response amongst the investors.
Developers who have set up SEZs in India : Nokia SEZ in Tamil Nadu, Quark City SEZ in Chandigarh,
Motorola, DELL and Forxconn.
In China the most prominent SEZ’s are Shenzhen and Pudong, a district of Shanghai. In Iran
Sarakhs, Sirjan, Shahid Rajeev Port, Pet Zone, Mahshahr & Kish.
In Philippines : The four governmentally owned are Cavite Economic Zone, Bataan Economic
Zone, Mactan Economic Zone and Baguio City Economic Zone.
Association of South-East Asian Nations
Introduction—The Association of South-East Asian Nations, commonly abbreviated ASEAN, is a
geo-political and economic organization of 10 countries. It was formed on 8 August 1967 when