Page 223 - COMBINED QUESTIONS AND ANSWERS - EDITION 2019 - PART II_Neat

Earlier, special provisions were made in the Customs Act, 1962 and in the Foreign
Trade Policy to set up the SEZs and guide functioning of the industrial and other units set up
within the SEZ. However, a separate do something known as Special Economic Zones Act,
2005 has been enacted by the Government of India and also framed Rules called The Special
Economic Zones Rules, 2006 stipulating the procedure to set up SEZs and their
functions, the facilities to be provided and their obligations. The approval to set up SEZ is
given by the Board of Approval constituted for this purpose. The SEZ may be developed by a
Developer approved by the Board of Approval. The Developer may be a person or a State
Government. The Developer is required to provide the infrastructure, common facilities
including housing, schools and other facilities required. Once the SEZ is set up, the persons
or the companies approved by the Approval Committee may set up a manufacturing unit,
service providing unit, repairing center and trading center. There may be a Co-Developer to
develop the SEZ.
SEZs are under the control of the Ministry of Commerce, Government of India. The
entire activity in the SEZ is under the direct control of the Development Commissioner who
functions under the Ministry of Commerce. SEZs are treated as “Foreign Territories” for the
purpose of trade and tariff. The goods supplied to the developer of SEZ or to the units set
up in the SEZs by the DTA units i.e., the manufacturers or service providers within India are
treated as exports to a foreign country. These supplies are to be considered as exports to a
foreign country. Supply of any goods to the Developer of SEZ or the units set up in the SEZ
are treated as exports to foreign countries and they are eligible for all the benefits that are
available to the exports to foreign countries. Similarly, any goods supplied from SEZ to
anybody in India is treated as imports from foreign countries and they are liable to duty as if
they are imported from foreign countries.

Q-869: Explain the procedure to set up SEZ
A-869: Special Economic Zone (SEZ) may be established either jointly or severally by the Central
Government, State Government or any person for manufacture of goods or rendering
services or for both or as a Free Trade and Warehousing Zone. Any person intends to set up
SEZ may identify the suitable area and make a proposal to the State Government concerned.
The proposal may also be made directly to the Board of Approval. When the proposal is
made directly to the Board of Approval, after receipt of such approval, the person concerned
shall obtain the concurrence of the state government within the period specified. The
proposal must be made in the prescribed form furnishing the particulars as prescribed. The
Developer of SEZ may allocate space or built-up area or provide infrastructure services to
the approved units.
The area within the Special Economic Zone may be demarcated by the Central Government
or any specified authority into
(a) Processing area for setting up units for activities of manufacture of goods or
rendering services

(b) Area exclusively for trading or warehousing process and
(c) Non-processing areas for activities other than those specified under clause (a) or
clause (b) above.

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