SPECIAL ECONOMIC ZONE

The special economic zone (SEZ) policy was announced by the government in 2000 which was concretised through the SEZ Act, 2005. It mainly aims to develop ‘export hubs’ in the country to promote growth and development. As an idea it was not new—India had set up Asia’s first ‘export processing zone’ (EPZ) in Kandla in 1965 itself. Later on the idea got another encouragement through the ‘export oriented units’ (EOUs). After the SEZ policy was formalised through an Act, the EOUs and EPZs are open to conversion to SEZ.

The SEZs can be set up by either the GoI, States or even private sector—in

all three sectors of the economy—agriculture, industry and services. As per the Ministry of Commerce and Industry, the principal objectives behind creating SEZs in the country include:

(i) generation of additional economic activity;

(ii) promotion of exports of goods and services;

(iii) promotion of investment from domestic and foreign sources;

(iv) creation of employment opportunities; and

(v) development of infrastructure facilities .

Recent steps (till March 2017) taken by the Government to strengthen SEZs in the country are as given below17:

• Minimum Land Area requirement for setting up of new SEZs has been reduced to 50 per cent for multi-product and sector-specific SEZs.

• Sectoral broad-banding has been introduced to encompass similar and related areas under the same sector.

• A new sector ‘agro-based food processing’ sector has been introduced to encourage agro-based industries in SEZs (food processing getting government’s nod by late 2016 for 100 per cent FDI by is expected to give a big push to it).

• Dual use of facilities like Social & Commercial infrastructure by SEZs and non-SEZs entities has been allowed in order to make SEZ operations more viable.

• Online processing of various activities relating to SEZ for improving ‘ease of doing business’.

• ‘SEZ India’ mobile app launched to help the SEZs to track their transactions on SEZ Online System (launched in January 2017).

By March 2017, the Government had approved 405 proposals for setting up SEZs (in addition to 7 SEZs of the GoI and 11 of States/private sector which were set-up prior to the enactment of the SEZs Act, 2005)—out of which 206 SEZs are operational. Today, the SEZs are invested with Rs. 4.06 lakh crore and have created 16.88 lakh employment. They have 23 per cent share in India’s total exports.

In recent times, the SEZs have lost their original synergy due to global

economic slowdown which followed the great recession among the developed economies. meanwhile, the Government has been taking various steps to encourage them.