SeZs Overview                                                                                                           

The concept of export processing zones is not a new one. An International Labor Organization (ILO) report, states that some of the earliest references of export processing zones date back to thirteen century in Spain. As per the report, The Free Zone Consortium of Cadiz was founded in 1929.In Spain a free zone was set up before the First World War, but it took off only after the Second World War.

India was the first country to establish EPZ, at Kandla, in the Asia Pacific region in 1966

The proposal for setting up the Kandla Free Trade Zone (KAFTZ) was mooted in 1961, with the objective of facilitating the development of the Kutch region, to ensure greater utilization of Kandla Port and to create employment opportunities in the Kandla-Gandhidham area. With a view to create an environment for achieving rapid growth in exports a Special Economic Zone was announced in the EXIM Policy 2000.

Special Economic Zones (SEZs) are specifically delineated duty-free enclaves treated as a foreign territory for the purpose of industrial, service and trade operations, with exemption from customs duties and a more liberal regime in respect of other levies, foreign investment and other transactions

What is Special?

The word "Special" mainly means special economic systems and policies. That is, the central government gives SEZs special policies and flexible measures, allowing SEZs to utilize a special economic management system.

Special tax incentives for foreign investments in the SEZs.

Greater independence on international trade activities.

Economic characteristics are represented as "4 primacies":

1) constructions primarily relies on attracting and utilizing foreign capitals;

2) primary economic forms are sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises;

3) products are primarily export-oriented;

4) economic activities are primarily driven by market.

SEZs are listed separately in the national planning (including financial planning) and have province-level authority on economic administration. SEZ's local congress and government has legislation authority.

Rationale for SEZ scheme

The main objectives of SEZ scheme can be briefly stated as:

»  Attract Foreign Direct Investment (FDI)

»  Earn foreign exchange and contribute to exchange rate stability

»  Boost the export sector, especially non traditional exports

»  Create employment opportunities

»  Introduce new technology

»  Develop backward regions

»  Stimulate sectors such as electronics, information technology, R & D, tourism, infrastructure and human resource development that are regarded as strategically important to the economy

»  Create backward & forward linkages to increase the output and raise the standard of local enterprise that supply goods and services to the zone