Salient Features Of Indian Special Economic Zones Economics Essay Example

1999. The strategy was announced at the clip of one-year reappraisal of EXIM Policy effectual from 1.4.2000. The basic thought behind set uping these zones is to reserve countries where export production could take topographic point free from all regulations and ordinances regulating imports and exports and to give them operational flexibleness.

The policy provides for puting up of SEZ 's in the populace, private, joint sector or by State Governments. It was besides envisaged that some of the bing Export Processing Zones would be converted into Particular Economic Zones. Consequently, the authorities has converted Export Processing Zones located at Kandla and Surat, Cochin, Santa Cruz, Falta, Madras, Vishakapatnam and Noida into Particular Economic Zones.

Particular Economic Zones in India were established in an effort to speed up foreign investing and endorse exports from India and acknowledging the demand of a planetary platform to expose the domestic houses and manufacturers to the competitory universe market. The proclamation of explicating a Particular Economic Zones policy in India was made by the authorities in April 2000 and was anticipated to be an abroad state for trade intents, commercial operations, responsibilities and revenue enhancements. SEZs when equipped are anticipated to supply premiere substructure services and nutriment services, besides allowing for the duty free import of merchandize and natural stuffs. Furthermore, attractive fiscal subordinates and trouble-free usage duties, banking and other methods are provided in such concern zones. Establishing SEZs is besides recognized as communications development methods.

Aims

• Coevals of extra economic activity
• Promotion of exports of goods and services
• Promotion of investing from domestic and foreign beginnings
• Creation of employment
• Development of Infrastructural installations.
• Simplified process for development, operation and maintaining
  

of the particular Economic Zones and for puting up units and carry oning concern

Some of the salient characteristics of Indian Special Economic Zones:

Constitution of SEZ-Indian SEZs are developed by authorities, private and joint sector, unlike its international opposite numbers where zones are chiefly maintained by their several authoritiess. This provides equal chances to both Indian and planetary participants.

Government has allocated a least favourable country of 1,000 hectares for greenfield SEZs. Although, there are no restriction in context of favourable country in building sector specific SEZs.

Foreign Direct Investment ( FDI ) - 100 % of Foreign Direct Investment is allowed for all gifts in Particular Economic Zones, apart from activities cataloged under the unconstructive record like,

• Weaponries and ammo and other points of defense mechanism
• Narcotic and Psychotropic substance
• Hazardous Chemicals
• Distillation and Brewing of alcoholic drinks
• Cigarettes and Tabacco.

SEZ divisions are obligatory to be encouraging net foreign exchange surrenderers and are non entitle to any least sum of value add-on guidelines or export duties. Commodity rush from Domestic Tariff Area ( DTA ) into a SEZ is recognized as exports and trade good rush into DTA from SEZ are recognized as imports.

Indian Special Economic Zones - Organizational Set-up

SEZs are controlled by a three tier Organizational Set-up described as under:

• Supreme commanding organic structure in the Department is known as The Board of Approval
• At territory degree, The Unit Approval Committee tackles with SEZs development and
  

other associated issues

Indian Special Economic Zones - Benefits

Besides offering high terminal substructure and handiness to a big skilled work force, SEZ besides offers attractive inducements and advantages to houses and developers.

Benefits

1. The SEZ Act besides provides a figure of inducements to units proposed to be set up in SEZs. SEZ units may be set up for transporting on fabrication, trading or service activity. A unit set up in SEZ has the following installations and inducements:
2. Land Catching at really low monetary values.
3. If SEZ built on agricultural land the husbandmans will free their support as they are non skilled labourers it would to tough to relocate them to other occupations. Already Farmers are holding really bad yearss in India, one of the prima agribusiness states.
4. Since the companies that operate under SEZ enjoy a batch of revenue enhancement vacations it would make a load on the finance ministry as revenue enhancement collected would be less.
5. Huge downward impact on Tax: GDP ratio & A ; the common adult male have to pay the monetary value of it.
6. 15 twelvemonth corporate revenue enhancement vacation on export net income - 100 % for initial 5 old ages, 50 % for the following 5 old ages and up to 50 % for the balance 5 old ages tantamount to net incomes ploughed back for investing.
7. Allowed to transport forward losingss.
8. No license required for import.
9. Duty free import/domestic procurance of goods for puting up of the SEZ units.
10. Goods imported/procured locally are duty free and could be utilised over the blessing period of
    

5 old ages.

has exempted SEZ Unit of measurements from the payment of cast responsibility and enrollment fees on the lease/license of secret plans.

Decision

The SEZ 's could drastically better the economic activity in the state, make the state 's export competitory and globally noticeable, be net foreign exchange earner and supply huge employment chance. But this should non be done at the cost of conveying down the agricultural activities, Land catching and existent estate Mafia should be decently regulated so that the common adult male is non the net sick person to acquire the net foreign exchange earner up and running. As compared to china where bulk of the SEZ 's were setup by the authorities, similar should be adopted in India, if non to the full it should be a public-private partnership and regulative organic structures should be decently managed to weed out false beliefs.

To be economically feasible SEZ 's should be approved over a peculiar land country ( greater than 1000 estates ) for rapid economic growing in the country and for it to be profitable and self sustainable. Relaxed Tax norms, Labor Torahs and DTA ordinances will certainly pull foreign investing and major industries to setup industries in the SEZ 's doing it profitable and run intoing its coveted consequences!