EXPORT PROCESSING ZONES

Special Economic Zones (SEZ) have touched new heights in terms of performance in Exports, Investment and Employment in the last three years.

Important points:

  • An SEZ is a territory within a country that is typically duty-free (Fiscal Concession) and has different business and commercial laws chiefly to encourage investment and create employment.
  • SEZs are created also to better administer these areas, thereby increasing the ease of doing business.

SEZs in India:

  • Asia’s first EPZ (Export Processing Zones) was established in 1965 at Kandla, Gujarat.
  • While these EPZs had a similar structure to SEZs, the government began to establish SEZs in 2000 under the Foreign Trade Policy to redress the infrastructural and bureaucratic challenges that were seen to have limited the success of EPZs.
  • The Special Economic Zones Act was passed in 2005. The Act came into force along with the SEZ Rules in 2006.
  • However, SEZs were operational in India from 2000 to 2006 (under the Foreign Trade Policy).
  • India’s SEZs were structured closely with China’s successful model.
  • Presently, 379 SEZs are notified, out of which 265 are operational. About 64% of the SEZs are located in five states – Tamil Nadu, Telangana, Karnataka, Andhra Pradesh and Maharashtra.
  • The Board of Approval is the apex body and is headed by the Secretary, Department of Commerce (Ministry of Commerce and Industry).
  • The Baba Kalyani led committee was constituted by the Ministry of Commerce and Industry to study the existing SEZ policy of India and had submitted its recommendations in November 2018.
  • It was set up with a broad objective to evaluate the SEZ policy towards making it WTO (World Trade Organisation) -compatible and to bring in global best practices to maximise capacity utilisation and to maximise potential output of the SEZs.

Objectives:

  1. To create additional economic activity.
  2. To boost the export of goods and services.
  3. To generate employment.
  4. To boost domestic and foreign investments.
  5. To develop infrastructure facilities.

Way Forward

  • Promotion of MSME investments in SEZs by linking with MSME schemes and allowing alternate sectors to invest in sector-specific SEZs is among the recommendations by the Baba Kalyani Committee on SEZs.
  • It had also batted for additional enablers and procedural relaxations as well as granting SEZs infrastructure status to improve their access to finance and enable long-term borrowings.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MNT

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