SPECIAL ECONOMIC ZONE 2.O

24 Feb SPECIAL ECONOMIC ZONE 2.O

Posted at 24 Feb 2022 in Current Affairs by Anshum Verma 0 Comments

0 Likes

The government’s recent proposal to change laws governing the Special

Economic Zones Act comes as a big boost for the sector.

A special economic zone (SEZ) is an area in a country that is subject to different economic regulations than other regions within the same country.
Asia’s first Export Processing Zone (EPZ) was established in 1965 at Kandla, Gujarat state.
In India, the Special Economic Zones (SEZs) Policy was announced in 2000.
SEZs in India functioned from 2000 to 2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes. Today Current Affairs.
The Special Economic Zones Act was passed in 2005.

Objectives

generation of additional economic activity
promotion of exports of goods and services
promotion of investment from domestic and foreign sources
creation of employment opportunities
development of infrastructure facilities
Once an SEZ has been approved by the Board of Approval and Central Government has notified the area of the SEZ, units are allowed to be set up in the SEZ.

Duty free import and domestic procurement of goods for the development, operation, and maintenance of your company/SEZ unit
100% income tax exemption on export income for the first five years, 50% for five years thereafter, and 50% of the export profit reinvested in the business for the next five years.
Exemption from GST and levies imposed by state government (supplies to SEZs are zero rated under the IGST Act, 2017, meaning they are not taxed)
Exemption from Minimum Alternate Tax (MAT)
Single window clearances for all state and federal government approvals.
Exemption in electricity duty and tax on sale of electricity by certain states in India.
Presence of customs officer in the SEZs to facilitate and expedite the trade processes
Offering land to SEZ developers at concessional rates by some states.

About 376 SEZs are notified but currently only 270 SEZs are operational in India.
In the April-December 2021 period, exports from SEZs increased by 25% to 93 billion dollars.
UNCTAD report suggests that SEZ exports did not rise at a faster rate than overall exports even before the pandemic.
It appears that SEZs have ceased to be attractive after the tax holiday for units and developers was wound down between 2017 and 2020.
The proliferation of Free Trade Agreements between 2005-15 robbed SEZs of their advantages, as importers outside SEZs benefited from zero-rated imports without being subject to Domestic Tariff Area (DTA) related restrictions.

Plutus IAS Current Affairs Team Member