Introduction

Special Economic Zone (SEZ) is a geographical region that has economic laws different from a countrys generally applicable economic laws, with the underlying objective being an increase in economic growth and activity through increased foreign investment. The category 'SEZ' covers a broad range of more specific zone types including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones & others. SEZs are projected as duty free area for the purpose of trade, operations, duty and tariffs. SEZ units are self-contained and integrated having their own infrastructure and support services.

India was one of the first in Asia to recognize effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asias first EPZ set up in Kandla in 1965. To overcome the shortcomings experienced on account of the multiplicity of controls and clearances, absence of world class infrastructure, & an unstable fiscal regime & with a view to attract larger foreign investments in India , Special Economic Zones (SEZs) Policy was announced in, April, 2000. The principal goal of SEZ is to increase foreign investment

Advantages of SEZ
10-year tax holiday in a block of the first 20 years . Exemption from duties on all imports & excise / VAT on domestic sourcing of capital goods for project development Freedom to develop township in to the SEZ with residential areas, markets, play grounds, clubs and recreation centers without any restrictions on foreign ownership . Income tax holidays on business income . 10% FDI allowed through the automatic route for all manufacturing activities. Procedural ease and efficiency for speedy approvals, clearances and customs procedures and dispute resolution .

Has host of Public and Private Bank chains to offer financial assistance for business houses.

 Well connected with network of public transport, local railways and cabs. Pollution free environment with proper drainage and sewage system . In-house Customs clearance facilities . Easy access to airport and local Railway Station. Full authority to provide services such as water, electricity, security, restaurants and recreational facilities within the zone on purely commercial basis. Abundant supply of technically skilled & semiskilled manpower across all industry sectors.

Disadvantages Revenue losses because of the various tax exemptions and incentives. Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves. The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.

Tangible benefits
Contribution to respective States GDP. Employment generation (Direct & Indirect) Creation of world class self contained infrastructure

Improve fiscal position of the state due to consequential benefits- cascading effect on economic activity
Increase in States revenues from VAT, Property taxes, Stamp Duty etc.

Intangible benefits
National and International recognition as Preferred Investment Destination

Facilitates urbanization shift from agriculture to industry

Creation of high quality social infrastructure

Reduction in pressure on existing urban infrastructure

Better standard of living

Improved competitiveness of the local industry

Absorption of latest technology and managerial capabilities Environmental benefits from planned developments.