A Special Economic Zone (SEZ) is a geographical region that has economic and oth

er laws that are more free-market-oriented than a country's typical or national

laws.
"Nationwide" laws may be suspended inside a special economic zone.
The category 'SEZ' covers a broad range of more specific zone types, including F
ree Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ),
Industrial parks or Industrial Estates (IE), Free Ports, Urban Enterprise Zones
and others.
Usually the goal of a structure is to increase foreign direct investment by fore
ign investors, typically an international business or a multinational corporatio
n (MNC).

India was one of the first in Asia to recognize the effectiveness of the Export
Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up i
n
Kandla in 1965. With a view to overcome the shortcomings experienced on account
of the multiplicity of controls and clearances; absence of world-class infrastr
ucture,
and an unstable fiscal regime and with a view to attract larger foreign investm
ents in India, the Special Economic Zones (SEZs) Policy was announced in April 2
000.
This policy intended to make SEZs an engine for economic growth supported by qua
lity infrastructure complemented by an attractive fiscal package, both at the Ce
ntre
and the State level, with the minimum possible regulations. SEZs in India functi
oned from 1.11.2000 to 09.02.2006 under the provisions of the Foreign Trade Poli
cy and
fiscal incentives were made effective through the provisions of relevant statut
es.
To instill confidence in investors and signal the Government's commitment to a s
table SEZ policy regime and with a view to impart stability to the SEZ regime th
ereby
generating greater economic activity and employment through the establishment of
SEZs, a comprehensive draft SEZ Bill prepared after extensive discussions with
the
stakeholders. A number of meetings were held in various parts of the country bo
th by the Minister for Commerce and Industry as well as senior officials for thi
s
purpose. The Special Economic Zones Act, 2005, was passed by Parliament in May,
2005 which received Presidential assent on the 23rd of June, 2005. The draft SEZ
Rules were widely discussed and put on the website of the Department of Commerce
offering suggestions/comments. Around 800 suggestions were received on the draf
t rules.
After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came i
nto effect on 10th February, 2006, providing for drastic simplification of proce
dures
and for single window clearance on matters relating to central as well as state
governments. The main objectives of the SEZ Act are:
(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;
It is expected that this will trigger a large flow of foreign and domestic inves
tment in SEZs, in infrastructure and productive capacity, leading to generation
of
additional economic activity and creation of employment opportunities.
The SEZ Act 2005 envisages key role for the State Governments in Export Promotio
n and creation of related infrastructure. A Single Window SEZ approval mechanism
has
been provided through a 19 member inter-ministerial SEZ Board of Approval (BoA).
The applications duly recommended by the respective State Governments/UT
Administration are considered by this BoA periodically. All decisions of the Boa
rd of approvals are with consensus.
The SEZ Rules provide for different minimum land requirement for different class
of SEZs. Every SEZ is divided into a processing area where alone the SEZ units
would
come up and the non-processing area where the supporting infrastructure is to b
e created.
The SEZ Rules provide for:
" Simplified procedures for development, operation, and maintenance of the Speci
al Economic Zones and for setting up units and conducting business in SEZs;
Single window clearance for setting up of an SEZ;
Single window clearance for setting up a unit in a Special Economic Zone;
Single Window clearance on matters relating to Central as well as State Governme
nts;
Simplified compliance procedures and documentation with an emphasis on self cert
ification
Considering the need to enhance foreign investment and promote exports from the
country and realising the need that a level playing field must be made available
to
the domestic enterprises and manufacturers to be competitive globally, the Gover
nment of India had in April 2000 announced the introduction of Special Economic
Zones
policy in the country, deemed to be foreign territory for the purposes of trade
operations, duties and tariffs. As of 2007, more than 500 SEZs have been propose
d, 220
of which have been created. This has raised the concern of the World Bank, which
questions the sustainability of such a large number of SEZs. The Special Econom
ics in
India closely follow the PRC model.
India passed special economic zone act in 2005. In India, the government has bee
n proactive in the development of the SEZs. They have formulated policies, revie
wed
them occasionally and have ensured that ample facilities are provided to the dev
elopers of the SEZs as well as to the companies setting up units in the SEZs.
[edit] SEZs in IndiaIn India, SEZs are the special zones created by the Governme
nt and run by Government-Private or solely Private ownership, to provide special
provisions to develop industrial growth in that particular area. The government
of India launched its first SEZ in 1965, in Kandla, Gujarat. The incentives and
facilities offered to the units in SEZs for attracting investments into the SEZs
, including foreign investment include:-
Duty free import/domestic procurement of goods for development, operation and ma
intenance of SEZ units
100% Income Tax exemption on export income for SEZ units under Section 10AA of t
he Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of
the
ploughed back export profit for next 5 years.
Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
External Commercial Borrowing by SEZ units up to US $ 12500 billion in a year wi
thout any maturity restriction through recognized banking channels.
Exemption from Central Sales Tax.
Exemption from Service Tax.
Single window clearance for Central and State level approvals.
Exemption from State sales tax and other levies as extended by the respective St
ate Governments.
The major incentives and facilities available to SEZ developers include:-
Exemption from customs/excise duties for development of SEZs for authorized oper
ations approved by the BOA.
Income Tax exemption on income derived from the business of development of the S
EZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act
.
Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act.
Exemption from dividend distribution tax under Section 115O of the Income Tax Ac
t.
Exemption from Central Sales Tax (CST).
Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).
List of Special Economic Zones in India Currently there are 114(as on Oct 2010)
SEZs operating throughout India in the following states.[5] Karnataka - 18; Kera
la - 6;
Chandigarh - 1; Gujarat - 8; Haryana - 3; Maharashtra - 14; Rajastan - 1; Oriss
a - 0 Tamil Nadu - 16; Utter Pradesh - 4; West Bengal - 2.
Additionally, more than 500 SEZs are formally approved (as on Oct 2010) by the G
ovt of India in the following states.[6] Andhra Pradesh - 109; Chandigarh - 2;
Chattisgarh - 2; Dadra Nagar Haveli - 4; Delhi- 3; Goa - 7; Gujarath - 45; Harya
na - 45; Jharkand - 1; Karnataka - 56; Kerala - 28; Madhya Pradesh - 14;
Mahrashtra - 105; Nagaland - 1; Orissa - 11; Pondicherry - 1; Punjab - 8; Rajas
than - 8; Tamil Nadu - 70; Uttarankhand - 3; Utter Pradesh - 33; West Bengal - 2
2;

As with increasing requirements of Commercialization and International trade, ne

eds of Global Duty Free trade operations Zone has given rise to SEZ of Mumbai.
This is one of the very hot topics in all leading newspapers for development of
such Special Economic Zone by Government Of Maharashtra, which in Navi Mumbai
is Undertaken by CIDCO (India) where all international transactions and operatio
ns will be done in a Duty and Tariff Free Zone which will give a positive boost
to Foreign Direct Investments (FDI).
Work has already started for same by Government Of India which has selected one
of the best locations of developing Mumbai i.e Navi Mumbai, which is also known
as
NMSEZ while reading few articles. This port will be well connected to all Rail,
Road as well as Sea Network Transportation and communication. Development of
NMSEZ Project is Developing faster to give a whole new commercial life for Forei
gn Trade in Mumbai.
1. Area - 32,000 acres
2. Cost - Rs25,000crores
3. Population - 1000,000
4. Investment - US$50bn
Incidentally, the article also informs us that Jurong Town Planners, the same pe
ople that designed Singapore, will be "crafting the master plan" (for the NMSEZ)
.
Another data point from the article - Shenzhen China is the poster boy of SEZ. I
t has attracted US$27.53bn worth of FDI as against India's total FDI of US$34bn
over the comparable period.

Work on Mumbai SEZ to begin this year

By Dev Dutt

The construction work on the combined Mumbai and Navi Mumbai Special Economic Zo
ne, estimated to cost Rs 4,850 crore, could begin in September or October this y
ear,
Nikhil Gandhi, Chairman, Sea King Infrastructure Ltd says. SKIL is the founder
partner of the Videocon International Ltd-led consortium that won the global ten
der
floated by the City and Industrial Development Corporation early this year. The
consortium has received a Letter of Intent for this project from CIDCO.
The consortium will have foreign-based investors.

Nikhil Gandhi gives details of the Maha-Mumbai SEZ project in an exclusive inter
view with Project Monitor.

What was the objective behind clubbing the Maha-Mumbai SEZ (MMSEZ) and Navi Mumb
ai SEZ (NMSEZ)?
The clubbing is aimed at integration of development of the two SEZs to provide f
or world-class infrastructure, utilities, services for business, living, learnin
g,
recreation and healthcare on the Chinese pattern. The clubbing will facilitate
substantial savings in costs of infrastructure, utilities and services,
administrative and overheads expenses. The participants will get a wider unit-lo
cation choice.
Have you received the Letter of Intent from CIDCO for the Navi Mumbai SEZ?
Yes, the consortium received the Letter of Intent from CIDCO on February 5, 2004
, and we are in the process of signing an agreement with the Corporation.
Who will give the final approval for clubbing the two SEZs?
The lenders led by IDBI and IDFC have been pressing for the integrated developme
nt of the two SEZs since the developers are now virtually the same. Besides,
it will be more viable from the financial point of view. The final approval for
clubbing the two SEZs will have to be given by CIDCO and Government of Maharasht
ra.
When will the civil and other works of the SEZ commence?
The work on the ground for developing the infrastructure etc. is likely to comme
nce in September or October 2004.
What is the total estimated cost of the combined SEZ?
The total estimated cost of the combined SEZ covering 2,576 hectares is Rs 4,850
crore with a debt equity ratio of 1.6:1.
What are the financial arrangements for this project?
The equity for the combined project is to be contributed by the main promoters,
namely Sea King Infrastructure Ltd, Videocon International Ltd, Hiranandani
Constructions Pte. Ltd, Avinash Bhosale Infrastructure Ltd and CIDCO. The other
shareholders will be SICOM Ltd, Parsons Brinckerhoff of USA
(as project management consultants), Jurong Consultants Pte. Ltd of Singapore (a
s master planners), and other investors like FIIs, OCBs and EPC contractors.
A special purpose vehicle has been formed for this project in which CIDCO will
hold 26 per cent equity in the NMSEZ part. The consortium will hold the balance
74 per cent.
What will be ultimate financial benefit to CIDCO from this project?
CIDCO will benefit in many ways. They will get a very good price for the NMSEZ l
and and they will also get a share of the gross revenue of the SPV from 1.5-7.5
per cent over the years. Moreover, CIDCO will also be able to recover the cost o
f relief and rehabilitation (R&R) of the project affected persons, pre-operative
expenses as well as the cost of their building at Dronagiri, as these would be c
onsidered as part of their equity for the NMSEZ project.
What environmental and other social security/liability will be taken care of in
this project?
All environmental requirements, as laid down by the Central and state government
s, will be fully complied with. In fact, it is expected that when the integrated
SEZ
is fully developed, the environment of the area will actually be enhanced due to
the adoption of environment-friendly planning and encouragement of conservation
measures. The social security/liability of the SEZ population will be taken care
of as per the provisions in the Central and state SEZ Acts, which are likely to
be
promulgated in the next few months. Rehabilitation of PAPs will be as defined by
the Maharashtra government.
Do you have any legal hurdles against implementing and commissioning this projec
t?
No legal hurdles are foreseen in the implementation and commissioning of the int
egrated SEZ as there are no environmental restrictions in the area other than th
e
provisions of the CRZ Act and the Pollution Control Act. The latter restrictions
will be fully complied with.
When do you hope to achieve financial closure for this project?
By September 2004.
What will be the exclusive feature or USP of the SEZ?
The USP of the SEZ will, obviously, be its location and logistical advantage, be
ing situated in close proximity to Mumbai, Jawaharlal Nehru Port, Chhatrapati Sh
ivaji
International Airport, National Highways, State Highways and Several waterways.
The SEZ will be close to Mumbai-Pune Knowledge Corridor as well as form part of
the
Mumbai-Pune-Nashik Golden Triangle. The proposed international airport in Navi
Mumbai and the Trans-Harbour Link would be additional benefits.

(March 01-15, 04)