PRESENTED BY:-NEERAJ KAKKAR
Objectives Of Presentation
• PART 1-To describe about SEZ, Its categories, its advantages and
disadvantages in INDIA.
• PART 2-To describe the 2 controversies related to SEZ’s.
A Special Economic zone (SEZ) is a geographical region that is
designed to export goods and provide employment. SEZs are exempt
from federal laws regarding taxes, quotas, labour laws and other
restrictive laws in order to make the goods manufactured in the SEZ at
a globally competitive price.
A free trade zone (FTZ) or export processing zone (EPZ), also called foreigntrade zone, formerly free port, is an area within which goods may be
landed, handled, manufactured, and re-exported without the intervention of
the customs authorities. Only when the goods are moved to consumers
within the country in which the zone is located do they become subject to the
prevailing customs duties. Free-trade zones are organized around major
seaports, international airports, and national frontiers—areas with many
geographic advantages for trade.
An industrial park (also known as industrial
estate, trading estate) is an area zoned and planned for
the purpose of industrial development. Industrial parks are
usually located on the edges of, or outside the main
residential area of a city, and normally provided with good
transportation access, including road and rail.
URBAN ENTERPRISE ZONE
An Urban Enterprise Zone is an area in which policies to
encourage economic growth and development are implemented.
Urban Enterprise Zone policies generally offer :1. Tax concession.
2. Infrastructure incentives.
3. Reduced rules and regulations.
to attract investments and private companies into the zones.
Urban Enterprise Zones are common in the United Kingdom and
the United States.
HISTORY OF SEZ IN INDIA
1.From 1965 onwards, India experimented with the concept of
such units in the form of Export Processing Zones.
2.A revolution came in 2000, when mr. Murlisone Maran, then
commerce minister, made a tour to China, Then
he incorporated the SEZs into the Exim Policy of
India. Five year later, SEZ Act 2005 was also
introduced and in 2006 SEZ rules were formulated.
Currently, there are about 143 SEZs (as of June 2012) operating
throughout INDIA and an additional 634 SEZs (as of June 2012) that have
been formally/principally approved by the Government of India.
Mahindra World City(Jaipur) Ltd. Kalwara Village, Jaipur, Rajasthan IT/ITES.
Kisan Udyog khara, Bikaner.
AIC Hindoun City.
Kaladwas Industrial Estate (SEZ) Udaipur
1. Generation of additional economic activity.
2. Promotion of exports of goods and services.
3. Promotion of investment from domestic and foreign sources
4. Creation of employment.
5. Development of infrastructure facilities.
6. Single window clearance for setting up of a SEZ and an unit in SEZ.
7. Single window clearance on matters relating to central as well as state
8. Easy and simplified compliance procedures and documentations with stress
on self certification
A. 15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5
years and up to 50% for the balance 5 years equivalent to profits ploughed back for
B. Allowed to carry forward losses.
C. Duty free import or domestic procurement of goods for setting up of the SEZ units.
D. Goods imported/procured locally are duty free and could be utilized over the approval period
of 5 years.
E. Exemption from customs duty on import of capital goods, raw materials, consumables,
F. Exemption from payment of Service Tax.
G. Setting up Off-shore Banking Units (OBU) allowed in SEZs.
H. External Commercial Borrowings up to $ 500 million a year allowed without any maturity
I. Enhanced limit of Rs. 2.40 crores per annum allowed for managerial remuneration.
J. No routine examination by Customs officials of export and import cargo.
Land grabbing at very low prices.
Loss of livelihood of the farmers whose land was acquired for SEZ
Revenue loses 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 mark for themselves.
o Huge downward impact of tax:- GDP Ratio and the common man have to
pay the price of it.
o The SEZ’s if not properly located could lead to Supply Chain Management
problems as well.
In spite of the strong objectives of the INDIAN Government The SEZ policy is
in following controversy.
Generation of little new activity as there may be relocation of industries to
take advantage of tax concessions.
Revenue loss due to tax exemption.
Large-scale land acquisition by the developers, may lead to displacement of
farmers with meager compensation.
Acquisition of prime agricultural land, having serious implications for food
Uneven growth aggravating regional inequalities.
A. Held in In November 2006, Gujarat
B. Farmers from the Jamnagar District moved to supreme court to challenge the setting-up
of a 10,000-acre (approx. 4,000-ha) SEZ by Reliance Infrastructure.
They claimed :1. Acquisition of large tracts of agricultural land in the villages of the district
violated the Land Acquisition Act of 1894.
2. It was also in breach of the public interest.
Results:a) Government putted a ceiling on the maximum land area that can be acquired for multiproduct zones .
b) Decide to “go slow” in approving SEZs.
Nandigram is a rural area in Purba Medinipur district of the Indian state of West Bengal. It is located
about 70 km south-west of Kolkata, opposite the industrial city of Haldia.
Nandigram Violence was held in 2007.
West Bengal government decided to allow Salim Group to set up a chemical hub at Nandigram under
the SEZ policy.
The main objective was to expropriate 10,000 acres of land for a Special Economic Zone (SEZ) to be
developed by the Indonesian-based Salim Group.
The villagers took control of the area and all the roads to the villages were cut off.
The police shootings at least 14 villagers died and 70 more wounded.
The chief minister Buddhadeb Bhattacharjee ordered the Nandigram land acquisition notification to
cover up the matter.
NO steps was taken to ensure that all persons are getting essential levels of food, shelter, water and
sanitation, health care and education, as well as their right to voluntary return or resettlement.
RESULTS:-Chief minister Buddhadeb Bhattacharjee shifted the plant to Nayachar, 30 kilometres from
Haldia, to set up the chemical hub.
How SEZ’s should be modelled to Benefit
Size Does Matter:- It hardly needs reiteration that only a large sized
zone can generate economic activity on some reasonable scale.
TAX Benefits:- The incentive package in India is quite liberal and
may even be a shade better than today.
Labor Laws:- Flexible labor policy is the need of hour in the SEZ’s.
Domestic Tariff Areas:-Apart of cheaper and competitive products
the domestic market itself provides immense opportunity for sale of
The SEZ’s could drastically improve the economic activity in the country
Make the country’s export competitive and globally noticeable, be net foreign
exchange earner and provide immense employment opportunity.
This should not be done at the cost of bringing down the agricultural activities,
Land grabbing and real estate mafia should be properly regulated so that the
common man is not the net sufferer to get the net foreign exchange earner up