Contains description about important concept of Business Environment i.e. Export Processing Zones and Trading Blocs

1. Export Processing Zones
• These are such industrial areas in a country, whose
entire production is done for the purpose of
exports(of goods only)
• Usually situated near Seaports, Airports.
• India’s first EPZ is Kandla Free Trade Zone
(KAFTZ), Gujarat, which was set up in 1965.
• We have 8 EPZs which were converted to SEZs in
2000
Ratika Chawla,Assistant Professor

2. Characteristics /Features
• Well developed Infrastructural facilities.
• Foreign investment is allowed even to 100% extent.
• Place is made available at concessional rates.
• Raw materials or capital goods i.e. Machinery, for
export production, can be imported without the
payment of duty.
• If some items are purchased from within the country
to be used for export production, are entitled to be
exempted from duty.
Ratika Chawla,Assistant Professor

3. • Goods imported in the EPZ are exported only after
some value addition
• Employment opportunities are created which help in
income generation .
• Development of labor skill set
• Transfer of technology also keeps growing
• Operating costs are intentionally kept low to attract
the investors.
Ratika Chawla,Assistant Professor

4. Facilities by the EPZ s in India
• Regular Electricity
• Single Window clearance
• Cheap and skilled labor
• Appropriate Water supply
• Desirable Location
• Proper Infrastructure
• Medical Facilities
Ratika Chawla,Assistant Professor

5. Objectives of EPZs
• To earn foreign exchange
• To create Employment opportunities
• To facilitate the transfer of technology
• To contribute to the overall development of the
country.
Ratika Chawla,Assistant Professor

6. Free Trade Zone
• Goods imported to a FTZ can be exported again
without any further processing .
Ratika Chawla,Assistant Professor

7. Trading Blocks
• They are the group of countries/economic integration
with in a geographical area which protect themselves
from import from the non- member countries
• Examples :- EU ,NAFTA etc.
Ratika Chawla,Assistant Professor

8. Types of Trading Blocks
• PTA(Preferential Trade Area)- When the
countries in a particular geographical area reduce or
remove the trade barriers on selected goods imported
from other members of the area.
Ratika Chawla,Assistant Professor

9. • (FTA )Free Trade Area – When the countries
agree to reduce or remove the barriers on all goods
coming from other member countries.
Ratika Chawla,Assistant Professor

10. • Customs Union – When the tariff barriers between
the members are removed and a common acceptance
of external tariff is made against non- members.
Ratika Chawla,Assistant Professor

11. • Common Markets(Single Market)- It shows
the complete economic integration .
• In this the member countries trade freely in all
economic resources .
• All the tariff barriers to trade in goods, services,
capital and labor are removed.
• The non- tariff barriers are reduced and eliminated.
Ratika Chawla,Assistant Professor

12. Advantages of Trading Blocks
• Free trade within the block- (due to the free access to
each other’s markets, members are encouraged to
specialize.
• Market access and Trade creation – Owing to the free
trade, the high cost domestic products can be replaced
by low cost imported goods – leading to consumption
effect i.e. increased demand of the low priced goods.
Ratika Chawla,Assistant Professor

13. • Economies of scale – due to low costs, high demand
of consumers, large production is done.
• Increased Employment Opportunities
• Protection from cheap imports from outside
Ratika Chawla,Assistant Professor

14. Ratika Chawla,Assistant Professor