Question

What are Special Economic Zones (SEZs)? Write the characteristics of Special Economic Zones (SEZs)

Answer 1

Special Economic Zone – Definition

An SEZ is an enclave within a country that is typically duty-free and has different business and commercial laws chiefly to encourage investment and create employment.

• Apart from generating employment opportunities and promoting investment, SEZs are created also to better administer these areas, thereby increasing the ease of doing business.           

  SEZ Background

  An SEZ Policy was announced for the very first time in 2000 in order to overcome the obstacles businesses faced. 

• There were multiple controls and many clearances to be obtained before starting a venture.
• Infrastructure facilities were shoddy and well below world standards in India.
• The fiscal regime was unstable as well.
• In order to attract huge foreign investments into the country, the government announced the Policy.
• The Parliament passed the Special Economic Zones Act in 2005 after many consultations and deliberations.
• The Act came into force along with the SEZ Rules in 2006.
• However, SEZs were operational in India from 2000 to 2006