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Special Economic Zones (SEZ) have been created first time in the:


1. EXIM Policy, 2000
2. EXIM Policy, 2005
3. Industrial Policy, 1956
4. Industrial Policy, 1991

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Correct Answer - Option 1 : EXIM Policy, 2000

The correct answer is EXIM Policy, 2000.

  • The Special Economic Zones scheme was perceived by the then Commerce and Industries Minister, Murosoli Maran.
  • During his visit to China in 1999, he found the concept of Special Economic Zones running there.
  • The scheme was then announced at the annual review of Exim Policy effective from 1st April 2000.

  • Special Economic Zones
    • ​Definition - An SEZ is a "duty-free enclavewithin a country that has different business and commercial laws chiefly to encourage investment and create employment. Though within the country, it is to be treated as foreign territory for the purpose of trade operations and duties, and tariffs. 
    • Background - The Policy was announced for the first time in the year 2000 to remove the following obstacles faced by businesses:
      • Multiple controls and clearances were to be obtained before starting a project.
      • Poor infrastructure facilities.
      • Low foreign investment.
    • Subsequent to announcing the Policy in 2000, the government passed the Special Economic Zones Act in 2005 and the Act came into force along with the SEZ Rules in 2006, though the SEZs were functional n India from 2000 to 2006 (under the Foreign Trade Policy).
    • Some important features:
      • No requirement for an import license.
      • The units located in the zone must become net foreign exchange-earners within 3 years.
      • In the case of domestic sales, full custom duties and import policy in force are applicable.
      • The companies are not required to pay income tax on the profit earned for the first five years and for the next two years only 50% of the tax is to be paid. Further, if half of the profit is reinvested in the company the concession of 50% tax is extendable for the next 3 years.
      • For developing an SEZ, the basic requirement is that 25% of the area of the SEZ must be used only for export-related activities and the remaining 75% area can be used for economical and social infrastructure.

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