Question

Consider the following statements about SEZ (Special Economic Zones).

1. It is a specifically delineated duty-free enclave, deemed to be foreign territory for the purposes of trade operations and duties and tariffs. 

2. Goods and services going into the SEZ shall be treated as imports.

Which of the above statements is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer 1

Correct Answer - Option 1 : 1 only

The correct answer is 1 only.

• SEZ (Special Economic Zones) is a specifically delineated duty-free enclave, deemed to be foreign territory for trade operations, duties, and tariffs.  Hence, Statement 1 is correct.
• They were introduced via India’s Special Economic Zone Act of 2005.
• The SEZ act came into effect in 2006.
• They are constituted by the Ministry of Commerce and Industry.
• SEZ units may be set up for the manufacture of goods and rendering of services. 
• Goods and services going into the SEZ area from Domestic Tariff Area (whole India except SEZ) shall be treated as exports and goods coming from the SEZ area into DTA shall be treated as imports. Hence, Statement 2 is incorrect.
• The setting up of an SEZ opens up new avenues to attract private investment.

• The main objectives of the SEZ Act are:
  • generation of additional economic activity.
  • promotion of exports of goods and services.
  • promotion of investment from domestic and foreign sources.
  • creation of employment opportunities.
  • development of infrastructure facilities.

• The Baba Kalyani Committee was constituted in 2018 to look into the SEZ policy of India.