Special economic zones are those zones which are specially designed duty free enclaves deemed as foreign territory for the purpose of trade operations, duties and tariff. They are free from import-export regulations except those relating to banking and labour. They are give incentives and facilities for their establishment and development.
A special economic zone may be set up for the manufacture of goods and rendering of services, processing, assembling, trading, repair, remaking, reconditioning, re¬engineering including making of gold, silver or platinum jewellery or articles thereof in connection there with.
The important features of special economic zones are:
1. Setting up a manufacturing, trading or service unit is allowed.
2. Creation of designated duty-free enclave treated as a foreign territory for trade operations, duties and tariffs.
3. No license is required for setting up these units.
4. Domestic sales are subject to customs duty and import duty policy in force.
5. 100% foreign direct investment is permitted through automatic route in the manufacturing sector.