Special Economic Zone 

Special Economic Zone 

Subject: Economy

Context: As many as 1,096 units were registered during the last three years in various SEZs across the country, while 336 units exited during the period

Concept:

• A special economic zone (SEZ) is an area in a country that is subject to different economic regulations than other regions within the same country. The SEZ economic regulations tend to be conducive to—and attract—foreign direct investment (FDI). FDI refers to any investment made by a firm or individual in one country into business interests located in another country.
• When a country or individual conducts business in an SEZ, there are typically additional economic advantages for them, including tax incentives and the opportunity to pay lower tariffs.
• The economic regulations of special economic zones (SEZs) tend to be conducive to—and attract—foreign direct investment (FDI).
• Special economic zones (SEZs) are typically created in order to facilitate rapid economic growth by leveraging tax incentives to attract foreign investment and spark technological advancement.
• While many countries have set up special economic zones (SEZs), China has been the most successful in using SEZs to attract foreign capital.

The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include: –

• Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
• 100% Income Tax exemption on export income for SEZ units for first 5 years,
• Supplies to SEZs are zero rated under IGST Act, 2017.
• Other levies as imposed by the respective State Governments.
• Single window clearance for Central and State level approvals.