Special economic zone (SEZ)
Around 250 fishermen and their families from Kattukuppam in Ennore protested on Monday demanding that the Tangedco stop construction work on a coal conveyor belt.
Special economic zone (SEZ)
- A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country.
- SEZs are located within a country’s national borders, and their aims include increasing trade balance, employment, increased investment, job creation and effective administration.
- To encourage businesses to set up in the zone, financial policies are introduced. These policies typically encompass investing, taxation, trading, quotas, customs and labour regulations.
- Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.
Reasons for SEZ
- The creation of special economic zones by the host country may be motivated by the desire to attract foreign direct investment (FDI).
- The benefits a company gains by being in a special economic zone may mean that it can produce and trade goods at a lower price, aimed at being globally competitive.
- In some countries, the zones have been criticized for being little more than labour camps, with workers denied fundamental labour rights
The SEZ Rules provide for:
- Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs;
- Single window clearance for setting up of an SEZ;
- Single window clearance for setting up a unit in a Special Economic Zone;
- Single Window clearance on matters relating to Central as well as State Governments;
- Simplified compliance procedures and documentation with an emphasis on self-certification
Objectives of SEZ
- Creating additional economic activity.
- Boosting the export of goods and services.
- Boosting domestic and foreign
- Developing infrastructure facilities.
Challenges of SEZ:
Unutilized Land in SEZs: Due to lack of demand for SEZ space and disruptions caused by the pandemic.
Existence of Multiple Models: There are multiple models of economic zones such as SEZ, coastal economic zone, Delhi-Mumbai Industrial Corridor, National Investment and Manufacturing Zone, food park and textile park which pose challenges in integrating the various models.
Competition from ASEAN Countries:
In the past few years, many of the ASEAN countries have tweaked their policies to attract global players to invest into their SEZs and have also worked on a developmental set of their skilling initiatives.
Consequently, Indian SEZs have lost some of their competitive advantages globally and hence need to have fresher policies.
Performance of SEZ
Source: Report of the Comptroller and Auditor General of India (2012-2013)
- As on 30th September 2014 Incremental employment has shown growth rate of 49.61% in 2007-2008. It has shown an increasing trend from 25.41% in 2008-2009 to around 46.89% in 2010- 2011.
- However, incremental growth rate registered a decline from 2013 to 2016 on account of continuous de-notification of number of SEZs as a result of several adverse market conditions.
- SEZs have generated employment from 1, 34,704 employees in 2006 to 18, 23,451 employees in 2017-2018 (i.e., more than 13 folds).
However, SEZs has created an employment but there is a shortfall between the projected and actual employment.