- The term special economic zone (SEZ) is commonly used as a generic term to refer to any modern economic zone. Broadly, SEZs are located within a country’s national borders but they have different business laws.
- The aims of the zones include: increased trade, increased investment, job creation and effective administration.
- To encourage businesses to set up in the zone liberal policies are introduced.
- These policies typically regard investing, taxation, trading, quotas, customs and labor regulations. Additionally, companies may be offered tax holidays. The host country may be particularly interested in foreign direct investment (FDI).
- The benefits company gains by being a SEZ may allow it to produce and trade goods at a globally competitive price.
- The operating definition of an economic zone is determined individually by each country.
- India was one of the first countries in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965.
- In order to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.