Special Economic Zone (SEZ)

I did a presentation in my college on the Special economic zone also know as FTA (Free trade zones) in US.

What is SEZ?

A special Economic zone is a geographical region that economic laws which are more liberal than the usual economic laws in the country. . The basic motto behind this is to increase foreign investment. The sez was first established by the PRC (Peoples republic of China) for a variety of reasons like, increase in investment and increase job opportunities and technical knowledge and bring about certain tax reforms.

Need for Sez and who can set up:

The policy of sez was introduced on 1/4/2000 (In India) with a view to provide an internationally competitive and hassle free environment for exports and make the domestic enterprises and manufacturers globally competitive. The units set up under sez can be for manufacturing or rendering service. The policy provides setting up the sez in the public sector or private sector or by joint sector or even by the state government. It was also decided that the current EPZ (Export processing zone) would be converted into the special economic zone. EPZ like SEZ also have less bureaucratic requirements and quotas are eliminated but there are certain barriers like tariff for import and export.

As I mentioned earlier sez are set up mainly to attract foreign investments and increase the exports, there are certain features that I would like to highlight from the SEZ act 2005 which will show what makes a unit under a special economic different from any other unit anywhere in the country

1) 100% FDI for the manufacturing sector, and no cap on foreign investments for Small scale industries (SSI) items. Foreign direct investment (FDI) is defined as a long term investment by a foreign investor in some other country’s economy. The FDI relationship consists of a parent enterprise and a foreign affiliate, the foreign affiliate will invest money in the parent company and together they will form the Trans national corporation (TNC)

2) Income Tax benefit under section 80 of the Income Tax Act, this implies that the profits earned by the unit is exempt from it for 3 years and 50% exemption for the next 2 years.

3) Duty free import of domestic goods required for the development and maintenance of the sez.

4) Exemption from Service tax and CST

5) Whatever investments that are made by individuals whether in mutual funds or properties or anywhere the interest that is earned is subject to income tax, but under sec88 of IT act investments made by the individual in the special economic zone is exempted from income tax.

6) There is an enhanced limit of 2.4 crore per annum allowed for managerial remuneration. This implies that units under sez’s can attract the best students from top business management schools, and a professional and well paid team will take charge of the management.

7) Normal labor laws are applicable which are enforced by the state, however state governments have been requested to simplify the procedures and for introduction of single window clearance mechanism by delegating appropriate powers to the development commissioner of SEZs.

Evaluation of Sez’s:

When evaluating the success of sez it is important to determine how the resources would have been utilized in the absence of the zones, would capital have remained in the country and would employment be created in more productive areas. When the regulatory framework legal framework and the administration of the sez fail then the cost of the sez’s outweighs the benefit.

Advantages of Sez:

Sez’s are good from the point of view of growth and development. It increases income level of citizens, encourages competition and lowers labor costs.

Attracts FDI and exchange earnings: FDI spells long term capital that can help sustain solvency. Also FDI will ensure meaningful ownership, in times of adverse claims pay put, it is only through the FDI route that foreign stake holders will infuse capital to come over the adverse situation

The state id well informed about the latest technology and also relevant information regarding the trade that goes on all over the world and how the domestic producers can penetrate into several markets. And private business’s can position themselves in the world market and boost the standard of living of citizen’s.

Sez’s also create a lot of job opportunities

Also when sez’s become a success it increases the GDP, and acts as a good economic model for the policy makers to mimic.

Disadvantages of Sez:

Employment: In the area of employment the disadvantage of SEZ is quite similar to the disadvantages of WalMart entering retail business. New jobs are created and working conditions improve, but for whom?? It is for the educated masses and the literate people and not for the laborers. Laborers suffer in the form of; forced overtime, exhausting work schedules; poverty pay, and unhealthy working conditions. The majority of workers in the Sez units are women who are exposed to the most humiliating sexual harassments. Free trade creates a “race to the bottom”, whereby developing countries lower their labor charges and environmental standards in an effort to attract foreign investment.

Secondly Companies would like to simply relocate to SEZ to take advantage of the tax concession’s being offered. This will bring about a significant revenue loss to the government. This will result in a kind of ‘disguised industry’ just as ‘disguised unemployment’.

And thirdly to set up an SEZ, large scale acquisition of land takes place which results in displacement of farmers and alternate means of livelihood are not available for them. But this issue has been taken up by the govt, and they will work out an appropriate compensation package before taking away land.

There is a possibility that Sez’s will be set up is states where there is already a strong tradition of manufacturing and exports. This in turn can aggravate regional disparities.

Conclusion:

Finally i would like to point out that SEZ can become a dangerous tool in the hands of power hungry politicians who want to show how much investment the country has attracted in their term, and so many jobs have been created. Sez’s appeal to almost all developing countries but they will not work if the country has no clear vision or strategy to move forward. They can perform even better than now if the public sector private sector and the government administration and the people, all work in coordination with each other and all work in harmony.


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57 comments on “Special Economic Zone (SEZ)

  1. simran says:

    hello you did realy a great work on sez.a very good presentation

  2. Pulkit says:

    good presentation ya, it ll be really good if u can give me the .ppt version of the same as i can take some hints out of it.

  3. ashmu says:

    I have uploaded the power point presentation

  4. jim says:

    u have made a wonderful study on it .may god bless u.

  5. munmun says:

    hi dis is moonmoon
    u hav did realy a grt job m also thinkin 2 do so

  6. munmun says:

    hi dis moonmoon
    u did realy a grt job m also thinkin 2 do so

  7. deepa naheshwari says:

    hey thanks now i know wat is the sez.how it work,advantage & disadvantege,thanks its help me.

  8. deepa naheshwari says:

    can u plz help me?how can singur controversy related with sez.can u plz mail me about that topic?& u r fantastic.

  9. deepa naheshwari says:

    can u plz help me?how can singur controversy related with sez.can u plz mail me about that topic?

  10. Ashmu says:

    Dear munmun,
    Great to know that you’re also planning to write an article on the Special economic Zone, give me your blog address, so that i can access it and read it. Then we can have a discussion on the different aspects of SEZ and also the issues connected with it

  11. Ashmu says:

    Dear deepa naheshwari
    Regarding acquiring the land for the SEZ in Singur there are usual problems being faced by the authorities for e.g.: the previous owners of that land are skeptical about the whole process and worried about how the policy would affect their life. From sources it is clear that the Kolkata government has taken over the entire ownership process and the ownership process has been completely transparent. Tata motors which is playing an important role in the construction has said that at least 10000 local people will be connected with this project. As far as owners of land are being displaced is concerned, Chief Minister Buddhadeb Bhattacharjee said that at a certain stage there is no choice but to use some agricultural land for industrial activity and acquiring the land is for larger good of the economy and the country. I will give you some relevant links where you will get all the information needed: http://www.indianexpress.com/story/21492.html
    http://in.news.yahoo.com/070130/48/6bn0c.html
    http://pd.cpim.org/2007/0128/01282007_nilotpal.htm

  12. SAMPRADA says:

    WELL U REALLY DID A GUD JOB …..N U U KNW WT I HELPED ME IN MY PROJECT ….SO I’M THANKFUL AS WELL…THIS REQUIRES A LOT OF PATIENCE N KNWLDGE AS WELL…THANKS A LOT..WUD LIKE 2 KNW MORE BOU IT FRM U IF POSSIBLE….BYE

  13. Ashmu says:

    Samprada, Im glad to know it helped you, blogging is really a great medium through which we can know so many people and share information. You also start blogging, its simply amazing!!!!

  14. MAHESH says:

    nice presentation

  15. karishma says:

    what are the problems faced by sez? can u highlight on it?

  16. shreyas says:

    grt job.i didnt get so much of information frm any of the sites

  17. purvi says:

    hiii wht is SEZ??wht are the advantages n disadvantages of SEZ??wht is nandigram issue??n lots more information about SEZ??really curious to know more about SEZ..i tried to search on google..but the language is to difficult to understand…plz mail me on puru_michael@yahoo.co.in..thanx in advance..

  18. Rahul says:

    hi ashmu,
    u did terrific job, this helped me in my project thanks a lot! but still i need more info on SEZ, if u have (can u pl mail me PPT prsntn) or
    SAMPRDA if u have done ur project can u mail me on rahulhmailbox-88@yahoo.co.in
    thanks….

    rahul
    “possible is nothing, go for it”

  19. Hi Rahul, I have sent you the email with the presentation, do let me know if you need any more information.

  20. R.Srinivasan says:

    Hi Ashmu,

    When we importing the hazards goods in SEZ unit what kind of documents has to submit to customs and what information is need for importing these kinds of goods.Pls give me reply

  21. Hello Mr R.Srinivasan, im giving you the links of the forms required to be filled, one sample letter for the application of an SEZ and also the relevant web site where you will get all the information:

    http://sezindia.nic.in/HTMLS/Form_A_and_checklist.pdf this is the basic form which explains everything and all the details required to be submitted.

    http://sezindia.nic.in/HTMLS/Instruction1-7.pdf this is a sample letter which you have to submit to the concerned department.

    http://sezindia.nic.in/ and this is the site where all the information regarding the sez establishment is given.
    If you need any more information let me know.

  22. R.Srinivasan says:

    Dear Aseem,

    Thanks for ur details and i have lots of queries regarding imports

    1. In SEZ we can import all the goods or any specific goods to import in SEZ Unit.

    2. Before importing the goods any permission is reuired or to give the import data to particular officier before importing goods.

    3. SEZ unit goods having any permission for Public Bonding.

    4. Before importing the goods what are the documents needed to clear the customs.

  23. Hello Mr R.Srinivasan, i would advise you to contact the government officials for this information. Since the information you are seeking is very specific in nature with regards to the imports it is better to get first hand information from the authorities. You can get the contact person from the website link which I have given above.

  24. Captain Sagar says:

    Hi,
    U have done a very good job and please accept my compliments for the same.
    Its been a great help for me as i am also taking a presenation on the same topic in Jan 08. The tpoic of my presentation is SEZ and its implications in Indian Economy.
    May i, therefore request if you could send the presentations that u have made on SEZ to my email.Any other relevant data on the same topic will also go a long way in ampifying my topic.
    Thanks.

  25. Hi Captain Sagar, thanks for the compliments, i will surely e mail you the presentation, give me your e mail id for.

  26. C.Prem says:

    Very clear & tidy work
    Can i have a look at your presentation as i can have it as a model for the one i got to present.
    my id is motiprem@rediffmail.com
    Thanking you in advance.

  27. Sure, will email it to you.

  28. Anu says:

    hye u did a commendable job……m lukin forward to do same kind in futur….
    it really helpd me to prepare ppt….i wud like to have some more information about the present senerio….lk the politics goin on behind it in Goa…..do write to me….
    n keep doin ur good work…..my mail id is smile_chocopie@yahoo.co.in

  29. srimanto says:

    hey….amazing article on SEZ..just what i was looking for …very informative.
    Ever since the Nandigram SEZ issue erupted into the scene ive been reading a lot about it an now ive prepare a presentation on SEZ…i would be really be grateful if you could give me a look into your ppt so that i could fashion this topic in a better manner.
    My email id is….srimanto21@gmail.com…thank you.

  30. Hello anu i have sent you an email with all the required information

  31. Hello srimanto i have emailed the presentation to you, have a look at it.

  32. amit jain says:

    hi aseem, did a great job. but still i want some information about how the concept of sez really started and can u mail me presentation on sez becoz i have to preapre for my school assignment . as i had never preapred presentation it will be great help for me to know what will be guidlines of presentation. please it is urgent. my mail id is amit_ja143@yahoo.com. thank you

  33. Adeesh Gupta says:

    Hi Aseem,u did a gr8 job man..thnx alot..i would appreciate if u also mail me ur ppt at adeesh.cool@gmail.com

  34. shreyans says:

    gr8 work

  35. TISHA says:

    HEY UV DONE QUITE AN EXCELLENT JOB OF UR SEZD RESEARCH IT WUD BE NICE TO HAV A COPY OF UR PRESENTATION 2 PLS SEND IT TO MY EMAIL ID MAKO2006ORCA@GMAIL.COM OR mAKO2006ORCA@YAHOO.CO.UK

  36. Thanks, I have sent the e mail to you….

  37. dipen pasawala says:

    hiy
    i am doing a project on SEZ
    could u provide me information whatever you have and site names
    it will helps me a lot buddy

  38. Namrata says:

    hi ashmu..
    grt presentation…
    by reading this m going to give presentation on it.
    if u have .ppt file of this presentation thne plz give me…
    i hope u send me as soon as possible..
    tc.
    bye

  39. Hi Namrata…..I have sent you the file on your email have a look..

  40. lenin says:

    you have done a good job.

  41. Thank you Lenin! But Im surprised Lenin has admiration for SEZs which is a capitalist and imperialist concept!!……..just kidding…..lol…..

  42. lakshmi says:

    ur presentation was thought proviking, can u help me regarding SEZ and farmers, do you have any materials related this, if its there kindly help.
    thanks

  43. abhay,vishal,mannu says:

    hi bro really u hav don a maverick job.
    thanx a lot.

  44. Thanks abhay,vishal,mannu!! I hope the info helped you….

  45. Hello lakshmi, i have sent you an email, have a look and get back to me.

  46. Hey lakshmi, how are you……..

  47. jay says:

    nice presentation helped me in my icse project

  48. viddesh says:

    if possible plz mail me the ppt.

  49. munish says:

    you really did a good job, but income tax exemption not in section 80 it is section 10

  50. Krishna mohan.M says:

    simple, but superb,….!all the best…!

  51. Hema says:

    What are the advantages and disadvantages from the point of view of a developer/constructor to create/development in a SEZ area?

  52. mohan kumar says:

    you have done a great job.it helped me a lot.thanks.

  53. Do you have a spam issue on this blog; I also am a blogger, and I was
    curious about your situation; we have developed some nice procedures and we are
    looking to exchange methods with others, please shoot me
    an email if interested.

  54. Ashok says:

    Special Economic Zones (SEZ) are specially delineated duty free enclaves for the purpose of trade, operations, duty and tariffs. These zones are self-contained and integrated with their own infrastructure and support services.
    URL to know the benefits and Service from Stylus.
    http://www.stylus.in/products/serviced-sez-units/

  55. Susanne says:

    Yesterday i spent 300 bucks for platinium roulette system , i hope
    that i will earn my first money online

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