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SEZ and its Advantages in INDIA.

BY: Raja Vikram | Category: Education | Submitted: 2010-03-05 11:00:09
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Article Summary: "This article is to tell about the SEZ and its benefits. In lay man terms Special Economic Zone (SEZ) is a geographical region given to the companies by Government with an Advantages over economic laws and Taxes to create a hassle free environment of Exports and Imports..."


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Worlds First SEZ found in industrial park of Puerto Rico in the year 1947. In the 1970's Ireland and Taiwan followed with that , In 1980's the revolution started in China to hit the global currency with its largest SEZ in the metropolis of Shenzhen.

Then to think of India, we have started from 1965 onwards by taking it as an export oriented zones. But when our commerce minister Mr. Maran went to southern china and decided to establish SEZ in our nation too. So in the year of 2005 SEZ act. started with EXIM policies but in the year 2006 the actual rules were Formulated. So , initiating so much about SEZ is really confusing with out Knowing what is SEZ? If we discuss on it, then SEZ is a Special Geographical region with more liberal economic laws than that of countries economic laws. So SEZ is Special Economic Zone Covers more broader range such as Free trade Zone (FTZ), Export Processing Zones (EPZ), Industrial Estates and free ports. So the main objective of SEZ is to increasing the foreign Direct Investment and to make it as a competitive hassle free International Business Environment.

So, In lay man terms Special Economic Zone (SEZ) is a geographical region given to the companies by Government with an Advantages over economic laws and Taxes to create a hassle free environment of Exports and Imports.

There are some of the facilities and Incentives given to the SEZ to attract the Foreign Investment. The Benefits can be as
1. Duty Free Import/Domestic Procurement of goods for development.
2. 100% Income tax Exemption for the first 5 years , Then 50% for next 5 years then 50% Ploughed back with export profit for next 5 years.
3. Exemption of minimum alternate taxes.
4. External Commercial Borrowings of up to $500 million per year is allowed .
5. Exemption from Central Sales tax, Service Tax.
6. Single window clearance for state and national level approvals.
7. Exemption from State Sales Tax.

Apart from these the main Facilities or Incentives included are
1. Exemption from Customs/Excise Duty.
2. Exemption from dividend distribution tax.
3. Exemption from central sales Tax and Service tax.


So the above what we have discussed are the advantages of SEZ but it has its disadvantages too. It can be 1. Revenue losses because of Tax Exemption and Incentives. 2. Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.

But at the best we have Advantages for our development in Export and Import Sector. In India we have the SEZ's in Kandla, Madras, Cochin, Visakhapatnam, Noida,Surat,Falta,Manikanchan, Indore, Jaipur, Mahindra City and Slat lake last but least Nokia . And excluding these there are some more to add in few years.

To Conclude SEZ's are really required for India to Develop its Foreign trade , but need to put more effort for its Infrastructure then on any other. I believe that we are doing a good work with SEZ's for our EXIM Development.

About Author / Additional Info:
An MBA From GITAM University,India.

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