What is 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. Their aims include increased 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.

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. Indian Special Economic Zone was structured with the establishment of the first Export Processing Zone (EPZ) at Kandla in the year 1965. The lack of investor friendly environment in India prevented growth of Indian industry, in spite of implementation of liberal economic policy by the central government. This resulted in the formation of SEZ. The SEZ Policy was announced in April 2000. This resulted in the formation of a much larger and more efficient form of their predecessors with world-class infrastructural facility.

Every coin has 2 sides, SEZ also has some advantages and disadvantages and they are:


  1. 15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment.
  2. No license required for import made under SEZ units.
  3. Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc.
  4. In –house Customs clearance facilities.
  5. Abundant supply of technically skilled as well as semi-skilled manpower.
  6. Well connected with network of public transport, local railways and cabs.


  1. Loss of revenue to government.
  2. Land grabbing
  3. Regional disparity
  4. Loss of agricultural land
  5. Compensatory problems

SEZs play a key role in rapid economic development of a country. In the early 1990s, it helped China and there were hopes (perhaps never very high ones, admittedly) that the establishment in India of similar export-processing zones could offer similar benefits — provided, however, that the zones offered attractive enough concessions.

Types of SEZ are – Sector-Specific SEZ, Multi- Product SEZ,  SEZ in a port or airport ; or for free trade and warehousing.

Few SEZ in India are – SEEPZ, Andheri (East), Mumbai, Khopata- Multi-product, Mumbai, Navi Mumbai- Multi-product, Mumbai, Sricity Pvt. Ltd., Chittoor.

Lately SEZ is catching up a lot of attention in the news. Under the GIFT City project headquartered in Ahmadabad, Indian aviation companies can now register there and operate their leasing business from India itself. On January 11, 2020 ComMin looking at ways to revamp SEZ policy. On September 25, 2019 Tripura to set up first SEZ at Sabroom, Biplab Deb woos Bangladesh to invest. Rajya Sabha has passes bill to allow trusts to apply for SEZ on June 28, 2019. On June 04, 2015 State SEZs fail CAG test, on all counts ‘Only 34,999 jobs created in 19 operational SEZs in the state against the promised four lakh; export, revenue too way short of targets.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at adv.aishwaryasandeep@gmail.com

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