B K School of Professional and Management Studies
Academic Year : 2021-22
Batch : MBA Evening (2021-2024)
Subject : Management Principles and Practice
Topics : Special Economic Zones and Exclusive Economic Zones
Submitted By :-
Name : Fagun Soni
Roll No : 22154
Submitted to :-
Prof. Mehal Pandya
Date of Submission : December 06, 2021
Special Economic Zone
What is SEZ ?
• A Special Economic Zone is an ara of the country where economic and
business trade laws are different from rest of the countries.
• These policies were introduced to encourage investments, increase
employements, business set up and promoting exports.
• For promoting companies and make globally competitive several tax
reliefs and tax holidays are given that benefit the compnies to grow.
• The Special Economic Zone (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. The SEZ Act,
2005 and SEZ Rules became effective on and from 10th February 2006.
Objectives of SEZs
• The main objectives of the SEZ Act are:
1. generation of additional economic activity
2. promotion of exports of goods and services
3. promotion of investment from domestic and foreign sources
4. creation of employment opportunities
5. development of infrastructure facilities
It is expected that this will trigger a large flow of foreign and domestic
investment in SEZs, in infrastructure and productive capacity, leading to
generation of additional economic activity and creation of employment
opportunities.
Benifits of SEZs.
• 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. Allowed to carry forward losses.
• No licence required for import made under SEZ units.
• Exemption from Central Excise duty on the procurement of capital goods, raw materials, and
consumable spares, etc. from the domestic market.
• The sale of goods or merchandise that is manufactured outside the SEZ (i.e, in DTA) and which
is purchased by the Unit (situated in the SEZ) is eligible for deduction and such sale would be
deemed to be exports.
• External Commercial Borrowings up to $ 500 million a year allowed without any maturity
restrictions.
• Exemption from requirement of domicile in India for 12 months prior to appointment as
Director.
• Since SEZ units are considered as ‘public utility services’, no strikes would be allowed in such
companies without giving the employer 6 weeks prior notice in addition to the other
conditions mentioned in the Industrial Disputes Act, 1947.
Disadvantages of SEZs.
• Revenue losses because of the various tax exemptions and incentives.
• Many traders are interested in SEZ, so that they can acquire at cheap
rates and create a land bank for themselves.
• The number of units applying for setting up EOU's is not
commensurate to the number of applications for setting up SEZ's
leading to a belief that this project may not match up to expectations.
Types of SEZs.
• Sector Specific SEZs. : Manufactures one or more good in a particular
sector. e.g. PHARMEZ in Ahmedabad Moriaya specifically for
Pharmaceutical Industry.
• Multi Product SEZs. : Manufacture multiple goods or rendering
multiple services in one sector or across multiple sectors. Kandla
Special Economic Zone.
• SEZ in port or Airport for Freetrade and warehousing : SEZ in an
existing port or airport form anufacture of goods falling in two or
more sectors including trading and warehousing e.g Adani Ports and
Special Economic Zones Ltd.
Locations and Count of SEZ in Gujarat
• There are total 57 SEZs are there in Guajarat. District wise SEZ List
mentioned below.
S.N District No. of SEZ
1 AHMEDABAD 15
2 GANDHINAGAR 6
3 VADOADARA 3
4 BHARUCH 8
5 VALSAD 2
6 SURAT 3
7 JAMNAGAR 1
8 AMRELI 2
9 KUTCH 16
10 MEHSANA 1
TOTAL 57
• (Source : https://ic.gujarat.gov.in/sez-government-of-gujarat.aspx)
Scope of SEZs in India.
• The prime objective was to enhance foreign investment and provide an
internationally competitive and hassle free environment for exports. The idea was
to promote exports from the country and realizing the need that level playing
field must be made available to the domestic enterprises and manufacturers to
be competitive globally. SEZ are set up in order to attract foreign investors to
invest in India, SEZ are brought with world class facilities , water , electricity ,
roads , transport , storage etc.. this foreign investment will help in economic
development of our country. 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.
Exclusive Economic Zone
• An exclusive economic zone (EEZ) is a sea zone prescribed by the United Nations
Convention on the Law of the Sea over which a state has special rights regarding the
exploration and use of marine resources, including energy production from water and
wind.
• Exclusive Economic Zones give countries the exclusive right to develop resources
within them and can be used for anything, including offshore wind farms, natural gas
and oil extraction and/or access to finishing grounds.
• The concept is a relatively recent one, only having been agreed to in 1982 at the Third
United Nations Conference on the Law of the Sea. Previously, territorial waters, which
are defined as extending up to 12 nautical miles (22km) off a country’s coast, had
been used as the basis for economic activity It can extend to a maximum of 200
nautical miles from the baseline.
• Exclusive Economic Zone of India is about 2.37 million square kilometres which are
guarded by the Indian Coast Guard Ships.
Rights of the country in the EEZ
• The coastal state has the rights to:
1. Explore and exploit, conserve and manage the natural resources (living or
non-living).
2. Produce energy from wind, currents and water.
3. Establish and use artificial islands, structures and installations.
4. Conduct marine scientific research.
5. Protect and preserve the marine environment.
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