Special Economic Zones

India was one of the first in Asia to recognise the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965. To overcome the shortcomings on account of the multiplicity of controls and clearances, absence of world-class infrastructure and an unstable fiscal regime and with a view to attracting larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000. This policy intended to make SEZs an engine for economic growth supported by quality infrastructure complemented by an attractive fiscal package, both at the Centre and the state level, with minimum possible regulations. SEZs in India functioned from 2000 to 2006 under the provisions of the Foreign Trade Policy and fiscal incentives were made effective through the provisions of relevant statutes. The SEZ Act, 2005, supported by SEZ Rules, came into effect in 2006, providing simplification of procedures and single window clearance on matters relating to central and state governments. The main objectives of the SEZ Act are a generation of additional economic activity; promotion of exports of goods and services; promotion of investment from domestic and foreign sources; creation of employment opportunities; and development of infrastructure facilities.