Special Economic Zones (SEZs) in India: Benefits, Policies, and Latest Updates

Why Were SEZs Introduced in India?
SEZs were established to:
Boost exports by providing a competitive business environment.
Attract foreign direct investment (FDI) through financial incentives.
Generate employment by encouraging industrial and service sector growth.
Improve infrastructure with world-class facilities for businesses.

Key Benefits and Incentives in SEZs
Businesses operating in SEZs enjoy several advantages, including:
Tax exemptions (Income Tax holidays for the first 5-10 years).
Duty-free imports of raw materials and capital goods.
Simplified compliance with single-window clearance systems.
100% FDI allowance in most sectors without restrictions.
Relaxed labor laws for easier hiring and operations.
Legal Framework: SEZ Act 2005
The Special Economic Zones Act, 2005 governs SEZs in India, ensuring:
A structured policy for SEZ development.
Clear guidelines on tax benefits and operational rules.
Dispute resolution mechanisms for businesses.

Latest Reforms: DESH Initiative
The government is revamping SEZ policies under the Development of Enterprise and Service Hubs (DESH) scheme to:
Allow dual use of SEZ spaces for both export and domestic markets.
Introduce flexible compliance norms to attract more industries.
Enhance infrastructure and digital connectivity in SEZs.

Economic Impact of SEZs in India
SEZs have significantly contributed to India’s economy by:
Creating over 3.19 million jobs (as of March 2024).
Attracting global companies like Infosys, Wipro, and Foxconn.
Boosting exports in sectors like IT, pharmaceuticals, and textiles.

Current Status of SEZs in India (2024)
276 operational SEZs across India.
Major hubs in Maharashtra, Karnataka, Tamil Nadu, and Telangana.
IT/ITeS, manufacturing, and biotech dominate SEZ sectors.


Sample Questions & Answers for Competitive Exams
1. What is the main objective of SEZs in India?
Answer: The primary goal is to enhance exports, attract FDI, and generate employment through tax incentives and business-friendly policies.
2. Which act governs SEZs in India?
Answer: The Special Economic Zones Act, 2005 regulates SEZs in India.
3. What is the DESH initiative for SEZs?
Answer: The Development of Enterprise and Service Hubs (DESH) scheme aims to allow SEZs to serve both export and domestic markets with relaxed norms.
4. How many operational SEZs are there in India (as of 2024)?
Answer: There are 276 operational SEZs as of March 2024.
5. Name two key tax benefits for SEZ units.
Answer:
Income Tax exemption for the first 5-10 years.
Duty-free import of raw materials.