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Special Economic Zones
A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be suspended inside a special economic zone. In order to remove drawbacks or shortcomings that comes as a result of multiple clearances and controls, and non availability of global infrastructure, the SEZ policy was formulated and put forward in the year 2000. The SEZ Act was passed in 2005 in the Parliament.
Objectives of Special Economic Zones
The objectives of Special Economic Zones can be listed out as follows:
- More economic activity generation
- Promotion of goods export and services
- Investment promotion from foreign and domestic sources
- Creation of opportunities for employment
- Developing infrastructure facilities
Benefits to SEZ Developers
Developers are entitled to numerous benefits under the SEZ such as:
- Exemption from customs and excise duties.
- Income Tax exemption in a block of 10 years in 15 years
- Exemption from minimum alternate tax
- Exemption from dividend distribution tax
- Exemption from Central Sales Tax
- Exemption from Service Tax
Disadvantages of SEZ
- 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.
The Board of Approval
The Board of Approval is the apex body and is headed by the Secretary, Department of Commerce. The Board of Approval has been constituted by the Central Government in exercise of the powers conferred under the SEZ Act. All the major decisions are taken by the Board of Approval. The members include:
- Secretary, Department of Commerce-Chairman
- Member, CBEC
- Member, IT, CBDT
- Joint Secretary (SEZ), Department of Commerce
- Joint Secretary, DIPP Member
- Joint Secretary, Ministry of Science and Technology
- Joint Secretary, Ministry of Small Scale Industries and Agro and Rural Industries
- Joint Secretary, Ministry of Home Affairs
- Joint Secretary, Ministry of Defence
- Joint Secretary, Ministry of Environment and Forests
- Joint Secretary, Ministry of Law and Justice
- Joint Secretary, Ministry of Overseas Indian Affairs
- Joint Secretary, Ministry of Urban Development
- A nominee of the State Government concerne
- Director General of Foreign Trade or his nominee
- Development Commissioner concerned
- A professor in the Indian Institute of Management or the Indian Institute of Foreign Trade
- Director or Deputy Sectary, Ministry of Commerce and Industry, Department of Commerce
All the requests for setting up of units in the SEZ are approved at the Zone level by the Approval Committee consisting of Development Commissioner. All post approval clearances are given at the zonal level by the Development Commissioner. A separate unit is also there which monitors the performance of the SEZ units on a periodic basis and is governed by the Approval Committee