Question

Discuss the term special Economic zone with the help of
practical example.​

Answer 1

Special Economic Zone

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, and 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. Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.

Answer 2

Special Economic Zones

• Special Economic Zone is an area in which business and trade laws are different from rest of the country mainly aiming at increasing trade, investment and job creation.

Practical Example :

• While many countries have set up SEZs, China has been the most successful in using SEZs to attract foreign capital.
• The first four SEZs in China were created in 1979 in the Southeastern coastal region: Shenzhen, Zhuhai and Shantou in Guangdong province, and Xiamen in Fujian province.
• China added Hainan Island to its list of SEZs in 1983.The success of the original SEZs prompted the government to create 14 "open coastal cities" in 1984. These cities enjoy similar benefits as SEZs such as the power to approve investment projects, offer incentives to foreign investors and import equipment and technology tax free.
• Within China, the SEZs essentially act as liberal economic environments that promote innovation and advancement. The Chinese government continues to allow these areas to offer tax incentives to foreign investors as a way of further developing the infrastructure of these regions.
• In the case of China, mainstream economists agree that the country's SEZs helped to liberalize the formerly traditional state. Without the SEZs, China may not have been able to successfully implement the same level of national reform.

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KNOW MORE :

Grow Of Special Economic Zones :

• With a view to overcome the shortcomings experienced on account of the multiplicity of controls and clearances, absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.
• As part of the economic reforms, the system of taking over land by the government for commercial and industrial purposes was introduced in the country. As per the Special Economic Zones Act of 2005, the government has so far notified about 400 such zones in the country. Since the SEZ deprives the farmers of their land and livelihood, it is harmful to agriculture. In order to promote export and industrial growth in line with globalisation the SEZ was introduced in many countries.

Role Of India In SEZ :

• India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia’s first EPZ set up in Kandla in 1965. The broad range of SEZ covers free trade zones, export processing zones, industrial parks, economic and technology development zones, high-tech zones, science and innovation parks, free ports, enterprise zones, and others.

Objectives Of SEZ :

1. To enhance foreign investment, especially to attract foreign direct investment (FDI) and thereby increasing GDP.
2. To increase shares in Global Export(International Business).
3. To generate additional economic activity.
4. To create employment opportunities.
5. To develop infrastructure facilities.
6. To exchange technology in the global market

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