Special Economic Zones (SEZ)

Special Economic Zones (SEZ)


A special economic zone (SEZ) refers to designated areas in countries that possess special economic regulations that are different from other areas in the same country. Moreover, these regulations tend to contain measures that are conducive to foreign direct investment. Conducting business in a SEZ usually means that a company will receive tax incentives and the opportunity to pay lower tariffs.

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. 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.

SEZs are controlled by a three tier Organizational Set-up described as under:

  • Supreme controlling body in the Department is known as The Board of Approval
  • At district level, The Unit Approval Committee tackles with SEZs development and other associated issues
  • Every district is led by a Development Commissioner, who also controls the Unit Approval Committee.


1.Free trade zones(FTZ)

It is a tax free area that provides essential facilities for trading, shipping, import, and export business. By operating in such area, rules and regulation on tariffs, labour, and environment might be exempted or reduced or less controlled.

2. Export processing zones (EPZ)

Export Processing Zones (EPZs) can be summarized as a unit bearing clusters of specially designed zones of aggressive economic activity for the promotion of export. The main concept of Export Processing Zones was conceived in the early 1970s to promote the growth of the sickening export business of India. Export Processing Zones (EPZs) also encompasses pre-defined infrastructural facilities and regulations pertaining to establishment of such zones and environmental stipulations, respectively. These Export Processing Zones of India were established to help the growth of Indian export commodities, especially from the fast growing sectors. –

3. Free Zones/ free economic zones (FZ/ FEZ),

Free economic zones (FEZ) or free zones (FZ) are a class of special economic zone (SEZ) designated by the trade and commerce administrations of various countries. The term is used to designate areas in which companies are taxed very lightly or not at all to encourage economic activity. The taxation rules are determined by each country.

4. Industrial parks/ industrial estates (IE)

An industrial park (also known as industrial estate, trading estate) is an area zoned and planned for the purpose of industrial development. An industrial park can be thought of as a more “heavyweight” version of a business park or office park, which has offices and light industry, rather than heavy industry.

5. Free ports

A free port   is a port or other area with relaxed jurisdiction of customs or related national regulations.Most commonly a free port is a special customs area or small customs territory with generally less strict customs regulations (or no customs duties and/or controls for transshipment). Earlier in history, some free ports like Hong Kong enjoyed political autonomy. Many international airports have free ports, though they tend to be called customs areas, customs zones, or international zones.

6. Bonded logistics parks(BLP)

A Bonded logistics park is a type of special economic zone. Trade arrangements are similar to that of a bonded warehouse but over a specific geographic area. Sometimes with international port capabilities. Goods may be stored, manipulated, or undergo manufacturing operations without payment of duty.

7. Urban enterprise zones

An Urban Enterprise Zone is an area in which policies to encourage economic growth and development are implemented. Urban Enterprise Zone policies generally offer tax concession, infrastructure incentives, and reduced regulations to attract investments and private companies into the zones.

Special Economic Zones (SEZ)

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