Question

Which of the following statements regarding Special Economic Zones (SEZs) are true?

1. SEZs are territories within a country that operate under different business and commercial laws to promote investment and employment.
2. The concept of Export Processing Zones (EPZs) was first implemented in 1965 with the establishment of Asia's initial EPZ in Kandla, Gujarat.
3. The Special Economic Zones Act was enacted in 2007, with the SEZ Rules coming into effect the following year in 2008.
4. SEZs were introduced to overcome the challenges related to infrastructure and bureaucracy that were restricting the success of EPZs.

• A. i, ii, iv
• B. i, iii
• C. i only
• D. ii, iii

Answer 1

Answer:

A. i, ii, iv

Special Economic Zones (SEZs)

• Special Economic Zones (SEZs) are designated geographical regions within a country that have different sets of rules and regulations compared to the rest of the country.
• They are established to attract foreign direct investment, boost exports, and create employment opportunities.
• The distinct regulatory framework in SEZs often includes :
  • Tax incentives
  • Streamlined procedures
  • Relaxed labor and environmental regulations,
• The distinct regulatory framework make them attractive destinations for businesses to set up their operations.

Export Processing Zones (EPZs)

• The idea of Export Processing Zones (EPZs) originated as early as the 1960s, with the first EPZ in Asia established in Kandla, Gujarat, in 1965.
• These zones were specifically designed to promote exports by providing various incentives and a conducive environment for manufacturing and processing goods meant for export.
• One of the primary reasons for the introduction of SEZs was to address the limitations and challenges faced by Export Processing Zones (EPZs) in terms of infrastructure, administrative bottlenecks, and regulatory constraints.
• SEZs were designed to provide a more comprehensive and robust framework to encourage exports, facilitate a conducive business environment, and attract foreign investments.

The Special Economic Zones Act

• The Special Economic Zones Act, which provides the legal framework for the establishment, operation, and regulation of SEZs in India, was  enacted in 2005.
• The Act was followed by the implementation of the SEZ Rules in 2006 to provide detailed guidelines for the functioning and management of SEZs in the country.