Special Economic Zones

January 05, 2022

Special Economic Zones - An overview:

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 being 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 to attract larger foreign investments
in India, the Special Economic Zones (SEZs) Policy was announced in April, 2000.1

This policy intends to make SEZs an engine for economic growth supported by quality
infrastructure complemented by an attractive fiscal package, both at the Centre and the State
level, with the minimum possible regulations. SEZs in India functioned from November 01,
2000 to February 09, 2006 under the provisions of the Foreign Trade Policy and fiscal
incentives were made effective through the provisions of relevant statutes.2

To instill confidence in investors and signal the Government's commitment to a stable SEZ
policy regime and with a view to impart stability to the SEZ regime thereby generating greater
economic activity and employment through the establishment of SEZs, a comprehensive draft
SEZ Bill was prepared after extensive discussions with the stakeholders.3

The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which
received Presidential assent on June 23, 2005. The SEZ Rules, came into effect on February
10, 2006, providing for drastic simplification of procedures and for single window clearance
on matters relating to Central as well as State governments.

The main objectives of the SEZ Act are:4

• Generation of additional economic activity.

• Promotion of exports of goods and services.
• Promotion of investment from domestic and foreign sources.
• Creation of employment opportunities.
• Development of infrastructure facilities.
The SEZ Act, 2005 envisages key role for the State Governments in Export Promotion and
creation of related infrastructure. A Single Window SEZ approval mechanism has been
provided through a 19-member inter-ministerial SEZ Board of Approval (BoA). The
applications duly recommended by the respective State Governments/UT Administration are
considered by the BoA periodically. All decisions of the Board of Approval are with consensus.

The SEZ Rules provide for different minimum land requirement for different classes of SEZs.
Every SEZ is divided into a processing area where only the SEZ units would come up and the
non-processing area where the supporting infrastructure is to be created.

The SEZ Rules provide for:5

• Simplified procedures for development, operation and maintenance of the SEZs and for
setting up units and conducting business in SEZs
• Single window clearance for setting up of an SEZ
• Single window clearance for setting up a unit in a SEZ
• Single Window clearance on matters relating to Central as well as State Governments
• Simplified compliance procedures and documentation with an emphasis on
selfcertification

Salient Feature of SEZ scheme:6

• A designated duty-free enclave to be treated as a territory outside the customs territory

of India for the purpose of authorised operations in the SEZ.
• No licence required for import.
• Manufacturing or service activities allowed.
• The Unit shall achieve Positive Net Foreign Exchange to be calculated cumulatively
for a period of five years from the commencement of production.
• Domestic sales subject to full customs duty and import policy in force. SEZ units will
have freedom for subcontracting.
• No routine examination by customs authorities of export/import cargo.
• SEZ Developers /Co-Developers and Units enjoy Direct Tax and Indirect Tax benefits
as prescribed in the SEZs Act, 2005.

Facts and Figures:7

• As on November 30, 2021, approvals have been accorded to 425 proposals for setting
up of SEZs in the country.
• So far, 376 SEZs are notified, out of which 268 are operational.
• As on December 08, 2021, eight Special Economic Zones (SEZs) have been approved
for the Agro and Food Processing sector in India. Out of these 8 SEZs, 7 have been
notified and 3 SEZs are operational.
• As on September 30, 2021, total employment generation was about 25.60 lakh persons
and investment of Rs. 6,28,565.89 crore has been made.
• In the Financial Year 2021-22 (as on October 31, 2021), exports from SEZs was
5,29,333 crore. There is a growth of 31% over the exports of the corresponding period
of FY 2020-21.

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Special Economic Zones in Uttar Pradesh - At a glance

As of September 27, 2021, there are 14 operational SEZs in Uttar Pradesh. Details are
mentioned in the table below:

Source

Noida Special Economic Zone (SEZ):8

Noida Special Economic Zone (NSEZ), the only Central Government SEZ in northern India
was set up in 1985 in Noida Phase-II. Prior to its being an SEZ in 2000, it was one of the seven
Export Processing Zones of the country and was known as the Noida Export Processing Zone
(NEPZ).

The Government of India has so far

invested a sum of Rs.1,114.96
crores on its development. NSEZ
provides excellent infrastructure,
supportive services and sector
specific facilities for the thrust
areas of exports like gem and
jewellery and electronics software.
This is the land locked SEZ, with
the nearest point of exports being
the Integrated Container Depots
(ICDs) like Dadri, Tughlakabad
and Patparganj as well as the
airport in Delhi. Its proximity to
Delhi and availability of skilled and
dedicated manpower makes it ideal
for setting up both
manufacturing and services units.

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NSEZ has 202 developed plots of varying sizes, besides thirteen Standard Design Factory
(SDF) complexes that can accommodate 208 units including one exclusive block for trading
service units. The SDFs are like ready to move in warm shells. Future expansion has been
strategically planned and when implemented fully, the zone would be able to provide 224 SDF
units.

NSEZ units have been logging impressive exports during the past many years. Exports from
the zone during 2020-21, even during a tough pandemic period, has been Rs.4,043 crores.
Employment in the zone has gone up from 32,550 in 2009 to 40,061 in 2021. During the same
period, number of operational units in the zone has increased from 245 to 289. On services
side, for all the 34 SEZs under the jurisdiction of NSEZ, the total exports for software and
services are Rs 52,613 crores in 2020-21, with the share of Noida SEZ being Rs 3,009 crores.9

Exports from Export Oriented Units (EOUs) in the jurisdiction of NSEZ have been to the tune
of Rs. 10,006.6 crores during the financial year 2020-21 (as per the figures obtained from
CBIC). NSEZ’s year wise exports are illustrated in the chart below:

Source

Besides, the jurisdiction of Noida Special Economic Zone is spread over State & Private sector
SEZs and EOUs in nine states namely Jammu & Kashmir, Himachal Pradesh, Punjab, Haryana,
Rajasthan, Delhi, Uttar Pradesh, Uttaranchal and Union Territory of Chandigarh. There are 34
SEZs under the jurisdiction of NSEZ.

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Moradabad Special Economic Zone (SEZ):10

Moradabad SEZ, the only Uttar Pradesh

Government Developed SEZ in the northern
India, was set up in 2003 at
Pakbara – Dingarpur Road
in Moradabad. Government of
Uttar Pradesh through UPSIDC Limited
being developers to this SEZ project has so
far invested a sum of Rs. 1100 million on its
development. Moradabad SEZ provides
excellent infrastructure, supportive
services and sector specific facilities for the
Handicraft Trade. Proximity to
Delhi/ NCR and availability of skilled and
dedicated manpower makes it ideal for
setting up various industries in Handicrafts
& its allied field.

This is a sector Special Economic Zone for

handicraft products. Provision for infrastructure facilities such as: – greenbelt, boundary wall,
internal development, security system, power substation, CETP, inland container depot, design
and training center, helipad, school, canteen has been made.

Moradabad SEZ was operationalized since April, 2007 when it started with only one unit,
however till today in spite of global slowdown in the handicraft trade for past four years; this
zone has now 58 operational Units as on 30.06.2021.

Source

Infrastructure, supportive services and trade related facilities have been substantially upgraded
during the last few years. Moradabad SEZ offers access to global telecommunication network,
uninterrupted power supply and efficient local transport system. Supportive infrastructure and

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easy availability of manpower make Moradabad SEZ an ideal location for setting up handicraft
unit.

Facility of Inland Container Depot (ICD) is available inside the zone which is operated by the
Container Corporation of India Limited (CONCOR), Moradabad and which is linked to the
rail-head available at Moradabad Inland Container Depot (ICD) in city.11

Source

Other operational Special Economic Zones in Uttar Pradesh:

S.No. Name of the SEZ Address Type of SEZ Status

1. Moser Bear India Ltd. Greater Noida, Uttar Non- Operational
Pradesh conventional
Energy including
solar energy
equipments /
cell

2. Ansal IT City and Parks Techzone, Greater IT/ITES Operational

Limited Noida, Uttar Pradesh
3. HCL Technologies Ltd Sector 126, Noida, IT/ITES Operational
Uttar Pradesh
4. NIIT Technologies Plot No.TZ-02, IT/ITES Operational
Limited SEZ Sector-Tech Zone,
ITES Park, Greater
Noida, UP
5. WIPRO Limited Gautam Budh Nagar, IT/ITES Operational
Greater Noida, Uttar
Pradesh
6. Seaview Developers Plot No. 20&21, IT Operational
Limited Sector-135, Noida,
Uttar Pradesh

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