Special Economic Zones: A Multifaceted Growth Oriented Tool
Globalization and expansion of the business empire to newer locations is with the sole purpose of promoting an organizations products or services. This method of expansion of business not only profits the business houses but also has a direct impact on the economic condition of the country. Besides, other various projects that the Government of a country takes up for bettering its economic condition, they also take up the projects of setting up special economic zones with a primary purpose of promoting and exporting the products and services of the country.
A Special Economic Zone or a SEZ is a geographical region with liberal economic laws than that is prevalent in the country. It is a development tool to improve the trade capacity, promote economic growth by attracting foreign investment and technology. By offering tax benefits and business incentives, these SEZ’s attract investment and foreign exchange, boosts employment and development of high-end technologies and infrastructure. With a goal of increasing the foreign direct investment into the country in the form of international business partners or multinational companies, the sez shelters the free trade zones, export processing units, industrial parks or industrial estates, free ports, software development parks, urban enterprise zones etc.
The Peoples Republic of China was among the early starters of the SEZ’s in 1980. Following its development and progress in China, sez’s have sprung up in a number of countries, with India being one among them. Though the country had its export-oriented zone operational since 1965 in Kandla, the growth of Special economic zones in India came up only by 2000. In India, Special economic zones are run by either private ownership or in partnership with Government of India and have been established with an aim to contribute to development of industrial growth and improve the infrastructure deficiencies of the area.
With the sole objective of generating additional economic activity, promotion of export and investment from domestic and foreign investors, creation of employment opportunities, the SEZ developers are provided with a number of facilities and incentives. These include Exemption from customs and excise duties, exemption of minimum alternate tax, income tax, dividend distribution tax, central sales tax as well as the service tax. The latest in the series of the Special economic zones in India, is located in Karnataka. Spread across 300 acres, this SEZ primarily focuses on the engineering services outsourcing for aerospace engineering services and precision engineering and manufacturing functions.
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