Special Economic Zones are geographical regions that have economic laws that are usually a step to increase foreign direct investment in the country. These are created as open markets within an economy that will be under governments regulatory controls.
Many developing countries are looking towards the SEZs with the expectation that they will provide the engines of growth for their economies to achieve industrialization. To attract FDI and to increase exports that in a way will accelerate the country’s economic growth.
Unlike most of the international instances where zones are primarily developed by Governments, the Indian SEZ policy provides for development of these zones in the government, private or joint sector. This offers equal opportunity to both Indian and private developers.
Besides providing state-of-the-art infrastructure and access to a large well-trained and skilled work force, the SEZ policy also provides enterprises and developers with a favourable and attractive framework of incentives since these Special Economic Zones (SEZ) attract investment, generate export revenues and create manufacturing jobs they are given income tax exemptions, FDI is permitted through automatic route, no cap on FDI for small scale industries.
Other benefits include no requirement of import license, exemption from custom duties and central Excise duties, profits allowed to be repatriated. SEZ brings capital in the form of FDI which is badly a necessity for a developing economy. It brings along with it roads, ports,airports, machinery to sustain growth. The important thing is creating employment opportunities.
SEZ creates immense employment opportunities. They create lot of indirect employment in terms of labour required. It also has also potential in creating employment in relevant industries. SEZs help in creating balanced economic growth in a country. It leads to tapping of local talent and contributes economic activity.
While special Economic Zones drastically improve economic activity in the country. But there are a few challenges that needs to be addressed like special Economic zone are accused of bringing down agricultural activities, great threat of land grabbing and real estate mafia can greatly affect the future of SEZ.
SEZ should be properly managed for rapid economic growth that leads to profitable and sustainable development. Liberal tax policies and regulations will attract foreign investment and major industries.
On the other hand government should frame it policies in such away that it should attract FDI and at the same time it should also ensure that the Special Economic Zones should not become a cause of concern.
James (pointindu) is an SEZ author. Indu Group is an end-to-end solutions provider in infrastructure and real estate, welcome read more on about Hyderabad SEZ Campus and advantage at Special Economic Zones in India