With the ever increasing demand for various good and services and tough competition among the companies, a few improvements were made in the country’s policies. As a result of globalization, the special economic zones or the SEZs came into existence. Within very short span of time, the SEZ gained lots of popularity among all categories of different businesses.
With the enforcement of SEZ act, the central government created lots of openings for the foreign players. The main objective of this concept was to generate additional economic activities, to boost the export of goods and services, investment from both the domestic as well as foreign sources and creation of abundant employment opportunities.
With the effective utilization of the SEZ, the country can gain in both, the backward as well as forward integration of economy. Till 2005, the SEZs were working under the provisions of Foreign Trade Policy, wherein people were eligible for the fiscal incentives. As per the SEZ act 2005, all the establishments get the legal framework and the same is applicable for all the units operating under a particular zone
In order to understand the SEZ in a clear manner, you need to know certain basic definitions as mentioned below:
- Developer – the state government or an individual who has been issues with a letter of approval from the central government
- Co-developer – A person or the state government who provides the infrastructure, and is issued a letter of approval from the central government
- Unit – this is an establishment set up by an entrepreneur in a SEZ. This could include an existing unit, a banking unit offshore, and a branch of an international Financial Services.
In order to set up a unit in the SEZ, you need to first submit a proposal to the development commissioner. Upon legal authorization for the proposal, an applicant will be granted with a letter of approval. When you set up a unit in the SEZ, there are lots of benefits and challenges. In order to…