In terms of the SEZ Act, 2005 a SEZ may be set up either jointly or severally by the Central Government, State Govt. or any person for manufacture of goods or rendering services or for both or as a free trade warehousing zone. Such proposals duly recommended by the concerned State Government are considered by the Board of Approval for SEZs. In addition to seven Central Government Special Economic Zones (SEZs) and 12 State/Private Sector SEZs set up prior to the enactment of SEZ Act, 2005, formal approval has been accorded to 578 proposals out of which 367 SEZs have been notified. A total of 122 SEZs are already exporting. 

Setting of SEZ unit and its functioning is regulated as per the provisions of SEZ Act 2005 and rules framed thereunder. The Approval Committees under the Development Commissioners constituted for each Zone, which comprise representatives from Customs, Income-tax, State Governments etc. have been directed to monitor the performance of the SEZ Units. This includes scrutiny of Annual Performance Report (APR), Quarterly Performance Report (QPR) and details of rent recovery. Failure to meet the requirements of the scheme or any violation attracts action under Foreign Trade (Development and Regulation) Act, 1992. 

This was stated by Shri Jyotiraditya M Scindia, Minister of State for Commerce and Industry, in a written reply in the Rajya Sabha today. Special Economic Zones regulation requires approvals and monitoring under SEZ Act with enforcement under foreign trade law. SEZs may be established by Central, State or private persons for manufacturing, services or warehousing; proposals recommended by State Governments are considered by the Board of Approval and, once formally approved, operate under the SEZ Act, 2005. Approval Committees under Development Commissioners, comprising customs, income tax and State representatives, monitor units through Annual and Quarterly Performance Reports and rent records; failures or violations attract action under the Foreign Trade (Development and Regulation) regime.