Press Information Bureau
Government of India
Ministry of Commerce & Industry

30-April-2012 16:59 IST

Benefits of SEZs

           While no specific studies to assess the performance and overall impact of Special Economic Zones (SEZs) on rural and agro industries across the country have been carried out, studies commissioned by the Department of Commerce on the socio-economic impact of SEZs have shown that SEZs have created a significant local area impact in terms of direct as well as indirect employment, emergence of new activities, changes in consumption pattern and social life, human development facilities such as education, healthcare etc.  In a short span of about six years since SEZ Act and Rules were notified in February, 2006, formal approvals have been granted for setting up of 589 SEZs out of which 389 have been notified and 153 are already exporting. Out of the total employment provided to 8,44,916 persons in SEZs as a whole employment to 7,10,212 persons is incremental employment generated after February, 2006 when the SEZ Act came into force.  This is apart from millions of man days of employment created by the developers for infrastructure activities. Physical exports from the SEZs have increased from Rs. 2,20,711.39 crore in 2009-10 to Rs. 3,15,867.85 crore in 2010-11, registering a growth of 43.11%.  There has been an overall growth of export of 2531% over past nine years (2003-04 to 2011-12). The total physical exports from SEZs in 2011-12, as on 31st March, 2012, has been to the tune of Rs. 3,64,477.73 crore approximately registering a growth of 15.39% over the previous financial year. The total investment in SEZs till 31st March, 2012 is Rs. 2,01,874.76 crore approximately, including Rs. 1,82,750.74 crore in the newly notified SEZs. 

In order to impart stability to SEZ regime and to achieve generation of greater economic activity and employment through the establishment of SEZs, Special Economic Zone Act, 2005 had been enacted in February 2006 supported by SEZ Rules, 2006. The main objectives of the SEZ Act are:-

a)   generation of additional economic activity

b)  promotion of exports of goods and services

c)   promotion of investment from domestic and foreign sources

d)  creation of employment opportunities

e)   development of infrastructure facilities

In terms of SEZ Act, 2005 and Rules framed thereunder, no export or foreign direct investment (FDI) targets are set for SEZs.  SEZ units are required to achieve positive Net Foreign Exchange earnings within a period of five years from the date of commencement of production. Data on actual growth in exports and foreign direct investment in SEZs during the last three years and the current year has been given in the table below:-

Years	Value of exports (Rs. in crore)	% Growth	Value of FDI (Rs. in crore)	% Growth
2008-2009	99,689	50%	10,983	49.72%
2009-2010	2,20,711	121%	16,778	52.77%
2010-2011	3,15,868	43.11%	22,790	35.83%
2011-2012	3,64,478	15.39%	11,466	-49.69%

       Relief provided to SEZ developers and units in the form of concessions, rebates and exemptions are intrinsic to the SEZ policy and are specifically provided under the SEZ Act and Rules, and are in the nature of incentives to achieve SEZ objectives.

As the above figures would indicate the SEZs have by and large been able to attain the objectives for which these were set up.  However, on-going review and reform, as necessary, of Government policy and procedure is inherent to Public Policy.

This information was given by Shri Anand Sharma ,  Union Minister for Commerce, Industry and  Textiles  in written reply to a question in  Lok    Sabha today.

DS/GK

Special Economic Zone regime requires units to achieve positive net foreign exchange within five years while promoting exports and investment. The Special Economic Zone regime established by the Special Economic Zone Act, 2005 seeks to generate economic activity, promote exports and investment, create employment and develop infrastructure; it imposes no fixed export or FDI targets but requires SEZ units to achieve positive Net Foreign Exchange earnings within five years of commencing production and provides concessions, rebates and exemptions as incentives to meet those objectives.