Q) There is a fear that the promotion of SEZs may be at the cost of fertile agricultural land affecting food security, loss of revenue to the exchequer and cause uneven growth with adverse effects.Examine

Why this Question?

Important part of GS Paper-III.

Key demand of the Question 

Discuss in detail the problems faced by Special Economic Zones in India.


Examine – When asked to ‘Examine’, we must look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.


Start with an introduction about the origin of SEZ’s.


In the first part, discuss benefits of SEZs.

In the next part, suggest steps that are needed to improve them.


Conclude with the importance of SEZ’s.

Model Answer

The concept of SEZ is expected to bring large dividends to the state in terms of economic and industrial development and the generation of new employment opportunities. The SEZs are expected to be engines for economic growth. Special Economic Zone (SEZ) is defined as “a specifically delineated duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs”.


  • Self certification for export and import
    • Import and export movement of goods are based on self-declaration in SEZ
    • No routine examination is made unless a specific order from the Development Commissioner or authority is made.
  • Sub contracting
    • A SEZ unit may sub-contract a part of its product or production process to different units, even abroad.
  • Fiscal incentives-Tax
    • There is an exemption from excise and customs duty on procurement of capital assets, consumable stores, and raw-materials from the domestic market.
    • There is an exemption from sales tax, import duty, income tax, minimum alternative tax, and dividend distribution tax.
  • Single Window Clearance
    • There is a facility for the submission of documents at single locations on a regular basis.
    • The proceedings are less and time-saving.

Baba Kalyani committee recommendations

Framework shift from export growth to broad-based Employment and Economic Growth (Employment and Economic Enclaves-3Es). Formulation of separate rules and procedures for manufacturing and service SEZs.Shift from supply-driven to demand-driven approach for 3Es development to improve the efficiency of investment-based on certain industries, the current levels of existing inventory in the region.Enabling framework for Ease of Doing Business (EoDB) in 3Es in sync with State EoDB initiatives. One integrated online portal for new investments, operational requirements, and exit related matters. Enhance competitiveness by enabling ecosystem development by funding high-speed multi-modal connectivity, business services, and utility infrastructure.Promote integrated industrial and urban development– walk to work zones, States and centers to coordinate on the framework development to bring linkages between all initiatives.Procedural relaxations for developers and tenants to improve operational and exit issues. Extension of Sunset Clause and retaining tax or duty benefits.