SEZ is a specifically delineated duty free enclave and shall be deemed to be a foreign territory for the purposes of trade operations and duties and tariffs.

Special Economic Zones (SEZs) on the lines of China were set up in 2000 for hassle free manufacturing and trading activities for the purpose of exports. Existing Export Processing Zone (EPZs) were notified to be converted into Special Economic Zones.

Special Economic Zone (SEZ) is an area upto 5,000 hectares endowed with the conveniences

• Internationally competitive quality infrastructure with uninterrupted power supply, roads, communications, broad band, etc.
• Minimum possible regulations like self-certification, (These areas an-e self-regulated)
• Tax exemptions like Customs, Excise, Central Sales Tax, State Sales Tax, Minimum Alternate Tax (MAT), Dividend Distribution Tax, Income Tax for first five years, and for the next five years 50 per cent IT exemption is applicable.
• Credit facilities like a unit in SEZs can use ECBs (External Commercial Borrowings) upto $500 million per year without any maturity restriction
• Hassle free environment with single window clearance for Centre and State approvals, The unit in the Zone have to be a net foreign exchange earner but they shall not be subjected to any predetermined value addition or minimum export performance requirements. Sales in the Domestic Tariff Area by SEZ units shall be subject to payment of full custom duty as per import policy in force.

1. Provision of world class infrastructure for enhancement of exports,
2. Mobilization of foreign exchange
3. Increasing employment opportunities,
4. Higher economic growth through multiplier effect.

See also : Export Processing Zone (EPZ)