Introduction - CBEC's Customs Manual 2025 - Customs

Chapter 25: Special Economic Zones 1. Introduction : 1.1 Special Economic Zone (SEZ) scheme was announced in April, 2000 with a view to provide an internationally competitive environment for exports. The objectives of Special Economic Zones include making available goods and services free of taxes and duties supported by integrated infrastructure for export production, expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth. 1.2 Earlier, the policy relating to the Special Economic Zones was contained in the Foreign Trade Policy and incentives and other facilities offered to the Special Economic Zone developer/co developer and units were implemented through various notifications and circulars issued by the concerned Ministries/Department. However, in order to give a long term and stable policy framework with minimum regulatory regime and to provide expeditious and single window clearance mechanism, a Central Act for Special Economic Zones was found to be necessary. Accordingly, the SEZ Act, 2005 was enacted, which was given effect to from 10-2-2006. Thus, activities of SEZs and its units are governed by the provisions of the SEZ Act, 2005 and the rules issued there under viz. SEZ Rules, 2006. SEZ Scheme is administered by the Department of Commerce under Ministry of Commerce Industry. 1.3 The Central Government, while notifying any area as a Special Economic Zone or an additional area to be included in the Special Economic Zone and discharging its functions under this Act, is to be guided by the following criteria, namely: (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. (f) Maintenance of sovereignty and integrity of India, the security of the State and friendly relations with foreign States. 1.4 SEZs may be set up for manufacturing of goods or rendering services or both and may be multi- product, sector specific, or Free Trade and Warehousing Zone. In terms of Section 53 of the SEZ Act, SEZs are deemed to be a territory outside the Customs territory of India for the purpose of undertaking the authorized operations and goods/ services entering it (from DTA) are treated as exports. 1.5 Notification of the SEZ Act, 2005 and the SEZ Rules, 2006, a total of 376 SEZs (including 7 Central Government plus 12 State Government) have been notified as on 26.10.2022 (As per Annual Report 2022-23 of Department of Commerce). Further, there are 270 SEZs operational as on 31.06.2022. Out of this, 163 are IT/ITES, 25 Multi product and 82 other sector specific SEZs. 5,620 units have been setup in the SEZs till 31.03.2023.