3 Marks Each

Question

Explain in brief special Economic Zone (SEZ).

Vidyadip · Accepted Answer

Special Economic Zone is a geographical area in which the manufacturing units or business units are granted certain relief.

$(1)$ To Encourage Export:

Through special economic zone, export of product or service are encouraged and increased.
Units setup in $SEZ$ follow different economic laws.
These units can purchase or sell any product or service anywhere all over the world without any control.
These units are provided legal tax exemption, economic package, minimum trade control and qualitative infrastructure.
Therefore, their competency to compete in the international market develops.
For the production of any quality product raw-material, semi-finished goods, technology if available can be bought to decrease production cost and improves the quality of product and increases export easily.
India where balance of trade always remains deficit, through the setup of special economic zone, export can be increased.

$(2)$ To attract Foreign Investments:

The concept of Special Economic Zone is important to attract domestic and foreign investments units setup.
Special financial packages like tax exemption, minimum trade control, qualitative infrastructural facilitiesarem given.
They can purchase or sale any product all over the world.
They are given freedom to do so.
This concept has been successful to attract foreign investment in China.
Foreign investors are encouraged through $SEZ.$
India too has followed this concept without having affecting internal economic structure.
To attract foreign investment, India has adopted the concept of $SEZ.$

$(3)$ Employment Creation:

To get the benefit of the facilities of $SEZ,$ many domestic and foreign companies have setup units and thereby remarkable creation of employment is observed.

$(4)$ To make domestic manufacturing units equivalent to world class units:

Units setup in $SEZ$ can take their own professional decisions.
They are at liberty to take decision.
They can produce the product at minimum cost and according to the demand of the world.
They are granted more facilities through different economic laws.
Labour laws of the country are not applicable to them.
They can purchase any raw material, tools of production, technology etc. for their product, from anywhere all over the world and bring down the production cost.
On the other hand, without any control the product manufactured in $SEZ$ can be exported.
Therefore, to set up units equivalent to world class units, concept of $SEZ$ is important.

Answer