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What is the full form of SEZ

SEZ: Special Economy Zone

SEZ stands for Special Economy Zone. It refers to a designated zone that is distinct from other parts of the country economically and is regarded as a duty-free enclave.

SEZ Full Form

A special economic zone (SEZ) is a region where business and trade regulations vary from those in the rest of the nation. SEZs are designated areas inside a nation's borders with the objectives of improving trade balance, employment, attracting more investment, creating jobs, and having efficient administration. Financial policies have been taken to entice enterprises to locate in the zone. Investing, taxation, commerce, quotas, customs, and labour laws are frequently covered under these policies. Companies may also be given tax holidays, which entitle them to a period of reduced taxation after locating in a zone.

The host nation's formation of special economic zones might be driven by the goal of drawing in foreign direct investment (FDI). While attracting foreign direct investments is the goal, the SEZ also draws domestic businesses because of its favourable infrastructure.


Special Economic Zones (SEZs) are created to support the nation's quick economic expansion. The key goals include fostering domestic and international investment as well as stimulating exports of goods and services.

One of the major advantages of special economic zones is the expansion of infrastructure and the generation of job opportunities.

Tax incentives for local firms and organisations, as well as enhanced infrastructure, are two of the key advantages of investing in SEZs. It encourages the expansion of foreign exchange revenues by generating additional job possibilities through exports.

Objectives (Goals or Aims) and Features

The key goals of SEZs are to increase foreign investment and create an advantageous ecosystem for exports. SEZs are built with top-notch infrastructures, such as storage, transportation, and roadways, and they draw international investments, which promotes economic growth.

Businesses that choose to locate in SEZs are eligible for benefits, such as free energy, water, a reduction in land prices, etc. These economic areas are categorised as duty-free industrial parks in terms of commercial activities, duties, and taxes.

The majority of the time, firms are exempt from paying customs duty when importing capital items, raw materials, consumable spare parts, etc.

SEZs may be exempt from paying sales and service tax on the acquisition or sale of products or services.

Any provision of products, services, or both to an SEZ unit is regarded as zero-rated. To put it another way, supplies made to SEZs are regarded as exports and are therefore excluded from the Goods and Services Tax.

Employer-friendly labour rules are one of the key characteristics of special economic zones.

SEZ Rules

Simplified procedures are designed for the creation, management, and upkeep of Special Economic Zones, as well as for the establishment of units and company operations. The SEZ regulations also call for single-window approval for the formation of a Special Economic Zone, the establishment of a unit within an SEZ, and matters involving the Central and State Governments. Additionally, simplified compliance procedures and paperwork are established with a focus on self-certification.


The classes of SEZ or Special Economic zones are Free-trade zones (FTZ), Export processing zones (EPZ), Free zones or Free economic zones (FEZ), industrial estates (IE) or Industrial parks, Free ports, Bonded logistics parks (BLP) and Urban enterprise zones.

i) Free-trade zones (FTZ): It is a region where, in accordance with specified customs regulations, commodities may be imported, kept, handled, manufactured, or modified before being reexported without often incurring customs duties. Free trade zones are usually designed near significant international and national borders and important seaports-areas with numerous geographic benefits for trade.

ii) Free economic zones (FEZ): FEZs are places where businesses pay extremely little or no taxes in order to promote economic development.

iii) Industrial parks: The region has been designated and designed with industrial development in consideration.

iv) Urban enterprise zones: It is a region where initiatives are taken to promote economic development and growth and are put into practice. These types of zones are exempt from municipal, state, and federal taxation and restrictions.

Role of Governments

The majority of SEZs are established through the cooperation of the central and state governments. However, SEZs can be established by any private, public, or joint sector organisation. State governments perform a crucial part in the creation of these economic regions because the plans must first be accepted by local authorities, who must give their approval for the provision of essential infrastructure facilities, like water, energy, transportation, etc., to the defined area. Moreover, the government is responsible for carrying out the legal duties of managing these SEZs. The functioning of Special economic zones is overseen by a unit approval committee, which comprises a development commissioner, a customs officer, and a state government representative.

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