Which of the following statements is correct about Special Economic Zones?

  1. An enclave within a country where industries can operate without any control
  2. An enclave within a country where any person can start any industry
  3. An enclave within a country where no labour laws are applied

  4. An enclave within a country where industries get some tax advantages

Answer (Detailed Solution Below)

Option 4 : An enclave within a country where industries get some tax advantages
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The correct answer is an enclave within a country where industries get some tax advantages.

  • Special Economic Zones (SEZs):
    • An SEZ is an enclave within a country that is typically duty-free and has different business and commercial laws chiefly to encourage investment and create employment.
    • In this zone, industries get some tax advantages.
    • The Parliament passed the Special Economic Zones Act in 2005 after many consultations and deliberations and it came into force in 2006.
    • SEZs were operational in India from 2000 to 2006 (under the EXIM/Foreign Trade Policy).
  • Special Economic Zones Act, 2005
    • It is defined as an Act to provide for the establishment, development, and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto.
  • Objectives of the SEZs Act are:
    • To create further economic activity.
    • To encourage the export of goods and services.
    • To provide employment.
    • To boost domestic and foreign investments.
    • To develop infrastructure facilities.
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