SEZ (Special Economic Zone) is a special business category in which certain businesses operate with economic benefits. This system is designed to promote industrial and business growth with increased exports and attracting new investments.
Under SEZ, businesses get exclusive benefits in customs and taxation under specific laws and conditions. These businesses are allowed to manufacture goods and provide services for both domestic and international markets.
How It Works:
- The government designates an area as an SEZ.
- Businesses set up eligible units there.
- Units follow SEZ and customs procedures.
- Goods or services are produced or provided.
- Exports receive applicable SEZ benefits.
Benefits:
- Supports export-oriented businesses
- Provides certain customs and tax benefits
- Attracts domestic and foreign investment
- Creates employment opportunities.
Example:
An Indian electronics company sets up a manufacturing unit in an SEZ to produce components for export and uses the applicable customs and trade benefits available to eligible SEZ units.