- India
- May 30
- Sreesha V.M
What are Special Economic Zones?
• The government notified two new Special Economic Zones (SEZs) in the Union Territory of Puducherry.
• The proposals were approved by the Board of Approval for SEZs under the Department of Commerce.
The two new SEZs:
1) IT/ITES SEZ will be developed by Oulgaret Municipality at Thattanchavady village in Oulgaret Taluk. This will be the first SEZ in India to be developed by an urban local body. The SEZ will come up across an area of 8.623 hectares with a proposed investment of Rs 725 crore, and is expected to create as many as 3,500 direct and indirect jobs.
2) The other, a multi-sector SEZ, will be developed by the Pondicherry Industrial Promotion Development and Investment Corporation (PIPDIC) at Karasur village in Villianur Taluk. This SEZ, with a proposed investment of Rs 1,250 crore, will be built on an area of 86.2457 hectares and is expected to create employment for 5,000 people in both direct and indirect categories.
• These approvals constitute a major milestone for Puducherry’s industrial and export-led growth strategy and are expected to expand opportunities for investment, manufacturing, and high-quality employment.
Special Economic Zones
• Asia’s first Export Processing Zone (EPZ) was set up in Kandla in 1965, followed by establishment of seven more EPZs in the country.
• Special Economic Zones (SEZs) Policy was announced in April 2000 wherein various new features were incorporated.
• This policy intended to make SEZs an engine for economic growth supported by quality infrastructure and complemented by an attractive fiscal package, both at the Centre and the state level, with a user-friendly regulatory framework.
• All the eight pre-existing EPZs located at Kandla and Surat (Gujarat), Santa Cruz (Maharashtra), Cochin (Kerala), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta (West Bengal) and Noida (Uttar Pradesh) were converted into Special Economic Zones.
• The Special Economic Zones Act, 2005, was passed by Parliament in May 2005 and received Presidential assent on June 23, 2005.
• The SEZ Act, 2005, supported by SEZ Rules, came into effect on February 10, 2006.
• All laws of India are applicable in SEZs unless specifically exempted as per the SEZ Act/Rules.
• SEZ units are set up for the manufacture of goods, for rendering of services and providing warehousing services.
• SEZs serve as engines of export-led growth.
The main objectives of the SEZ Act are:
i) Generation of additional economic activity.
ii) Promotion of exports of goods and services.
iii) Promotion of investment from domestic and foreign sources.
iv) Creation of employment opportunities.
v) Development of infrastructure facilities.
• It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities.
Functioning of SEZs
• The functioning of the SEZs is governed by a three-tier administrative set-up.
• The board of approval is the apex body and is headed by the Secretary, Department of Commerce.
• The approval committee at the zone level deals with approval of units in the SEZs and other related issues. Each zone is headed by a development commissioner, who is ex-officio chairperson of the approval committee.
• Once an SEZ has been approved by the board of approval and the central government has notified the area of the SEZ, units are allowed to be set up in the SEZ.
• All the proposals for setting up of units in the SEZ are approved at the zone level by the approval committee consisting of development commissioner, Customs authorities and representatives of the state government.
• The performance of the SEZ units are periodically monitored by the approval committee and units are liable for penal action under the provision of Foreign Trade (Development and Regulation) Act, in case of violation of the conditions of the approval.
• The SEZ Rules provide for different minimum land requirements for different classes of SEZs.
• Every SEZ is divided into a processing area where alone the SEZ units would come up and the non-processing area where the supporting infrastructure is to be created.
Gateways to next wave of growth
• In India, SEZs have played a transformative role in strengthening the economic landscape.
• These zones have significantly accelerated export growth while fostering industrial expansion across sectors.
• Beyond earning foreign exchange and building infrastructure, SEZs have contributed to the holistic development of local economies through direct and indirect employment generation, the emergence of new business ecosystems, and improved socio-economic outcomes.
• As of February 28, 2026, there are 368 notified SEZs across India.
• By offering fiscal incentives, streamlined regulatory processes, and modern infrastructure, SEZs have enhanced India’s global competitiveness.
• From port-led hubs such as Mundra Port and Kandla Port to sector-focused ecosystems like Sri City and GIFT City, each SEZ offers a distinct value proposition for global and domestic investors alike.
• They have facilitated the growth of specialised industrial clusters, encouraged innovation and technological advancement, and positioned India as an attractive and reliable investment destination in the global market.
(The author is a trainer for Civil Services aspirants.)