Special Economic Zone

1. Understanding The Concept Of ‘SEZ’

The Special Economic Zone is a geographical area with financial legislation that are more liberal than the typical financial legislation of a country. Usually the objective is to boost foreign investment. In view of the need to increase foreign investment and encourage imports from the nation, and in view of the need for a level playing field to be rendered accessible to national companies and producers in order to be viable worldwide, the Government. In April 2000, India announced the establishment of Special Economic Zones in the nation, considered to be overseas land for the reasons of trade, customs and tariff activities. SEZs are exempt from customs duties, income tax, retail tax, utility tax. Following the adoption of the SEZ Act by the Parliament in June 2005, the law went into force in February 2006, although some countries, such as Gujarat, had themselves enacted regional SEZ legislation in 2004.

2. The Object Behind SEZs

The Preamble of the SEZ Act 2005 sets out the purpose of the Act to promote imports. The declared aim of establishing SEZs across India is to “promote imports.” The Ministry of Commerce and Industry maintains that imports will eventually grow five times, that GDP will increase by 2% and that SEZs will generate 30 lakh employment across India. It is also asserted by the govt that SEZs will promote worldwide manufacturing through foreign direct investment (FDI), allow the transition of contemporary technology and generate opportunities for infrastructure. SEZ tends mainly to be touching on one of the main components of the land-based sectors, thus maintaining vital links with the other three main variables of sector, such as workers, assets and organisation. As classical economists, four variables are identified, such as territory. Labor, capital and organization as main equivalent participants for any manufacturing entity, each of them including property for SEZ conceptually holds at least 25% of the complete valuation of the sector.

3. SEZS And Land Acquisition: How Are They Inter-Related?

In the age of liberalization and privatization, the purchase of property has taken on fresh proportions with the establishment of the Special Economic Zones. SEZs and property acquisitions are interlinked, as a considerable amount of property is needed in the building up of SEZs. The Government of India is promoting the establishment of SEZs in the country to assist the nation’s financial and manufacturing development. Land procurement relates to the method by which the state forcefully acquires private property for public purposes without the permission of the landowner, which is distinct from the business purchase of land. The legislation of purchase of land stems its validity from the legal concept of the authority of the Eminent Domain of the State–the authority by which the State maintains “absolute control over all assets in the State with the option of expropriation.” The Land Acquisition Act 1894 confers this authority on the central and government authorities to obtain land “for government reasons and for the benefit of companies and for the purpose of determinism.

There is therefore, of course, a debate as to why there was a need for distinct particular SEZ legislation, when property for the same could have been obtained under the Land Acquisition Act. Although there is no reason or response for this issue, it can be discovered on the exploration of similarities and distinctions between the method performed under the two, along with other elements. It is assumed in this document that the idea behind the purchase of property for SEZ has originated from the purchase of property under the Land Acquisition Act, as is evident from the resemblance of the method performed by SEZ at the same moment, which includes certain distinguishing characteristics, therefore the SEZ Act tends to be both the child and the missed and discovered brother of the Land Acquisition Act.

1. Purpose For Which Land Is Acquired Under Land Acquisition Act And SEZ Act:

Under the Land Acquisition Act, 1894, the appropriate government. Can obtain property only for the’ government benefit’ or for the purposes of the Company. The Act adopts a wide concept of’ government intent’ which allows for a wide spectrum of initiatives. In a variety of instances, the Supreme Court (SC) has raised concerns pertaining to reasonable reward, land valuation, interpretation of public purpose and other problems related to property procurement. The tribunal also ruled that the constitution allows the purchase of private property by the state only if it is needed for a public purpose. In latest instances of property procurement, the “government intention” is being called into question. However, in order for construction to take position, especially at a moment when the agricultural sector is on the decrease, soil must be purchased for agricultural growth. The issue is when, how and in what cases the state should act to obtain property. Under the SEZ Act, the only aim for which property can be obtained is the creation, growth and governance of SEZs. While the preamble to the SEZ Act 2005 states that SEZs have been established to promote exports, Section 5 of the Act states that the central government will be guided by the following principles while notifying any area as SEZ, i.e.’ (a) the generation of additional economic activity, (b) the promotion of exports of goods and services, (c) the promotion of investment from domestic and foreign sources. However, the fundamental item appears to be linked to the’ government intent.’ In other words, there are several accounts that show that the establishment of SEZs has helped the nation to prosper in more than one way, thus fulfilling’ government intent.’

2. Procedure Adopted For Acquisiiton Of Land Under The Land Acquisition Act And The SEZ Act

Under the Land Acquisition Act, two distinct processes have been established for the procurement of property for’ government purposes’ and’ businesses.’ For the former, the method begins with the publishing of the Government’s preliminary notification. Intent to obtain a specific property, accompanied by a meeting of complaints, publishing of a statement that it is necessary for a public purpose, procurement by the Collector, notification to interested individuals, which eventually leads to an enquiry and reward by the Collector. The prior approval of the suitable government must be obtained for the takeover of businesses. Along with an arrangement entered into by the Company. Under the SEZ Act, 2005, the individual planning to start up SEZ first submits a suggestion to the Government of the State. Or the BOA. Even the State Government, if it intends to start up SEZ, may create a suggestion to the Board of Directors. This is accompanied by the Developer’s permission to work and the SEZ notice. The running of the SEZs is thus controlled by a three-tier administrative establishment. The Board of Approval is an apex organ, led by the Secretary, Department of Commerce. The authorization committee at zone tier deals with the authorization of SEZ facilities and other associated problems. Each zone shall be chaired by the Commissioner for Development, who is the ex-officio chair of the Approvement Committee.

Once the SEZ has been authorized by the Board of Approval and the Central Government has notified the SEZ region, the SEZ divisions may be established. All proposals for the establishment of SEZ units shall be approved at zone level by the approval committee consisting of the Development Commissioner, the Customs Authorities and representatives of the State Government. All publish authorization clearances, including the granting of the importer-exporter license amount, the shift in the title of the business or the executing authority, the wide range diversification, etc. shall be provided at the stage of the Zone by the Development Commissioner. The achievement of the SEZ systems shall be regularly tracked by the authorization committee and the employees shall be responsible for criminal proceedings under the Foreign Trade Act (Development and Regulation) in the event of infringement of the circumstances of the authorization.

Broadly talking, there is a resemblance in the method taken for the acquisition of property under the Land Acquisition Act and the SEZ Act to the point that the approval of the landowner is not needed under both. However, the suitable government is the ultimate agency under the Land Acquisition. Whereas under SEZ, it is the approval board.

3. Advantages And Disadvantages Of Land Acquisition Act And SEZ

SEZs and property acquisitions often require agricultural property and the federal and state authorities are obtaining property from peasants. The numerous benefits of SEZ and property takeover in India are that it has helped take vast quantities of foreign currency into the nation, improved the amount of employment for the individuals and brought technological developments to the Indian sector, and made it a cost-effective producer. On the other side, the disadvantages are that it is expected that more than forty Lakh individuals, who depend on agricultural property, will be expelled from their territory. It is projected that farming households will have to experience a reduction of around Rs.212 crores of full revenue each year, and that this will also put India’s food security at stake. Land procurement in India has now led in dissension, turmoil and resistance from landowners to livelihoods. Whether it’s Nandigram, Singur, Koodankulam, Jagatsinghpur (POSCO), Kannamangal or Bastar, the problems are the same. In the context of growth, property procurement is by force without owing regard for fundamental human rights, the right to lives and personal liberty. The state offers’ human’ displacement, accompanied by aid and rehabilitation. However, historical records indicate that an approximately 40 million individuals have wasted their soil since 1950 owing to the displacement of big construction initiatives. At least 75% of them are still waiting for recovery. In addition, payment is to be discussed only for those who retain rights to property. No payment had been scheduled for those who had not been granted by the Narmada Water Disputes Tribunal.

The current scheme of distribution of compensation to landowners is considered to be completely unreasonable. If the property is obtained for a business reason in the guise of a public purpose, then let the competition define the cost of the property as free markets are not about corporate institutions or even industrialisation, they are about liberty. Then why limit the liberty of peasants to buy their property at market prices? (Mutual negotiations, with a view to returning to land acquisition only after 90% of the land has been purchased through negotiation, may become necessary.) There is no question that the state must acquire property for growth to take position. There are also a few success stories of property purchase that have been very fluid, leading in the growth of the region. Market forces have also stimulated agrarian India. The state will need to have fresh processes in position to make peasants participants in the growth system. Acquiring agriculture at small rates hurts the lives of peasants, which demonstrates that our present agricultural property procurement scheme has not been adapted to the requirements of the moments, and that there needs to be change. A new glance requires to be made at the property procurement strategy, including legislation, reward offers and progress rehabilitation schemes.

Exploring The Differences And Identifying The Unique Features Of SEZ

Although the social extent of property procurement and SEZ seems linked, it is worth mentioning that SEZ is a very particular and thorough topic in itself. Once the land is obtained under the Land Acquisition Act, it becomes the ownership of the Government. And the governor. It can be used in any way it wants, as soon as it is used for the intent for which it has been obtained. But sometimes, if, for some reason, the aim for which it was obtained can no longer be achieved, the Government. It can still be used for a distinct intent as soon as there is no unfaithful intention on its portion. However, the land notified to SEZ can not be used for any other intent. Also under the SEZ Act, 2005, once the territory has been notified as SEZ, its property remains with the private person or with the Government of the State. As the situation might be.

Secondly, SEZ Rules provide for certain facilitative procedures which are absent in the case of Land Acquisition Act. They are as follows:

  • Simplified procedures for the development, operation and maintenance of Special Economic Zones and for the establishment and conduct of business units in SEZs;’
  • Single window clearance to set up the SEZ;
  • Single window clearance to set up a unit in a Special Economic Zone;
  • Single Window clearance on issues relating to the central and state governments;
  • Simplified compliance procedures and documentation, with emphasis on self-certification.
  • Similarly, there are a number of advantages and exemptions granted in SEZ which are completely present in the event of’ other government intent’ under the Land Acquisition Act. Incentives and equipment provided to SEZ units to attract capital to SEZs, including foreign investment, include:-
  • Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
  • 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
  • Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
  • External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels.
  • Exemption from Central Sales Tax.
  • Exemption from Service Tax.
  • Single window clearance for Central and State level approvals.
  • Exemption from State sales tax and other levies as extended by the respective State Governments.

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