Q.(a) Explain the objectives and characteristics of SEZs.
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Start your 14-day free trial to unlock the full solution →(a) SEZs are duty-free export enclaves designed to boost exports, FDI, employment and infrastructure through tax and procedural incentives. (b) The rural economy suffers from over-dependence on low-productivity agriculture, tiny fragmented holdings, indebtedness, weak credit/marketing, poor infrastructure and poverty.
(a) Objectives and characteristics of SEZs
A Special Economic Zone (SEZ) is a specially demarcated, duty-free enclave that is treated as foreign territory for the purposes of trade, duties and tariffs. In India, SEZs are governed by the SEZ Act, 2005.
Objectives:
- Promote and increase exports.
- Attract foreign direct investment (FDI).
- Generate employment opportunities.
- Develop world-class infrastructure.
- Promote overall economic activity and transfer of technology.
Characteristics / features:
- Duty-free import and domestic procurement of goods for development and production.
- Single-window clearance for approvals.
- Tax incentives and exemptions (on income and duties for specified periods).
- World-class infrastructure (power, roads, connectivity).
- 100% FDI allowed under the automatic route in most activities.
- Minimum-area norms and foreign-territory treatment for customs.
(b) Problems of the rural economy
- Over-dependence on agriculture with disguised unemployment (more workers than needed on farms).
- Low agricultural productivity due to old methods and inadequate inputs.
- Small and fragmented land holdings, which are uneconomic to cultivate.
- Rural indebtedness and dependence on moneylenders charging high interest. …
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