Special Economic Zones (SEZs) are specific geographical regions that have economic laws different from and more liberal than a country's typical economic laws. The goal is usually an increase in Foreign Direct Investment (FDI) in the country. A policy for setting up of SEZs in the country with a view to provide an internationally competitive and hassle free environment for exports was introduced on April 1, 2000 . An SEZ is like a foreign territory within a country. An SEZ is governed by a special set of rules to facilitate foreign direct investment for export-oriented production. These zones are typically marked by minimum bureaucracy, best infrastructure, generous tax holidays, unlimited duty free imports of raw, intermediate and final goods as well as capital goods and a package of incentives to attract foreign and domestic investments for promoting export-led growth. Units may be set up in SEZ for manufacturing of goods and/or rendering of Services.

There is a clear understanding that a well-implemented and designed SEZ can bring about many desired benefits for a host-country: increases in employment, FDI attraction, general economic growth, foreign exchange earnings, international exposure, and the transfer of new technologies and skills. Hence, many developing countries are also developing the SEZs with the expectation that they will provide the engines of growth for their economies to achieve industrialization

SEZs are not a new phenomenon in INDIA , In fact, the first such zone in the country was set up way back in 1965 at Kandla. But it was known then as the Economic Processing Zone. Thereafter, in 1972, the Santacruz Electronic Export Processing Zone (SEEPZ) was launched in Mumbai.

Special Economic Zone Act (SEZ ACT) has been introduced in the year 2005. It is 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.

The main objectives of the SEZ Act are:

• Generation of additional economic activity
• Promotion of exports of goods and services;
• Promotion of investment from domestic and foreign sources;
• Creation of employment opportunities;
• 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.

Under the Act, SEZ could be set up either jointly or severally by the Central Government, State Government, or any person (including a private or public limited company, partnership or proprietorship):

• For Manufacture Of Goods; Or
• For Rendering Services; Or
• For Both Manufacturing Of Goods And For Rendering Services; Or
• As A Free Trade And Warehousing Zone.