What a Special Economic Zone Is

An SEZ is a designated area with special rules, tax breaks and simpler procedures, designed to boost exports and attract investment.

A Special Economic Zone is treated as foreign territory for trade purposes: goods can enter duty-free, and firms enjoy simpler approvals and tax benefits.

The idea

Create a small island of good infrastructure and friendly rules inside a country with tougher conditions.

Benefits

Duty-free imports of inputs, faster clearances and, historically, tax holidays.

Goal

Attract factories and services firms that export, creating jobs and foreign exchange.

A duty-free factory

A firm imports machinery and parts free of duty in an SEZ, assembles goods and exports them.

Assuming SEZs are ordinary industrial parks

They have special legal status.

Key takeaways

SEZs have special rules.
Imports are duty-free.
Exports are the goal.
Infrastructure is a key attraction.