In metropolitan cities in India, we all have heard one term called SEZ (Special Economic Zones). But has anyone thought about what they are and why they are so special? Well, SEZ is important for the economic activity boosting within a region or a country. In India, a total of 265 SEZs are operational, whereas, in total, 378 are notified.
It is a fact that to make a national economic powerhouse; SEZ plays a very crucial role. Even government bodies introduce special schemes only for SEZ to empower them and gain more investments from other business players into their developed SEZ. In this post, we will discuss a few information pieces that make these economic zones very crucial.
4 Reasons Special Economic Zones Are Important
1. Boosts the product’s export
For any national economy, wellbeing, import, and export are two major crucial elements. So, these special economic zones have advanced infrastructure and all government clearance that allow companies in these zones to manufacture and export. Due to advanced infrastructure, there is more production, and more goods will be exported.
More the export will be there; more will be the revenue generation for the government. That is why there is more focus on economic zone development, whether it is a state government or the central government. Till 31 Dec 2020, the export value of all Indian operational SEZ was Rs.5456 crores. This is what the power of SEZ is.
2. Boost infrastructural activities
For instance, there is land with no professional activity, and suddenly the government announces it as SEZ. Then, there will be a boost in infrastructural activities like proper roadways, electricity, and other infrastructural resources. In this manner, the region will be developed, and no migration of local people is required in outside states.
Flexibility in labour laws, low restrictions on taxes, and other benefits give companies a golden opportunity to work and boost the local infrastructure of the particular region. In a nutshell, SEZ makes world-class facilities that enhance the livelihood of a common person. The best examples are the IT parks across the nation which help in boosting the local infrastructure as well.
3. Testing grounds on business policies
The best case to check whether the Private sector lending scheme works for the common people or not is to allow SEZ. Implementing liberal business policies helps companies in the SEZ to flourish. However, if companies are not performing well after the implementation of government policies, the government will change their policies and come up with another reform.
Tax incentives or exemptions for a certain period are the major reason for foreign direct investment (FDI). However, there should be a balanced percentage to allow foreign direct investment to manage the nation’s resources. Or else, the nation would take the path of capitalist society, which sometimes unbalances the nation’s demographic dividend.
4. Uplift the economic wellbeing
As we discussed, it boosts the infrastructure; SEZ also uplifts the economic condition of the society. In today’s era, the modern lifestyle is the need of everyone. Also, per capita income is very crucial to determine whether the region is developed or not. In all these parameters, economic zones have the upper hand and provide all sorts of economic freedom to society.
In the modernization era, a regular income is necessary to survive and enjoy financial freedom. Therefore, the government makes strategies to encourage special economic zones to boost economic activity and get employment.
Conclusion
Special economic zones in the future will continue to grow and boost economic activity. Also, companies will come up with sustainable economic policies that will not harm the environment. So, livelihood and earning are both saved.