SHREY SAXENA VARTIKA JAIN SHWETA BHATT SURABHI SHARMA

A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. The category 'SEZ' covers a broad range of more specific zone types, including Free Trade Zones(FTZ), Export Processing Zones (EPZ), Free Zones(FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. `The objectives of setting SEZs are aimed at boosting exports and attracting investments in various export-oriented manufacturing and service sectors.

Several fiscal incentives are offered to units setting up operations in SEZs which coupled with a business friendly operating environment, would result in increasing levels of productivity, with a resultant growth in investments & exports.

The zones offer numerous benefits such as: 1. Tax incentives. 2. Infrastructure and Utilities. 3. Simplified procedures. 4. Provisions better suited for foreign investors than domestic economy

POSITIVE IMPACT OF SEZs

Setting up SEZs in such areas can have many positive effects on these situations as listed below: 1)Changing the current occupation pattern 2)New employment opportunities (local recruitment) 3)Self-employment with the compensation money 4).Better infrastructure and living conditions 5)Contract opportunities for local population 6)Further self employment opportunities through training 7)Bringing the rural society in the mainstream

NEGATIVE IMPACT OF SEZs

Implementation of such a large scale venture will most definitely have negative effects as well. These negative impacts are of economic as well as social nature. We now list the possible negative effects that they can have: 1)Financial losses to government 2)Land grabbing 3)Environmental impact 4)Clusters of development 5)Employee working conditions

Objective of the study: To study the impact of SEZ on various socioeconomic dimensions of globalization in India. Research method: We have used descriptive research method for our study.

Sample size: We have taken the data of only operational SEZ of India and have not included the expected data of the upcoming SEZ.

Data collection:

We have used the secondary data available on the site of Ministry of Commerce & Industry.


Limitations of the study:

1) As it is based on secondary data, so the result may not be completely true. 2)There are also various other factor affecting the socioeconomic dimensions of globalization. 3)We have considered only the impact of SEZ on socioeconomic dimension.

Introduction India was one of the first in Asia to recognize the effectiveness of the Export Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in Kandla in 1965. In order to overcome the shortcomings experienced on account of the multiplicity of controls and clearances; absence of world-class infrastructure, and an unstable fiscal regime and with a view to attract larger foreign investments in India, the Special Economic Zones (SEZs) Policy was announced in April 2000.

The Special Economic Zones Act, 2005, was passed by Parliament in May, 2005 which received Presidential assent on the 23rd of June, 2005. The draft SEZ Rules were widely discussed and put on the website of the Department of Commerce offering suggestions/comments. Around 800 suggestions were received on the draft rules. After extensive consultations, the SEZ Act, 2005, supported by SEZ Rules, came into effect on 10 February 2006, providing for drastic simplification of procedures and for single window clearance on matters relating to central as well as state governments. The remaining part of India, not covered by the SEZ Rules, is known as the Domestic tariff area.

The major incentives and facilities available to SEZ developers include:

   

Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA. Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act. Exemption from dividend distribution tax under Section 115O of the Income Tax Act. Exemption from Central Sales Tax (CST). Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act).

From the above data we can see that prior to SEZ act of 2005 the investment was very less before 2005 &immediately the next year the investment increase by 45%. Because of the recessionary effect the FDI Inflows was less which lead to the decline in the investment in the SEZ.

SEZ has generated lot of employment opportunities. The figures given above include only direct employment. The data shows that employment generation growth rate was much higher in the year 200506.

Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Employment 95407 1,00,650 1,78,000 2,00,459 2,80,832 3,87,439 4,90,000

growth rate

5.50 76.9 12.6 40.1 38.0 26.5

From the figure we can say that because of the SEZ women employment got drastic increase. In the year 2005-2006 there was major increase in women employment High pay-scale, easy transportation facility are major factors for that.

Here, we have seen the impact of economic factors of SEZ on the GDP of India. From, the regression analysis the impact on GDP is given by the following regression equation GDP= 54.62 0.27*Investment 14.66* Inflation+ 51.37 * Export

Regression Statistics Multiple R R Square Adjusted R square Standard Error Observations 0.90336691 0.81607177 0.540179433 11.68792632 6

Intercept Investment Inflation Export of SEZ

Coefficients 54.61660642 -0.270113457 -14.6595317 51.37395177

Here, we have calculated the socio impact of SEZ on Indian GDP.  From, the regression analysis the impact on GDP is given by the following regression equation GDP= 119.67 0.93* Women employment 66.68* Direct employment + 0.48 * population


The regression equations say that for every 1% increase or decrease of the independent variable shows the increase or decrease of dependent variable. For e.g. GDP = 54.62 0.27* Investment 14.66* Inflation + 51.37 * Export This equation shows that even though the Investment and Inflation are showing negative effect on the GDP growth but it is over-powered with the positive effect of the export volume growth. This shows that the export from SEZ has great impact on the economy of the country.`  Similarly, another regression analysis to study the impact of social factors on an economy was carried GDP = 119.67 0.93* Women employment 66.68* Direct employment + 0.48 * population. This equation shows that no doubt the employment generated by this SEZ has a great impact on the welfare of the society and the growth of the economy, but as compared to the increase in the population of the country the effect is not felt overall. So necessary steps must be taken to increase the SEZ zones to create more employment opportunities