ESTABLISHMENT OF SPECIAL ECONOMIC ZONECentral

Section 6 of The Special Economic Zones Act, 2005

The areas falling within the Special Economic Zones may be demarcated by the Central Government or any authority specified by it as--

(a)the processing area for setting up Units for activities, being the manufacture of goods, or rendering services; or
(b)the area exclusively for trading or warehousing purposes; or
(c)the non-processing areas for activities other than those specified under clause (a) or clause (b).

Summary

The areas inside a Special Economic Zone can be divided into distinct functional zones by the Central Government or a specified authority.
The processing area is designated for setting up Units that manufacture physical goods or render services.
A specific area can be set aside exclusively for trading or warehousing purposes.
Non-processing areas are designated for supporting activities that are not manufacturing, rendering services, trading, or warehousing.

Practical examples

1In March 2018, inside the newly notified West-End SEZ, the developers demarcated a 50-hectare sector as the processing area. They built specialized factory sheds there so a manufacturing firm could install machinery to build electronic parts.

2In September 2019, inside the same SEZ, a 10-hectare sector was designated as a non-processing area. The developer constructed residential apartments, a health clinic, and a small retail center here to support the workers employed in the factories.

FAQ

1. Who has the authority to demarcate areas within a Special Economic Zone under Section 6?

The demarcation is done by the Central Government or by any authority specified by the Central Government.

2. What can be set up in the processing area of an SEZ?

The processing area is strictly for setting up Units that manufacture goods or render services.

3. What are non-processing areas used for?

They are used for supporting activities other than manufacturing, rendering services, trading, or warehousing, such as residential or social infrastructure.

Test yourself

Q1.Under Section 6 of The Special Economic Zones Act, 2005, which area is specifically designated for setting up Units to manufacture goods or render services?

Q2.Under Section 6 of The Special Economic Zones Act, 2005, what is the purpose of the area designated under clause (b)?

Q3.Under Section 6 of The Special Economic Zones Act, 2005, how is a non-processing area defined?

Q4.Under Section 6 of The Special Economic Zones Act, 2005, who is empowered to demarcate the areas within a Special Economic Zone?

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