Puducherry's Historic First: SEZ Developed by an Urban Local Body

Key Highlights of the Two New SEZs in Puducherry

First SEZ Developed by an Urban Local Body (ULB)

• Developer: Oulgaret Municipality at Thattanchavady village (Oulgaret Taluk)
• Sector: IT/ITES SEZ
• Area: 8.62 hectares
• Proposed Investment: Rs 725 crore
• Employment: 3,500 direct and indirect jobs
• Significance: First SEZ in India developed by a municipal body

Multi-Sector SEZ by PIPDIC

• Developer: Pondicherry Industrial Promotion Development and Investment Corporation (PIPDIC)
• Location: Karasur village (Villianur Taluk)
• Objective: Diversified manufacturing and service industries to boost regional exports

Significance for Regional Development

• TAP Region Boost: Projects underscore economic momentum in Tamil Nadu, Andaman & Puducherry (TAP) Region
• Export-Led Growth: SEZs will catalyze Puducherry's export-led growth strategy through world-class infrastructure
• Decentralized Industrialization: Sets a precedent for empowering local municipalities to drive large-scale industrial growth

What is a Special Economic Zone (SEZ)?

Definition: A geographically delineated duty-free enclave treated as foreign territory for trade operations, customs duties, and tariffs, while remaining within India's sovereign territory.

• Domestic Tariff Area (DTA): Rest of India outside SEZ boundaries
• Trade Dynamics: Goods supplied from SEZ to DTA are treated as regular imports, subject to customs procedures and import duties

Evolution of SEZs in India

• 1965: Asia's first Export Processing Zone (EPZ) set up at Kandla
• 2000: SEZ policy announced to overcome regulatory shortcomings and attract foreign investment
• 2005: Special Economic Zones Act enacted
• 2006: SEZ Rules notified
• 2018: Baba Kalyani Committee proposed renaming SEZs as "3Es" - Employment and Economic Enclave

Statutory Framework

Section 5 of SEZ Act, 2005: Board of Approval evaluates proposals based on:

• Generation of additional economic activity
• Promotion of exports
• Creation of employment
• Development of infrastructure
• Maintenance of sovereignty and integrity of India

Key Incentives Provided to SEZs

• Duty-Free Operations: Complete duty-free import and domestic procurement of goods
• Tax Exemptions: Zero-rated supplies under IGST Act, 2017
• Regulatory Ease: Single-window clearance for Central and State-level approvals

Institutional Structure

• Department of Commerce (DoC): Formulates policy, administers Board of Approval (BoA)
• Development Commissioner (DC): Manages regulatory framework, UAC approvals, customs
• Developers/Co-developers: Entities with Letter of Approval (LoA) for infrastructure
• SEZ Units: Commercial entities for exports, imports, and domestic sales (includes Offshore Banking Units and IFSC units)

Recent Reforms

• Concessional DTA Sales: Eligible SEZ units permitted to sell prescribed proportion in DTA
• Semiconductor Focus (2025): Relaxed land encumbrance norms for semiconductor manufacturing SEZs (Sanand, Gujarat; Dharwad, Karnataka)
• RoDTEP Integration: Extends remission benefits to neutralize embedded local levies
• SEZ 2.0: 17-member committee drafting new policy to overhaul SEZ Act, 2005 and align with WTO norms

Current Status (As of 2026)

Note: SEZs remain the backbone of India's IT and ITES services exports.