A special economic zone is a  geographical region  which has more liberal economic laws to function as free trade and Warehousing  zone to render manufacturing, research and development services. The stated purpose for creating SEZ is to provide internationally  competitive hassle free environment  to increase foreign direct investment (FDI) within the whole country and generate employment. The government of India in April 2000  announced the introduction of SEZ (Special Economic Zone), deemed to be foreign territory for the purpose of trade operation, duties and tariffs. Special economic zones enjoys complete exemption from custom duties, income taxes, sales taxes and service taxes. Countries which have experimented with this concept are China, UAE, Malaysia, India,  Jordan, Poland,Kazakhstan, Philippines, Russia and to some extent North Korea.
 
Introduction of SEZ 's in India  
 
India was among the earliest countries in the Asia to understand the concept  and potential of EPZ ( Export Processing Zone) in order to strengthen its export.  The first ever EPZ was established at Kandl, Gujarat. The main objective behind this was to overcome the outcome the shortfalls arising due to multiple clearances and controls, unbalanced fiscal step-ups, lack of international standard infrastructure and drawing more foreign direct investment (FDI).With the SEZ policy, Indian government wished to provide local companies with proper scope for competing on global scale. The SEZ policy was introduced to help with increasing the levels of economic activity and provide more job opportunities.

Since these special economic zones attract investments,  generate export revenues and produce manufacturing jobs  they actually are given  income tax exemptions FDI is permitted through automatic  route. It also provides immense employment opportunities. This also provides  a large number of indirect employment in terms of  labor needed. It also has an ability to provide direct employment required in relevant industries. SEZ have drastically improved the economic activity within the whole country. However, there are number of challenges  that special economic zone is  accused of  like bringing down the agricultural activities. SEZ is ought to be properly managed for rapid economic growth for profitable and sustainable development. Other benefits involves no requirement of import license, easy exemption from custom duties and central excise duties. The special economic zones brings capital to country in form of FDI which is definitely necessary for improving economic sector of the country. This involves  complete utilization of talent  in order to  improve the level of economic activity. This has to be properly managed for rapid development that leads to sustainability of country. Liberal policies and regulations will attract foreign investments and other major industries.