The Special Economic Zones Act, 2005

(1) This Act may be called the Special Economic ZonesAct, 2005. (2) It extends to the whole of India. (3) It shall come into force on such date1as the Central Government may, by notification in theOfficial Gazette, appoint, and different dates may be appointed for different provisions of this Act andany reference in any such provision to the commencement of this Act shall be construed as a reference tothe coming into force of that provision.

In this Act, unless the context otherwise requires,-- (a) "appointed day" with reference to a Special Economic Zone means the date on which theSpecial Economic Zone is notified by the Central Government under sub-section (1) of section 4; (b) "Approval Committee" means an Approval Committee constituted under sub-section (1) ofsection 13; (c) "authorised operations" means operations which may be authorised under sub-section (2) ofsection 4 and sub-section (9) of section 15; (d) "Authority" means a Special Economic Zone Authority constituted under sub-section (1) ofsection 31; (e) "Board" means the Board of Approval constituted under sub-section (1) of section 8; (f) "Co-Developer" means a person who, or a State Government which, has been granted by theCentral Government a letter of approval under sub-section (12) of section 3; (g) "Developer" means a person who, or a State Government which, has been granted by theCentral Government a letter of approval under sub-section (10) of section 3 and includes an Authorityand a Co-Developer; (h) "Development Commissioner" means the Development Commissioner appointed for one ormore Special Economic Zones under sub-section (1) of section 11; (i) "Domestic Tariff Area" means the whole of India (including the territorial waters andcontinental shelf) but does not include the areas of the Special Economic Zones; (j) “entrepreneur” means a person who has been granted a letter of approval by the DevelopmentCommissioner under sub-section (9) of section 15; (k) "existing Special Economic Zone" means every Special Economic Zone which is in existenceon or before the commencement of this Act; (l) "existing Unit" means every Unit which has been set up on or before the commencement ofthis Act in an existing Special Economic Zone; (m) "export" means-- (i) taking goods, or providing services, out of India, from a Special Economic Zone, by land,sea or air or by any other mode, whether physical or otherwise; or (ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit orDeveloper; or (iii) supplying goods, or providing services, from one Unit to another Unit or Developer, inthe same or different Special Economic Zone; (n) "Free Trade and Warehousing Zone" means a Special Economic Zone wherein mainly tradingand warehousing and other activities related thereto are carried on; (o) "import" means-- (i) bringing goods or receiving services, in a Special Economic Zone, by a Unit or Developerfrom a place outside India by land, sea or air or by any other mode, whether physical orotherwise; or (ii) receiving goods, or services by a Unit or Developer from another Unit or Developer of thesame Special Economic Zone or a different Special Economic Zone; (p) "infrastructure facilities" means industrial, commercial or social infrastructure or otherfacilities necessary for the development of a Special Economic Zone or such other facilities whichmay be prescribed; (q) "International Financial Services Centre" means an International Financial Services Centrewhich has been approved by the Central Government under sub-section (1) of section 18; (r) "manufacture" means to make, produce, fabricate, assemble, process or bring into existence,by hand or by machine, a new product having a distinctive name, character or use and shall includeprocesses such as refrigeration, cutting, polishing, blending, repair, remaking, re-engineering andincludes agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry,sericulture, viticulture and mining; (s) "notification" means a notification published in the Official Gazette and the expression“notify” shall be construed accordingly; (t) "notified offences" means the offences specified as such under sub-section (1) of section 21; (u) "Offshore Banking Unit" means a branch of a bank located in a Special Economic Zone andwhich has obtained the permission under clause (a) of sub-section (1) of section 23 of the BankingRegulation Act, 1949 (10 of 1949); (v) "person" includes an individual, whether resident in India or outside India, a Hindu undividedfamily, co-operative society, a company, whether incorporated in India or outside India, a firm,proprietary concern, or an association of persons or body of individuals, whether incorporated or not,local authority 1[trust or any entity as may be notified by the Central Government] and any agency,office or branch owned or controlled by such individual, Hindu undivided family, co-operative,association, body, 2[authority, company, trust or entity]; (w) "prescribed" means prescribed by rules made by the Central Government under this Act; (x) "Reserve Bank" means the Reserve Bank of India constituted under section 3 of the ReserveBank of India Act, 1934 (2 of 1934); (y) "Schedule" means Schedules to this Act; (z) "services" means such tradable services which,-- (i) are covered under the General Agreement on Trade in Services annexed as IB to theAgreement establishing the World Trade Organisation concluded at Marrakesh on the 15th day ofApril, 1994; (ii) may be prescribed by the Central Government for the purposes of this Act; and (iii) earn foreign exchange; (za) "Special Economic Zone" means each Special Economic Zone notified under the proviso tosub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and WarehousingZone) and includes an existing Special Economic Zone; (zb) "State Government" means a State Government of the State in which a Special EconomicZone is established or proposed to be established; (zc) "Unit" means a Unit set up by an entrepreneur in a Special Economic Zone and includes anexisting Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre,whether established before or established after the commencement of this Act; (zd) all other words and expressions used and not defined in this Act but defined in the CentralExcise Act, 1944 (1 of 1944), the Industries (Development and Regulation) Act, 1951 (65 of 1951),the Income-tax Act, 1961 (43 of 1961), the Customs Act, 1962 (52 of 1962) and the Foreign Trade(Development and Regulation) Act, 1992 (22 of 1992) shall have the meanings respectively assignedto them in those Acts.

(1) A Special EconomicZone may be established under this Act, either jointly or severally by the Central Government, StateGovernment, or any person for manufacture of goods or rendering services or for both or as a Free Tradeand Warehousing Zone. (2) Any person, who intends to set up a Special Economic Zone, may, after identifying the area, makea proposal to the State Government concerned for the purpose of setting up the Special Economic Zone. (3) Notwithstanding anything contained in sub-section (2), any person, who intends to set up aSpecial Economic Zone, may, after identifying the area, at his option, make a proposal directly to theBoard for the purpose of setting up the Special Economic Zone: Provided that where such a proposal has been received directly from a person under this sub-section,the Board may grant approval and after receipt of such approval, the person concerned shall obtain theconcurrence of the State Government within the period, as may be prescribed. (4) In case a State Government intends to set up a Special Economic Zone, it may after identifying thearea, forward the proposal directly to the Board for the purpose of setting up the Special Economic Zone: Provided that the Central Government may,-- (a) after consulting the State Government concerned; (b) without referring the proposal for setting up the Special Economic Zone to the Board; and (c) after identifying the area, suo motu set up and notify the Special Economic Zone. (5) Every proposal under sub-sections (2) to (4) shall be made in such form, and, manner, containingsuch particulars as may be prescribed. (6) The State Government may, on receipt of the proposal made under sub-section (2), forward thesame together with its recommendations to the Board within such period as may be prescribed. (7) Without prejudice to the provisions contained in sub-section (8), the Board may, after receipt ofthe proposal under sub-sections (2) to (4), approve the proposal subject to such terms and conditions as itmay deem fit to impose, or modify or reject the proposal. (8) The Central Government may prescribe the following requirements for establishment of a SpecialEconomic Zone, namely:-- (a) the minimum area of land and other terms and conditions subject to which the Board shallapprove, modify or reject any proposal received by it under sub-sections (2) to (4); and (b) the terms and conditions, subject to which the Developer shall undertake the authorisedoperations and his obligations and entitlements: Provided that different minimum area of land and other terms and conditions referred to in clause (a)may be prescribed by the Central Government for a class or classes of Special Economic Zones. (9) If the Board,-- (a) approves without any modification the proposal received under sub-sections (2) to (4), it shallcommunicate the same to the Central Government; (b) approves with modifications the proposal received under sub-sections (2) to (4), it shall,communicate such modifications to the person or the State Government concerned and if suchmodifications have been accepted by such person or State Government, the Board shall communicatethe approval to the Central Government; (c) rejects the proposal received under sub-sections (2) to (4), it shall record the reasons thereforand communicate the rejection to the Central Government which shall intimate to the StateGovernment or the person concerned. (10) The Central Government shall, on receipt of communication under clause (a) or clause (b) ofsub-section (9), grant, within such time as may be prescribed, a letter of approval on such terms andconditions and obligations and entitlements as may be approved by the Board, to the Developer, being theperson or the State Government concerned: Provided that the Central Government may, on the basis of approval of the Board, approve more thanone Developer in a Special Economic Zone in cases where one Developer does not have in his possessionthe minimum area of contiguous land, as may be prescribed, for setting up a Special Economic Zone andin such cases, each Developer shall be considered as a Developer in respect of the land in his possession. (11) Any person who, or a State Government which, intends to provide any infrastructure facilities inthe identified area referred to in sub-sections (2) to (4), or undertake any authorised operation may, afterentering into an agreement with the Developer referred to in sub-section (10), make a proposal for thesame to the Board for its approval and the provisions of sub-section (5) and sub-sections (7) to (10) shall,as far as may be, apply to the said proposal made by such person or the State Government. (12) Every person or the State Government referred to in sub-section (11), whose proposal has beenapproved by the Board and who, or which, has been granted letter of approval by the CentralGovernment, shall be considered as a Co-Developer of the Special Economic Zone. (13) Subject to the provisions of this section and the letter of approval granted to a Developer, theDeveloper may allocate space or built up area or provide infrastructure services to the approved Units inaccordance with the agreement entered into by him with the entrepreneurs of such Units.

(1) The Developer shall, after the grant of letter of approval under sub-section (10) ofsection 3, submit the exact particulars of the identified area referred to in sub-sections (2) to (4) of thatsection, to the Central Government and thereupon that Government may, after satisfying that therequirements, under sub-section (8) of section 3 and other requirements, as may be prescribed, arefulfilled, notify the specifically identified area in the State as a Special Economic Zone: Provided that an existing Special Economic Zone shall be deemed to have been notified andestablished in accordance with the provisions of this Act and the provisions of this Act shall, as far asmay be, apply to such Zone accordingly: Provided further that the Central Government may, after notifying the Special Economic Zone, if itconsiders appropriate, notify subsequently any additional area to be included as a part of that SpecialEconomic Zone. (2) After the appointed day, the Board may, authorise the Developer to undertake in a SpecialEconomic Zone, such operations which the Central Government may authorise.

The Central Government, while notifyingany area as a Special Economic Zone or an additional area to be included in the Special Economic Zoneand discharging its functions under this Act, shall be guided by the following, namely:-- (a) generation of additional economic activity; (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; (e) development of infrastructure facilities; and (f) maintenance of sovereignty and integrity of India, the security of the State and friendlyrelations with foreign States.