UPSC Mains 2015 GS3 Q10 — SEZ Issues
There is a clear acknowledgement that Special Economic Zones (SEZs) are a tool of industrial development, manufacturing and exports. Recognizing this potential, the whole instrumentality of SEZs requires augmentation. Discuss the issues plaguing the success of SEZs with respect to taxation, governing laws and administration. (Answer in 200 words)
Question Decoded — examiner's intent
- Directive verbs
- Discuss
- Scope keywords
- Special Economic Zones (SEZs)industrial developmentmanufacturing and exportstaxationgoverning lawsadministration
- Implicit sub-parts
- The current status and utility of SEZs in India's export-led growth model.
- Specific constraints within the taxation framework such as MAT and withdrawal of sunset clauses.
- Legal and regulatory bottlenecks including the SEZ Act 2005 vs. newer State-led policies.
- Administrative hurdles like single-window clearance inefficiency and lack of external infrastructure connectivity.
- Briefly suggest 'augmentation' measures like the DESH Bill to address the stated issues.
- Common pitfalls
- Writing a generic essay on SEZs without focusing specifically on the three silos of taxation, law, and administration.
- Failing to mention the withdrawal of Direct Tax benefits which led to the decline in SEZ popularity.
- Ignoring the conflict between SEZ laws and domestic tariff area (DTA) regulations.
- Neglecting to mention the 'Development of Enterprise and Service Hubs' (DESH) Bill as the modern context for augmentation.
- Spending too many words on the history of EPZs instead of current structural challenges.
- Dimensions required
- Fiscal/Economic (Taxation)Legal/Jurisprudential (Acts and Rules)Operational/Bureaucratic (Administration)Global Trade (WTO compliance and export competitiveness)
- Marks allocation hint
Allocate 20 words for a definition and current context. Spend 40 words each on the three core pillars: taxation issues, legal conflicts, and administrative delays (120 words total). Devote 40 words to the 'augmentation' aspect or DESH Bill, and a 20-word conclusion on future outlook.
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