Special Economic Zones (SEZs) were established in many countries as testing grounds for implementation of liberal market economy principles. SEZs are viewed as instruments enhancing the acceptability and credibility of transformation policies, attracting domestic and foreign investment and also for the opening up of the economy. SEZs in India seek to promote the value addition component in exports, generate employment as well as mobilise foreign exchange.

India over the past two decades has progressively opened up its economy to face new challenges and opportunities of the 21st century effectively. Unlike the first phase of industrialization, visualized by Pundit Jawaharlal Nehru whose aim was mainly state-led investment in the industry and now with the influence of liberalization and globalization all over the world, our strategy is being shifted towards private sector-led development which has both cheap capital and technology at its disposal. Establishment of Special Economic Zones (SEZs) is one among the major changes in the economic policies made by the Government of India.