Question

Consider the following about EPZ in India

1. They were aimed to promote investments and exports
2. EPZ failed to promote exports from India as much as expected

Which of the above are correct?

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. None of the above

Answer 1

The correct option is C Both 1 and 2

An Export Processing Zone (EPZ) is a Customs area where one is allowed to import plant, machinery, equipment and material for the manufacture of export goods under security, without payment of duty.

Advantages of the Export Processing Zone:
- Increase in foreign exchange through increased exports,
- Job creation,
- Foreign direct Investment (FDI) to the host country.
- The introduction of technology into the country.

Disadvantages:
More EPZs are created, there is an incentive to keep costs as low as possible to be competitive against other developing nations. This means that the workers continue to suffer the consequences of unsafe working conditions. Many governments that have created EPZ's have acted against labor movement activities within EPZ's.

Only 3.8% of exports from India in 1997 were from EPZs.