The correct option is 1 and 3 only.
Explanation
Special Economic Zones (SEZs) are specifically delineated duty-free enclaves deemed to be foreign territory for the purposes of trade operations and duties and tariffs. They are established to attract Foreign Direct Investment (FDI), generate employment, and promote exports through liberal economic laws and superior infrastructure.
Statement 1 is Correct: SEZs are established by the Central and State governments, often in collaboration with the private sector, to attract foreign companies and investors. The primary objective is to create a competitive environment for exports and boost manufacturing.
Statement 2 is Incorrect: According to the standard provisions, companies setting up production units in SEZs are exempted from paying income tax for an initial period of five years, not ten. While there are partial exemptions (e.g., 50%) for the subsequent five years, the full tax holiday is limited to the first five years.
Statement 3 is Correct: To ensure operational efficiency and ease of doing business, SEZs are equipped with world-class facilities. This includes reliable electricity, water supply, roads, transport, storage, and often recreational and educational facilities for the workforce.
Key Takeaway: SEZs provide a 100% income tax exemption for the first five years and offer world-class infrastructure to incentivize foreign investment and export-oriented manufacturing.