Assertion (A): Export Processing Zones (EPZs) were set up as an enclave separated from the Domestic Tariff Area (DTA) and converted into SEZs. Reason (R): The Export Oriented Units (EOUs) scheme is complimentary to the EPZ and is introduced to enable exporters enjoy liberal package of incentives. Codes:
Both (A) and (R) are correct and (R) is the right explanation of (A).
Concept: In an Assertion-Reason item you first judge each statement's truth, then decide whether the reason actually explains the assertion. Here both statements describe India's export-promotion schemes.
Assertion (A) is correct: Export Processing Zones were indeed set up as enclaves carved out of and separated from the Domestic Tariff Area to promote exports, and they were later converted into Special Economic Zones. Reason (R) is correct: the Export Oriented Units scheme is complementary to the EPZ/SEZ route and was introduced to let exporters enjoy a liberal package of incentives, giving units the flexibility to locate outside the zones while getting similar benefits. For instance, a garment exporter can set up an EOU near its raw-material source instead of inside a zone, yet still claim duty-free imports and tax concessions.
Option check: Since both statements are true, options 1 and 2 (which call one of them wrong) are ruled out. Both belong to the same policy design of ring-fencing export activity and offering liberal incentives, so R supports and explains the export-promotion purpose behind A; this makes option 4 correct rather than option 3, which denies the explanatory link.
Hence both (A) and (R) are correct and (R) is the right explanation of (A).
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