A SEZ is a geographical region that has economic laws that are more liberal than a country's typical economic laws. Usually the goal is an increase in foreign investment. Special Economic Zones have been established in several countries, including China and India.
The new SEZ will be spread over 107 hectares of land where Wockhardt will set up a biopharmaceutical manufacturing and research facility.
"This SEZ will provide the base for a new thrust in international markets that will drive Wockhardt's growth in the coming years," said Habil Khorakiwala, Wockhardt's chairman.
"It will make Aurangabad a major hub for pharmaceutical and biotechnology industries."
India has already a dominant role as an offshore location of choice for contract manufacturing and according to a recent KPMG report, its potential to further boost its strength presents an opportunity worth an estimated $48bn (€38bn) in 2007.
The SEZ will house manufacturing facilities for active pharmaceutical ingredients (API), biopharmaceuticals, and a research and development centre.
Wockhardt currently has ten manufacturing facilities, including one in the UK and while over half of the firm's sales now come from Europe and the US, India continues to be the group's manufacturing and research base.
Further investment in biotechnology at the proposed SEZ will accelerate Wockhardt's expanding global reach, the firm said.