2. SEZ AND WORLD TRADE
SEZ exports in 2000 : 850 billion
• China : 45%
• Indonesia : 10%
• Philippines : 57%
• Costa Rica : 56%
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3. ROLE OF SEZS IN INDIAN ECONOMY
• to provide internationally competitive
environment
• to increase share in global exports
• to encourage FDI and enhance GDP
• to act as laboratories for changes in our
policies.
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4. OUR APPROACH
• Special fiscal regime, to attract private
investments for developers
• GOI and SG to develop the external
infrastructure
• Attractive facilities for setting up units
• Key role for State Government and private
sector in the development of SEZs
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5. OUR APPROACH (contd.)
• Deregulation and single window for State and
Central laws
• Legal framework : windows in existing laws
leading to Special Central and State
legislation for SEZ
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6. LEGAL AND POLICY FRAMEWORK-
AN UPDATE
• Developer of SEZ
• Units in SEZs
• DTA supplier
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8. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs
• 100% FDI allowed for:
(b) townships with residential, educational
and recreational facilities
(b) franchise for basic telephone service in
SEZ.
• Income Tax exemption to developers for
any block of 10 years in 15 years
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9. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs (Contd)
• Duty free import/domestic procurement of
goods for development, operation and
maintenance of SEZs
• Exemption from Service Tax and the Central
Sales Tax
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10. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs (Contd)
• Income of infrastructure capital fund/co.
from investment in SEZ exempt from Income
Tax
• Investment made by individuals etc in a SEZ
also eligible for exemption under section 88
of Income Tax Act
• Developer permitted to transfer
infrastructure facility for Operation and
Maintainence, inclusive of Income Tax
benefits
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11. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs (Contd)
• Guidelines issued on generation, transmission and
distribution of power in SEZs
• Allocation of power to SEZs from central quota
• Freedom in allocation of space and built up area to
approved SEZ units on commercial basis.
• Authorised to provide and maintain services like
water, electricity, security, restaurants and
recreation centres on commercial lines.
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13. FACILITIES NOTIFIED FOR
SEZ UNITS
• No license required for import.
• In addition to manufacturing, trading
and services also allowed.
• Freedom to subcontract.
• Single window approval by
Development Commissioner of the
zone.
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14. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
• No license needed to manufacture items
reserved for SSI sector
• 100% FDI allowed in manufacturing
through automatic route except in sectors
such as defense, atomic energy.
• No cap on foreign investments for items
reserved for SSI.
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15. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Under FEMA
• Guidelines issued by RBI in Nov 2002 for
setting up Off-shore Banking Units in
SEZs.
• External commercial borrowings by units
allowed without any maturity restrictions.
• Freedom to bring in export proceeds
without any time limit
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16. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Under FEMA (contd.)
• Freedom to make overseas investment
• Insurance outside India allowed
• Capitalisation of import payables
• Commodity hedging permitted.
• Foreign cos permitted to set up
branches for manufacturing activities
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17. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Customs and Excise :
• Duty free import or domestic
procurement of goods for development,
operation and maintenance of SEZ units.
Central Sales Tax Act :
• Exemption to sales made from Domestic
Tariff Area to SEZ units.
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18. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Income Tax Act:
• 100% IT exemption (10A) for first 5 years,
50% for 2 years thereafter and 50% of
reinvestment for 3 years
• Permitted to carry forward losses
• Offshore Banking Units allowed to have full
IT exemption for 3 years and 50% for next
two years.
Service Tax:
• Exemption from Service Tax to SEZ units.
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19. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Environment
• Permitted facilities like golf
courses, de-salination plants,
hotels and non-polluting service
industries in the Coastal
Regulation Zone area
• Exemption from public hearing
under Environment Impact
Assessment Notification.
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20. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Drugs and Cosmetics :
• Exemption from port restriction
under Drugs & Cosmetics Rules
• Single window mechanism in
Zones having such units
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21. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Companies Act :
• SEZ to have Regional office of Registrar of
Companies.
• Exemption from requirement of domicile in
India for 12 months prior to appointment
as Director.
• Enhanced limit of Rs. 2.4 crores per
annum allowed for managerial
remuneration
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22. FACILITIES NOTIFIED FOR
DTA SUPPLIER
Supplies from Domestic Tariff Area
(DTA) to SEZ to be treated as physical
export under IT, Customs and CST Act
DTA supplier entitled to :
• Drawback/DEPB
• CST Exemption
• Exemption from State levies
• Discharge of its EP
• IT exemption u/s 80HHC
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23. PROGRESS – STATE POLICY
• AP ,UP, Maharashtra, Madhya Pradesh, Gujarat ,
Karnataka , Rajasthan and TN announced SEZ
Policy.
• Enabling notifications issued by Maharashtra, MP,
AP, Rajasthan and UP
• UP and MP have enacted State SEZ Act ; Gujarat
and Maharashtra likely to do in near future
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24. FEATURES OF STATE SEZ POLICY:
• Exemption from state sales tax /VAT and other
state levies
• Exemption from electricity duty
• Single window approval for state level clearances
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25. FEATURE OF STATE SEZ POLICY
(Contd.)
• Declaration of Development Commissioner
as Labour Commissioner under the
Industrial Disputes Act.
• Simplification of returns and inspection
systems.
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27. GOVERNMENT OF INDIA
• Enactment of Central SEZ Act
• Exemption of the SEZs from restrictive labour laws
• Facilitation of external infrastructure needs
• Special emphasis on sector specific and port based
SEZs
• Domestic and External marketing of SEZs
• Working with State Governments for State
SEZ legislation
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28. PROGRESS-PHYSICAL
All 8 EPZs converted into SEZs :-
• Kandla ( Gujarat) : 1965 (625 Acres)
• Seepz( Maharashtra) : 1975 (110 Acres)
• Noida (U P) : 1986 (310 Acres)
• Madras ( T N) : 1986 (262 Acres)
• Cochin ( Kerala ) : 1986 (103 Acres)
• Falta ( W B) : 1986 (280 Acres)
• Visakhapatnam( AP) : 1994 (360 Acres)
• Surat ( Gujarat ) : 1998 (103 Acres)
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