16926018 Sez An Overview

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SPECIAL ECONOMICS ZONESPECIAL ECONOMICS ZONE

MADE BY:SHIVANGI RAWAT

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•INTRODUCTION•OBJECTIVES•STRUCTURE OF SEZ•ADMINISTRATIVE LAYOUT•FACILITIES OFFERED•BENEFITS OF SEZs•PROBLEM•LIST OF DEVELOPERS

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A A Special Economic ZoneSpecial Economic Zone ( (SEZSEZ) is a ) is a geographical region that has economic laws geographical region that has economic laws that are more liberal than a country's typical that are more liberal than a country's typical economic laws. SEZ include a wide range of economic laws. SEZ include a wide range of zone type as follows:zone type as follows: -FTZ-FTZ-EPZ-EPZ-FZ-FZ-IE-IE-FREE PORTS-FREE PORTS-URBAN ENTERPRISE ZONES-URBAN ENTERPRISE ZONES

SEZ – An OverviewSEZ – An Overview•SEZs, the new engines for export led economic growth in India,

defined as:

“Specifically delineated duty-free enclave and shall be deemed to be

foreign territory for the purposes of trade operations and duties and

tariffs”

. . . . EXIM Policy 2000, Chapter 9 para 30

•Extremely successful Chinese format to promote exports, attract FDI

and foster overall economic growth

•Shenzhen SEZ, started in 1981, has achieved 38% GDP growth CAGR

(highest recorded so far) mainly due to:Liberal economic frameworkIntegrated infrastructure at very competitive prices

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Objectives of the SEZObjectives of the SEZ ((aa) generation of additional economic activity ) generation of additional economic activity (b) promotion of exports of goods and services; (b) promotion of exports of goods and services; (c) promotion of investment from domestic and (c) promotion of investment from domestic and foreign sources;foreign sources; (d) creation of employment opportunities; (d) creation of employment opportunities; (e) development of infrastructure facilities;(e) development of infrastructure facilities;

Structure of SEZ in India

PROCESSINGManufacturing

activitiesProvide servicesIndulge in tradeOr warehousing

NON-PROCESSINGwhere the supporting

infrastructure is to be created,Housing.

Administrative layout of SEZ

Board of approval

Approval committee

SEZ units

Incentives and facilities offered to Incentives and facilities offered to thethe SEZsSEZs

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.

100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Exemption from minimum alternate tax under section 115JB of the Income Tax Act.

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ØExternal commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels.

ØExemption from Central Sales Tax.

ØExemption from Service Tax.

ØSingle window clearance for Central and State level approvals.

ØExemption from State sales tax and other levies as extended by the respective State Governments.

Facilities to SEZ DevelopersFacilities to SEZ Developers100% FDI allowed for : townships and recreational facilities on a

case to case basis, franchise for basic telephone service in SEZ

Income Tax Benefit under (80 IA) to developers for any block of

10 years in 15 years

Duty free import/domestic procurement of goods for

development, operation and maintenance of SEZs

Exemption from Service Tax

Income of infrastructure capital fund/company from investment

in SEZ exempt from Income Tax

(Contd.)(Contd.)

üDeveloper permitted to transfer infrastructure facility for operation and maintenance.

üGeneration, transmission and distribution of power in SEZs allowed.

üFull freedom in allocation of space and built up area to approved SEZ units on commercial basis.

üAuthorized to provide and maintain service like water, electricity, security, restaurants and recreation centers on commercial lines.

Facilities to SEZ EnterprisesFacilities to SEZ Enterprises•Exemption from customs/excise duties.•Income tax :

100% Income-Tax exemption for first 5 years and 50% for 2 years thereafter.•Foreign Direct Investment :

100% foreign direct investment is freely allowed in manufacturing sector in SEZ units under automatic route, except prohibited items.

No cap on foreign investments for SSI reserved items

•Central Sales Tax Act :Exemption to sales made from Domestic Tariff Area to SEZ

units•Service Tax :

Exemption from Service Tax to SEZ units

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●Banking / External Commercial Borrowings :Banking / External Commercial Borrowings :

-External commercial borrowings by units up to $ 500 million a -External commercial borrowings by units up to $ 500 million a

year allowed without any maturity restrictions.year allowed without any maturity restrictions.

-Freedom to bring in export proceeds without any time limit.-Freedom to bring in export proceeds without any time limit.

-Flexibility to keep 100% of export proceeds in EEFC account. -Flexibility to keep 100% of export proceeds in EEFC account.

Freedom to make overseas investment from it.Freedom to make overseas investment from it.

-Exemption from interest rate surcharge on import finance.-Exemption from interest rate surcharge on import finance.

-SEZ units allowed to ‘write-off’ unrealized export bills.-SEZ units allowed to ‘write-off’ unrealized export bills.

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Benefits of SEZBenefits of SEZ

Exports from the functioning SEZs during the last three years are as under:

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-Investment and employment in the SEZs set up prior -Investment and employment in the SEZs set up prior to the SEZ Act, 2005.to the SEZ Act, 2005. --Investment and employment in the SEZs Investment and employment in the SEZs notified under the SEZ Act 2005:notified under the SEZ Act 2005: Current investment and employment:   Current investment and employment:   Investment:           Rs. 83450crore Investment:           Rs. 83450crore Employment:        1,13,426 persons Employment:        1,13,426 persons

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Problem in SEZ Problem in SEZ

üTransparency in policy formulation.üPayment problem.üOpenness in land acquisition.üPrime agriculture land.

List of Developers who have set up List of Developers who have set up SEZsSEZs

qNokia SEZ in Tamil Nadu qQuark City SEZ in Chandigarh qFlextronics SEZ in Tamil Nadu qMahindra World City in Tamil Nadu qMotorola, DELL and Foxconn qApache SEZ (Adidas Group) in Andhra Pradesh qDivvy's Laboratories, Andhra Pradesh qRajiv Gandhi Technology Park, Chandigarh qETL Infrastructure IT SEZ, Chennai qHyderabad Gems Limited, Hyderabad

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THANKS………