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    Sez Main 123

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    Raj K Gahlot
    The document provides an overview of Special Economic Zones (SEZs) in India. It discusses that SEZs aim to generate economic activity and promote exports by providing tax incentives and simplified regulatory processes. SEZs allow for 100% foreign ownership, a single window clearance system, and tax holidays for units located within SEZs. The number of SEZs in India has increased in recent years as the government works to develop infrastructure and attract foreign investment through these specialized economic zones.

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    Sez Main 123

    Uploaded by

    Raj K Gahlot
    83 views42 pages
    The document provides an overview of Special Economic Zones (SEZs) in India. It discusses that SEZs aim to generate economic activity and promote exports by providing tax incentives and simplified regulatory processes. SEZs allow for 100% foreign ownership, a single window clearance system, and tax holidays for units located within SEZs. The number of SEZs in India has increased in recent years as the government works to develop infrastructure and attract foreign investment through these specialized economic zones.

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    SEZ MAIN 123.ppt

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    The document provides an overview of Special Economic Zones (SEZs) in India. It discusses that SEZs aim to generate economic activity and promote exports by providing tax incentives and simplified regulatory processes. SEZs allow for 100% foreign ownership, a single window clearance system, and tax holidays for units located within SEZs. The number of SEZs in India has increased in recent years as the government works to develop infrastructure and attract foreign investment through these specialized economic zones.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    83 views42 pages

    Sez Main 123

    Uploaded by

    Raj K Gahlot
    The document provides an overview of Special Economic Zones (SEZs) in India. It discusses that SEZs aim to generate economic activity and promote exports by providing tax incentives and simplified regulatory processes. SEZs allow for 100% foreign ownership, a single window clearance system, and tax holidays for units located within SEZs. The number of SEZs in India has increased in recent years as the government works to develop infrastructure and attract foreign investment through these specialized economic zones.

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    of 42

    SEZ The Next Frontier For India

    Presented By:
    Shudodhani Sharma
    Deepika Malhotra

    SPECIAL ECONOMIC
    ZONES IN INDIA

    Overview

    WINTER

    Meaning of SEZ & Associated


    Terms
    SEZs in India
    Difference between SEZ &
    EPZ
    SEZ ACT,2005
    Features of SEZ
    SEZ Policy Objectives
    SEZ Formats
    Key Stakeholders
    Incentives to boost SEZ
    development

    Advantages of development
    of SEZ Units
    Who can set up SEZ
    Implementation of SEZ
    Policy
    Major Economic Zones in
    India
    States Share in Notified
    SEZs
    Regulatory Framework
    SEZ and Export Promotion
    SUMMARY

    Template

    SEZs

    Special Economic Zones

    01

    WINTER

    Template
    A Special Economic
    Zone (SEZ) is defined as a
    deemed foreign territory within a country with
    special rules for facilitating FDI for export-oriented
    production, and for purposes of trade operations and
    custom duties and tariffs.
    It is a specifically delineated duty free enclave
    SEZ is basically a specified geographical region
    that has economic laws that are more liberal than a
    country's typical economic laws.

    Categories

    02

    WINTER

    The category 'SEZ' covers a broad range of


    Template
    specific zone types,
    including
    Free Trade Zones (FTZ)
    Export Processing Zones (EPZ)
    Free Zones (FZ)
    Industrial Estates (IE)
    Free Ports
    Urban Enterprise Zones and others.

    Nokia SEZ Complex in Tamil Nadu

    Domestic Tariff Area

    03

    WINTER

    Template
    -Domestic Tariff Area
    is an area within India but
    which is outside the Special Economic Zone.

    -The Units operating under certain specific


    schemes such as EPZ/SEZ/EOU are expected to
    carryout their activities within customs bonded area.
    The area which is not coming under the jurisdiction
    of custom bonded are called Domestic Tariff Area.

    Domestic Tariff Area

    04

    WINTER

    Goods going in to
    SEZ from Domestic
    Template
    Tariff Area (DTA) are treated as physical
    exports.
    Those coming out of SEZ to DTA are
    treated as if imported from other
    countries, for all trading operations.
    Taking goods into and out of SEZ are
    mostly done with minimal Customs
    supervision and paper work, and on selfcertification.

    Processing Area

    05

    WINTER
    Template

    Processing Area is the demarcated


    area where units can be located for
    manufacture of goods or rendering
    of services.

    Non- Processing Area

    06

    WINTER

    Template
    Non-processing
    area is intended to

    provide support infrastructure in terms


    of SUPPORT FACILITIES to SEZ
    processing area and may include
    commercial and social infrastructure.

    Special Economic Zones in India

    07

    WINTER

    Number of Special Economic Zones in India has increased over


    the last few years.

    Template

    In India, Special Economic Zones are being set up in many states


    of the country due to the efforts that are being undertaken by the
    Indian government.
    The implementation of the first drafted SEZ policy statement took
    place from the end of the year 2000.
    It was drafted as a five-year project, starting from 1.11.2000 to
    09.02.2006.
    Further, the first policy statement of the Indian Special Economic
    Zones were amended to accommodate and compliment the growth
    attained.

    How SEZs are different from EPZ

    08

    WINTER

    Restriction on Sectors: SEZ is open to all


    Template
    manufacturing, services
    & trading activities whereas
    EPZ focuses only on manufacturing & trading.

    Tax Exemption: SEZs enjoy a 5 year tax holiday


    followed by 50% exemption for 2 more years which is
    not the case with EPZ.
    DTA * Sales: For SEZ unlimited DTA Sales are
    allowed on full duty but incase of EPZ only 50%
    exports qualify for DTA Sales. Thus SEZ enjoy greater
    access to domestic market.

    How SEZs are different from EPZ

    WINTER

    Retention of Foreign
    Exchange Earnings:
    Template
    SEZ Units can retain 100% foreign currency

    earnings in Exchange Earner Foreign Currency


    Account (EEFC) but EPZs allow only 70% to
    retain.
    This gives companies in SEZ better control over
    foreign currency in relation to purchase of imported
    inputs.

    How SEZs are different from EPZ

    09

    WINTER

    Export Performance
    Requirements:
    Template
    No minimum export performance
    required in terms of Net Foreign
    Exchange Earning as % of Exports
    (NFEP) for SEZ s but for EPZs it is
    required.

    Who is a trader ?

    10

    WINTER
    Template

    -Traders are persons who trade in


    goods & services manufactured
    by companies operating in SEZ
    units.
    -They deal in exports & imports.

    What is EEFC

    11

    WINTER
    Template

    Exchange Earners' Foreign


    Currency Account (EEFC):
    It is an account maintained in

    foreign currency with an Authorized


    Dealer, i.e. a bank dealing in foreign
    exchange.

    History of Formation of SEZs in

    12

    WINTER
    India

    Template

    Seeds of the basic concept of SEZ were sown in the mid


    sixties
    Export Processing Zones: Basic model of the present day
    Indian SEZ was structured with the establishment of the
    first Export Processing Zone (EPZ) at Kandla in the year
    1965.
    Failure of EPZs paved way for
    modern
    day SEZs
    SEZ policy of India was devised to act as a catalyst
    to promote the economic growth attained in the early
    1990 but it did not produce the desired results.

    MAIN PROBLEMS

    13

    WINTER

    Lack of Good Economic


    Policy & inefficient
    management
    became detrimental factors
    for EPZs
    Red tape, lengthy
    administrative procedures,
    rigid labor laws & poor
    physical infrastructural
    facilities: main cause of
    deterioration of FDI inflow
    into India.

    Indian markets were not


    mature enough to facilitate
    easy entry of FIIs into the
    Indian economic system.
    The legal framework of
    Indian economy was not
    strong enough to prevent
    misuse of Indian markets
    by the foreign investors.

    Template

    Thus, the lack of investor friendly environment in India


    prevented growth of Indian industry, in spite of implementation of
    liberal economic policy by the central government.

    History of Formation of SEZs in


    India

    14

    WINTER

    These problems resulted in the formation of a much larger and


    more efficient form of their predecessors with world-class
    infrastructural facility.

    Template

    The modern day SEZ came into existence because the economic
    reforms incorporated in the early 1990s did not resulted in the overall
    growth of the Indian economy.
    The History of SEZs in India suggests that the present day SEZ
    policies of India are well complimented by the provisions of the Acts
    and Rules of SEZ.
    'The Special Economic Zones Act, 2005 was then formulated.
    The SEZ Act, 2005 and SEZ Rules became effective from 10th
    February 2006.

    SEZ ACT 2005

    15

    WINTER

    The SEZ Act 2005Template


    defines the key role for the
    State Governments in Export Promotion and
    creation of infrastructural facilities.

    A Single Window SEZ approval mechanism has


    been facilitated through a 19 member interministerial SEZ Board of Approval or BOA. And
    the decision of the SEZ Board of Approval is
    binding and final.

    SEZ ACT,2005

    Enacted to

    Triggered

    Special Fiscal

    give boost to

    Foreign &

    Incentives

    Domestic

    were introduced

    ECONOMIC
    GROWTH

    Investment in
    SEZ

    for
    entrepreneurs
    & developers

    Features of Indian SEZs

    16

    WINTER

    Modern harbor
    Airport
    Financial Institutions
    A vibrant industrial city with abundant supply of skilled
    manpower, covering the entire spectrum of industrial and
    business expertise
    Well connected with network of public transport, local
    railways and cabs
    Abundant supply of technically skilled manpower
    Abundant supply of semi-skilled labor across all industry
    verticals
    Easy access to airport and local Railway Station

    Template

    Why SEZ Policy-OBJECTIVES

    17

    WINTER

    - Generation of economic
    activity
    Template
    - Simplified procedures for development, operation &
    maintenance of SEZs
    - Promotion of exports of goods and services

    - Single window clearance for setting up of a SE


    - Promotion of investment from domestic & foreign
    sources
    - Setting up of SEZ units
    - Creation of employment
    - Development of infrastructure facilities
    - Framing easy procedures for conduct of SEZ business

    18

    WINTER

    Incentives to boost SEZ Development


    -Single Window Clearance System for the establishment of
    Template
    SEZ

    -SEZ Units exempted from paying 100% income tax on the


    export income for a period of 5 years
    -After that they have an exemption of 50% income tax for a
    period of 5 years.
    -Local procurement of goods used for the operation,
    maintenance, and development of SEZ Units are duty free
    and exempt from sales tax, mandi tax, turnover tax, and
    electricity cess.
    -Foreign direct investments up to 100% are allowed

    Advantages of SEZ Units in India

    19

    WINTER

    10-year tax holiday in a block of the first 20 years


    Exemption from dutiesTemplate
    on all imports & excise/VAT
    Freedom to develop township in to the SEZ
    10% FDI allowed for all manufacturing activities
    Procedural ease & efficiency for approvals & clearances
    Handling bulk containers made operational
    Houses both domestic and international air terminals to
    facilitate transit
    Public and Private Bank financial assistance Abundant
    supply of skilled manpower
    Network of public transport, local railways and cabs &
    In-house Customs clearance facilities
    Creation of employment

    Advantages of SEZ Units in India

    20

    WINTER

    Major Facilities of Indian SEZ

    Template
    -Units within the SEZ do not have to have a license for importing
    goods
    -Support services such as post office, banks, food courts, ATMs,
    and fire services are provided in the SEZ complex.
    -Do not require separate documentation for Exim and customs
    policy

    -The units performance is monitored by the Development


    Commissioner, and the supplies that the SEZ receives from the
    DTA are treated as exports.

    Who can set up SEZ

    21

    WINTER
    Template

    Any private/public/joint sector or


    State Government or its agencies can
    set up Special Economic Zone (SEZ).
    Foreign Companies can also set up
    SEZs.

    Implementation of SEZ Policy

    22

    WINTER
    Template

    Successful implementation of Indian SEZ Policy is evident from


    the following facts:
    -Projected exports from all SEZs for 2007-08 is Rs. 67300 crore
    -Presently, 1016 units are in operation and providing direct
    employment to over 1.79 lakh people of which around 40% are
    women
    -Private investment by entrepreneurs before the SEZ Act was
    around Rs. 4400 crore. In the 63 notified SEZs which have come
    up after
    -10th February 06, investment of Rs. 13,435 crore has already
    been made in less than a year
    -Have created direct employment for around 18,457 people

    Major Special Economic


    Zones in India
    Navi Mumbai Special Economic Zone (NMSEZ)
    Andhra Pradesh Special Economic Zone
    (APSEZ)
    Kendal Special Economic Zone (KASEZ)
    Surtax Special Economic Zone (SURSEZ)
    Maha Mumbai Special Economic Zone
    (MMSEZ)
    Madras Special Economic Zone (MEPZ)

    23

    States Share in Area under


    Notified SEZs

    24

    WINTER
    Template

    Regulatory Framework

    25

    WINTER

    Template
    Land in SEZ cannot
    be sold.
    Development Commissioner to demarcate
    processing areas- subsequent to which
    proposals for setting up of units will be
    entertained.
    Only units with valid Letter of Approval
    from Development Commissioner can set
    up operations.

    Regulatory Framework

    26

    WINTER

    Land may be allotted for development of


    Template
    infrastructure facilities for use by units- specific
    approval may be obtained for lease of land for
    creation of facilities such as canteen, PCOs,
    first aid centres, creche, etc. for exclusive use of
    unit.
    Only authorized persons with identity cards
    permitted to enter processing area.
    No vacant land in non-processing area will be
    available for business & social purposes.

    SEZ & Export Promotion

    27

    WINTER

    Export policy of India was eased by Govt. of India to facilitate


    easy growth of SEZ and Export Promotion of Indian goods
    across international destinations.

    Template

    This led to the development of special kind of units within the


    designated Special Economic Zones.
    These specialized export oriented units were called Export
    Oriented Units or EOU and they were created to increase the
    overall export potential of these SEZ.
    Further, these EOU were devised in such a way, so that they
    can focus specifically on the growth of Indian exports.

    SEZ & Export Promotion

    28

    WINTER

    -The recipient of goods exported by these export oriented


    units allows them to sell their products in the domestic markets
    in case of rejection by them, after payment of designated tax
    and within the direct tariff area. Only some exclusive
    commodities are barred from such selling process.

    Template

    -Exemption on duties on Indian capital goods and inputs


    -Preferential treatment of these units to the Indian market for
    easy dissemination of their products and / or service

    Trend in Export Performance of SEZ

    WINTER
    Template

    SEZ Exports as % share of Total Exports in India

    SUMMING UP
    SEZs a tax efficient option for Developer and Units.
    Besides direct taxation benefits, indirect benefits
    contribute to low cost of doing business and ensure
    SEZs as profitable investment destinations.
    Provides widespread opportunities in different
    location in diverse sectors involving a whole range of
    primary and secondary activities in manufacturing,
    trading and service activities.
    The SEZ Act embodies strategic positioning of Zones
    in the international markets by leveraging on
    linkages with hinterland/Domestic Tariff Area through
    establishment of world class infrastructure and
    providing economic benefits.

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