Sez Ppt

Special Economic Zones in India

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SEZ AND WORLD TRADE SEZ exports in 2000

: 850 billion

• China

:

45%

• Indonesia

:

10%

• Philippines

:

57%

• Costa Rica

:

56%

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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. 3

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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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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LEGAL AND POLICY FRAMEWORKAN UPDATE • Developer of SEZ • Units in SEZs • DTA supplier

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DEVELOPER OF SEZ

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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 8

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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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 10

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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UNITS IN A SEZ

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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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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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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 15

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 16

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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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. 18

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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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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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 21

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 22

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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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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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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COMMITMENTS FOR THE IMMEDIATE FUTURE

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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 27

PROGRESS-PHYSICAL All 8 EPZs converted into SEZs :• • • • • • • •

Kandla ( Gujarat) Seepz( Maharashtra) Noida (U P) Madras ( T N) Cochin ( Kerala ) Falta ( W B) Visakhapatnam( AP) Surat ( Gujarat )

: : : : : : : :

1965 (625 Acres) 1975 (110 Acres) 1986 (310 Acres) 1986 (262 Acres) 1986 (103 Acres) 1986 (280 Acres) 1994 (360 Acres) 1998 (103 Acres) 28

PROGRESS-PHYSICAL (contd) Formal Approvals Given to SEZs • Indore ( Madhya Pradesh) • Navi-Mumbai (Maharashtra) • Sitapura (Jaipur) • Positra (Gujarat) 29

15 SEZ approved in principle: • • • • • • • • • •

Maha-Mumbai ( Maharashtra ) Vallarpadam/Puthuvypeen (Kerala) Moradabad (U.P.) Jodhpur(Rajasthan) Nangunery ( T N) Paradeep & Gopalpur (Orissa) Kulpi and Salt Lake (W B) Bhadohi, Kanpur, Greater NOIDA Visakhapatnam and Kakinada, (A P) Hassan ( Karnataka) 30

FOR DETAILS VISIT WWW.SEZINDIA.NIC.IN

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THANK YOU

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