Special Economic Zone

TEA EXCHANGE BHARATH LTD. PROJECT ON SPECIAL ECONOMIC ZONE

VIPIN RATHIA Project assigned: 16th may 2009 (MANAGEMENT TRAINEE)

PROJECT INDEX 1

Introduction & information of SEZ

2

Current status of upcoming SEZ

3

Investment in SEZ & Geography

4

Advantages and Disadvantages of SEZ

5

Objectives behind Setting up of SEZ

6

Private Participation

7

Special Economic Zones SEZ Establishment Procedure.

8

Types of SEZ

9

Minimum Land Requirement

10

Minimum Investment Requirements Major SEZ benefit & result of benefit

SEZ {SPECIAL ECONOMIC ZONE} Sez means special economic zones. It is useful in building up large industries and providing more employment opportunities to the people who are below poverty line. The merits of sez are pollution control, cost of land, manufacturing becomes very easier for the products which are nedded at short notice. It will help to increase in our economic development and it will improve the people standard of living that is below poverty line.

Contents 1 China 2 India 2.1 List of SEZs in India 3 Indonesia 4 Iran 5 Kazakhstan 6 North Korea 7 Pakistan 7.1 List of SEZs in the Pakistan 8 Philippines 8.1 List of SEZs in the Philippines 9 Poland 10 Russia 10.1 Technical/Innovational Zones 10.2 Industrial/developmental Zones 10.3 Tourist Zones 11 Ukraine 12 References 13 External links

List of SEZs in India • Sricity (Sri City) (SEZ), (Andhra Pradesh) (http://www.sricity.in) • Velankani SEZ, (Chennai) (http://www.velankanisez.com) • Pharma and Biotech SEZ, Aurangabad, Maharashtra (http://www.inspirainfra.com) • Visakhapatnam (Andhra Pradesh) • Hyderabad (Andhra Pradesh) • Polepally (Andhra Pradesh) • Ahmadabad, Baroda, Kandla and Surat (Gujarat) • Cochin (Kerala) • Pithampur (Madhya Pradesh) • Nagpur also refer MIHAN, Pune and SEEPZ in Mumbai (Maharashtra) • Chennai, Ilandaikulam Madurai, Nanguneri and Tirunelveli (Tamil Nadu) • NOIDA, Greater NOIDA (Uttar Pradesh) UP • Falta (West Bengal) • Bangalore [Karnataka] • Kensington [Powai, Mumbai] • Mangalore (Karnataka)

Current status of upcoming SEZs- Till date the government has notified 63 SEZs. The Ministry of Commerce might restrict the total number of SEZs approval at 100

State wise distribution of outstanding SEZ projects State

Maharashtra Karnataka Andhra Pradesh Haryana Gujarat Tamil Nadu Uttar Pradesh West Bengal Orissa Rajasthan

No. of SEZs Details Investment (Rs bn) available for

70 63 62

no. of projects 24 28 22

610.9 263.4 379.1

50 40 23 30

14 29 12 5

1,257.6 850.2 86.5 66.2

21 13 11

8 8 1

153.4 605.4 0.3

Investment in SEZ Investment in notified SEZs (as of 30.6.08)

Rs. 73348 crore (all Incremental Employment generated after February 2006))

Investment in Private/State Govt. SEZs which came into force prior to SEZ Act, 2005 (as of 30.6.08) Investment in 7 SEZs established by the Central Government (as of 30.6.08.)

Rs. 3701.91 crore (incremental investment generated since Feb. 2006 is Rs. 1946 crore)

Rs. 4043.28 crore (incremental investment generated since Feb. 2006 is Rs. 1764.08 crore)

GEOGRAPHY : .The total number of SEZ to come up in the near future in India is about 234 .total investment of Rs.3, 00,000 crore will be invested till December, 2009 .out of which 63 SEZ’s has been notified till date for an investment plan of Rs.53, 561 crore till December, 2009. .Out of all these 63 notified SEZs there will be an employment of about 15,75,450 persons or more and if all the 234 SEZs were allowed to be cleared it may employ about 40,00,000 people in India by the end of December 2009. .the proposed SEZs may require maximum of about 1750 square Km.

Advantages and Disadvantages of SEZ. Advantages • 15 year corporate tax holiday on export profit – 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back for investment. • Allowed to carry forward losses. • No licence required for import made under SEZ units. • Duty free import or domestic procurement of goods for setting up of the SEZ units.• Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years.• Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc.• Exemption from Central Excise duty on the procurement of capital goods, raw materials, and consumable spares, etc. from the domestic market. Disadvantages •Revenue losses because of the various tax exemptions and incentives. •Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.

Objectives behind Setting up of SEZ 1)Generation of additional economic activity 2) Promotion of exports of goods and services 3) Promotion of investment from domestic and foreign sources 4) Creation of employment opportunities 5) Development of infrastructure facilities;

Private Participation: .Mahindra World City in its new avatar house have declared three SEZs, which are in the field of Auto, apparel and IT within the township. .Reliance Industries, ONGC, Mahindra & Mahindra, Reliance Energy, Wipro, Biocon, Hewlett Packard, Nokia and the Adani group are prominent among the 40 players who have announced SEZs of their own. .DLF is investing over Rs 31,000 crore in four units in Amritsar, Ambala, Ludhiana and Gurgaon .DS group has a Rs 12,000-crore plan for two SEZs in Haryana and Himachal Pradesh. .Bharat Forge, Videocon, Suzlon, etc., are investing over Rs 1,000 crore each in SEZs in places such as Pune and Mangalore.

Special Economic Zones SEZ Establishment Procedure. *Step by Step Procedure *Documents Submission *State Government Approval Step by Step Procedure 1.According to SEZ Act 2005, a Special Economic Zone can be established either jointly or severally by the Central Government, State Government, or any other person involve in the manufacturing of goods. Even a foreign company can also set up SEZ in India. 2.After identifying the proper area a person wishing to establish a SEZ unit may make a proposal to the State Government. 3.Nowwithstanding anything contained in sub-section (2), any person, who intends to set up a Special Economic Zone, may, after identifying the area, at his option, make a proposal directly to the Board for the purpose of setting up the Special Economic Zone. 4.In case, a State Government intends to set up a Special Economic Zone, it may after choosing the area, forward the proposal directly to the Board of Approval for the purpose of setting up the Special Economic Zone: 5.Every proposal under sub-sections (2) to (4) shall be made in such form and manner containing such particulars as may be prescribed. 6.The State Government may, on receipt of the proposal made under subsection (2), forward the same together with its recommendations to the Board within a fix period as may be prescribed. 7.Without prejudice to the provisions contained in subsection (8), the Board may, after receipt of the proposal under sub-section (2) to (4),

approve the proposal subject to such terms and conditions as it may deem fit to impose, or modify or reject the proposal. 8.The Central Government may prescribe the following requirement for establishment of a Special Economic Zone, namely:.The minimum area of land and other terms and conditions subject to which the Board shall approve, modify or reject any proposal received by it under sub-section (2) to (4) ; and.The terms and conditions, subject to which the Developer shall undertake the authorised operations and his obligations and entitlements. 9. If the Board,* Approves without any modification, the proposal received under subsection (2) to (4), it shall communicate the same to the Central Government; *Approves with modifications the proposal received under sub-section (2) to (4), it shall, communicate such modifications to the person or the State Government concerned and if such modifications have been accepted by such person or the State Government, the Board shall communicate the approval to the Central Government; 10.The Central Government shall, on receipt of communication under clause (a) or clause (b) of sub-section (9), grant, within such time as may be prescribed, a letter of approval on such terms and conditions and obligations and entitlements as may be approved by the Board, to the Developer, being the person or the State Government concerned: 11.Any person who, or a State Government which, intends to provide any infrastructure facilities in the identified area referred to in sub-section (2) to (4), or undertake any authorised operation may, after entering into an agreement with the Developer referred to in sub-section (10), make a proposal for the same to the Board for its approval and the provisions of sub-section (5) and sub-sections (7) to (10) shall, as far as may be, apply to the said proposal made by such person or State Government. 12.Every person or a State Government referred to in subsection (11), whose proposal has been approved by the Board and who, or which, has

been granted letter of approval by the Central Government, shall be considered as a Co-Developer of the Special Economic Zone.

13.Subject to the provisions of this section and the letter of approval granted to a Developer, the Developer may allocate space or built up area or provide infrastructure services to the approved units in accordance with the agreement entered into by him with the entrepreneurs of such Units. Subject to the provisions of this section and the letter of approval granted to a Developer, the Developer may allocate space or built up area or provide infrastructure services to the approved units in accordance with the agreement entered into by him with the entrepreneurs of such Units.

Documents Submission 1.15 copies of the application shall be submitted to the Chief Secretary of the State, which shall indicate: 2. Name and address of the applicant 3.Status of the promoter (whether private/public or joint sector/ NRIs or state government) 4.Project report The documents for establishment of SEZ shall be submitted with the following details: .Location of the proposed Zone with details of existing infrastructure and that proposed to be established, .Area of the proposed SEZ and its distance from the nearest Sea Port/Airport/Rail/Road head etc. .Financial details and mode of financing the project and viability of the project. .Details of foreign equity, if any .Whether the zone will allow only certain specific industries or will be a multi-product zone.

State Government Approvals The State Government shall, forward it along with their commitment to the following to the Department of Commerce, Government of India: • .hat the area proposed under Special Economic Zone shall be free from any environmental restrictions; .Water, electricity and other services would be provided as required; • .Full exemption shall be given in electricity duty and tax on sale of electricity for self generated and purchased power; • .Exemption from State Sales Tax, octroi, mandi tax, turnover tax and taxes, duty, Cess, levies on supply of goods from Domestic Tariff Area to SEZ units; • .That single point clearances system and minimum inspections requirement under State Laws/Rules would be provided. • .Generation, transmission and distribution of power shall be allowed within the SEZ; • .The Zone will be declared as a Public Utility Service under the Industrial Disputes Act; • .All powers under Industrial Dispute Act, 1947 shall be delegated to Development Commissioner.

Types of SEZ Sector Specific SEZ-units may be set up for – manufacture of one or more goods in a sector – rendering of one or more services in a sector Multi-product SEZ-units may be set up for – manufacture of two or more goods in a sector or goods falling in two or more sectors – trading and warehousing – rendering of two or more services in a sector or services falling in two or more sectors Other SEZ’s – SEZ in a port or airport – SEZ for Free Trade and Warehousing

Sr No

Minimum Land Requirement Nature of SEZ Minimum Contiguous Minimum Processing Area Required Area Required (Max 5000 ha)

1

Multi Product

1000 ha

50%

2

Sector Specific

100 ha

50%

3

SEZ in Port or Airport

100 ha

50%

4

SEZ for Free Trade Zone and Warehousing

40 ha

50% , 1 lakh sq. m of built up area,(not exceed 20% of the Processing areain Sector Specific SEZ)

5

Gems and Jewellery, Biotechnology, Nonconventional Energy

10 ha

50%

6

Electronic Hardware and Software, Information Technology

10 ha

50%

Note 1 hectare = 2.421 acres = 10,000 sq.metres; 1000 hectares = 2500 acres

Minimum Investment Requirements Sector Specific SEZ’s – Investment should be more than Rs. 250 crores or – Net worth* of Rs. 50 crores Multi product SEZ’s – Investment should be more than Rs. 1000 crores or – Net worth* of Rs. 250 crores

Major SEZ Benefits Development Stage(Capital Goods,Consumables,Co mponents & Spares)

No Customs Duty No Excise Duty No Sales Tax No Service Tax No Purchase Tax No Stamp duty & Registration Fees No Stamp duty on Mortgages No Electricity duty

No Customs Duty

Operation Stage(Raw Materials,Consumables, Components & Spares)

As above

As above

Profit Stage

Exemption from Income Tax

No Income Tax for 10 years (8

No Excise Duty No Sales Tax No Service Tax No Purchase Tax No Stamp duty & Registration No Stamp duty on Mortgages No Electricity duty

Results of Benefits Reduced Cost of infrastructure Reduced Cost of Utilities Reduced Cost of Raw Material Reduced Cost of Capital Reduced Cost of Manpower Operational Ease Enabled Baskets of Benefits leading to global competitiveness

Maha govt signs MoU to develop SEZs The Maharashtra government's industrial infrastructure arm MIDC signed a Memorandum of Understanding (MoU) with four companies for developing special economic Zones (SEZ), which will attract minimum investment of Rs 17,000 crore and create employment of more than 50,000. .Eldeco Infrastructure Properties Ltd will develop the multi product SEZ at Amravti in the backward region of Vidarbha covering over 1,010 hectares. The expected cost of developing the SEZ is around Rs 600 crore. .Parsvnath SEZ Pvt Ltd will develop a pharmaceutical SEZ at Nanded in Marathwada region covering over 150 hectares and the development cost of the project is expected to be around Rs 47 crore. This project is expected to attract investment of 5,000 crore and create job opportunities for around 8,000 persons. .Ajanta Projects India Ltd will develop textile SEZ at Butibori on the outskirts of Nagpur by investing Rs 73 crore. This SEZ project will bring investment of Rs 5,000 crore and create jobs for 8,000 to 10,000 persons.

RAJASTHAN SL/NO NAME OF DEVELOPER

LOCATION

TYPE

AREA

1

Mahindra Gesco

Jaipur

IT/ITES

49 hect

2

M/s. Vatika Jaipur SEZ Developers Ltd.

Jaipur-Ajmer IT/ITES Expressway

20.23 hect

3

Somani Worsted Limited

Khushkera Industrial Area, Bhiwadi,

20 hect

4

Mansarovar Industrial Development Corporation

Jodhpur

Electronics Hardware and Software/ ITES Handicraft

5

GENPACT INDIA

Jaipur

IT/ITS

10 hect

6

RNB Infrastructures BIKANER

7 8

Rockman Projects Ltd Omaxe Limited

9

Ansal Properties

Jaipur Alwar District Village

131 hect

Woollen 103.41 hect Sector Multiproduct 1012 hect Multiproduct 6070.4 hect Gems &

1012.5 hect

and Infrastructure Limited

10 11 12 13 14

15 16 17

Parsvnath Developers Ltd Adani Exports Limited Suncity Rajasthan SEZ Developer Pvt. Ltd. SRM Infrastructure Private Ltd Societyfor Innovative Education and Development ('EMPI' Vittal Centre INNOPOLIS) DLF sLtd. Mahindra World City (Jaipur) Ltd. Rajasthan State Industrial Development Corporation.

Sangtera,

Jewellery

Neemrana,alwar Multiproduct 3000hect Alwar

Multi service 1000hect

Neemrana,alwar Multiproduct 323.89 hect

Near Bhiwadi

IT/ITS

2024hect

Kalwara Village IT/ITS

76.1hect

18

Mahindra Worldcity Jaipur, (Jaipur) Limited

Handicraft

103.11 hect

19

Mahindra Worldcity Jaipur, (Jaipur) Limited

Light Engineering

104.35 hect

20

RNB Infrastructure Private Limited

21

P S Jaipur SEZ Developers Pvt. Ltd. Arihant Infratech (India) Pvt. Ltd.

22 23 24 25

26

Industrial Textile Area, Bikaner Bhanpur Kala Multiservices

103.3 hect

Udaipur District,

Building Materials

220 hect

M/s. Vatika Jaipur SEZ Developers Ltd. Somani Worsted Limited

Jaipur

IT/ITS

20.23 hect

Bhiwadi

Electronics / ITES

20 hect

Mansarovar Industrial Development Corporation RNB Infrastrucure Pvt. Ltd.

Bhiwadi

Electronics / ITES

20 hect

Bikaner

Textile sector 103.41 hect

205 hect

Exports from the functioning SEZs Physical exports in the year 2007-08 accounted for 84% of the total turnover of SEZs. Year 2003-2004

Value (Rs. Crore) 13,854

Growth Rate (over previous year) 39%

2004-2005

18,314

32%

2005-2006

22 840

25%

2006-20007

34,615

52%

2007-2008

66,638

92%

RAJASTHAN SEZ policy • There will be no tax for the developers of special economic zone, units, and other establishments under SEZ. The tax issues usually include local taxes, sales tax, purchase tax, sales tax, levies, contract tax, ocroi, cess, and few more. The export sector are bereaved from all such taxes while exporting goods and services from the domestic area to international market • The Central Government will provide enough grants and equity to the SEZ projects • of the One of the officers Rajasthan State Pollution Control Board will always be available in the development commissioner's office to keep a check on the environmental issues • Distribution of electricity and power will be sufficient if not overflowing to avoid any uncanny hindrance that bear chances of affecting the developments in the SEZ • There will be sufficient water supply for every work to be carried out in the SEZ • The state government will also provide a specific area for public utility services in the zone • The development commissioner will permit registration of any smallscale industry as well the IT units in the special economic zone

• SEZs are considered as industrial administrative divisions by the state government

SEZ (Special Economic Zone) *there are approximately 3,000 SEZs operating in 120 countries. *which account for over US$ 600 billion in exports. *and about 50 million jobs.

Tea export up by 64 pc *country's tea export rose by 64 percent in June this year. *The county's total tea export increased to 19.62 million kg in June *against 11.99 million kg in the year ago period, according to the latest Tea Board update. *Export from south India increased by more than two times to 14.76 million kg in June compared to 6.17 million kg in the same month last year. *The export from north India, however, declined to 4.86 million kg from 5.81 million kg.

MAHINDRAWORLD CITY JAIPUR Following the success of Mahindra World City, New Chennai, the second Mahindra World City was established in Jaipur. Inaugurated in December 2006, Mahindra World City, Jaipur is spread over an area of 3,000 acres (12 km2). Promoted by the Mahindra Group in partnership with Rajasthan State Industrial Development and Investment Corporation Ltd (RIICO, an agency of the Government of Rajasthan). Mahindra World City, Jaipur is being developed as a multi-product Special Economic Zone on the format of an “Integrated Business City”. The SEZ includes exclusive zones for IT/ITeS Companies, Light Engineering companies including Auto and Auto Component manufacturers, Handicraft Companies, Gems & Jewellery Companies and Apparel companies. Besides these exclusive zones, there will also be a Domestic Tariff Area (DTA) catering to the demand of domestic industries. Mahindra World City, Jaipur will also have a dedicated Logistics and Warehousing Zone for the manufacturing companies in order to provide complete end to end solutions.Mahindra World City, Jaipur has the largest IT/ITeS centric SEZ under development in India. The total area spread over 750 acres (3.0 km2) is under development and has already attracted top companies such as Deutsche Bank, Infosys, Wipro, Nagarro, Truworth, Tech Mahindra and QH Talbros among others. A Technology Park ‘Evolve’ promoted by Mahindra World City, Jaipur has also come up as part of the IT / ITeS SEZ. Set in a campus of 25 acres (100,000 m2), the Technology Park will lease built-up space for IT/ITES companies.

Mahindra World City, Jaipur became operational in August 2008 with Infosys and Detusche Bank, being the first companies to start their operations

Entrance to Mahindra World City Jaipur

Infosys Technologies, IT SEZ

Deutsche Bank

Customs Office

SEZ OF TEA EXCHANGE The tea exchange bharath ltd. Can go for the sez in packaging, blending And processing.Like Wagh Bakri tea group is looking at installing the machine in special economic zones (SEZs) of Gujarat by next year. Wagh Bakri eyes SEZs to install tea-bag making machine. EX: The Bengal government is drawing up plans to set up a special economic zone (SEZ) in Siliguri for the tea industry. It has identified 100 acres of land near the Dabgram growth centre in Siliguri for the proposed SEZ. The total cost of setting up the SEZ will be Rs 50-Rs 75 crore. The SEZ will house tea processing and blending units. The units in SEZ can import tea without licence and blend it for re-export. They will enjoy certain fiscal incentives in the form of tax concessions and exemption from customs duty on import of capital goods, raw materials, consumables and spares

Calcutta port The Calcutta Port, in association with the Tea Board, has applied to the Union ministry of commerce and industry to set up a tea park in the port area. The park is expected to be granted SEZ status.The park, which will comprise a tea processing and packaging unit, will be set up on 14 acres of land near the port at an estimated cost of Rs 28 crore.

Special Economic Zones SEZ Controversy

Introduction Land, especially agricultural land is a very sensitive issue in India. There are millions of people whose livelihood depends on agricultural land. But the introduction of SEZ in India has resulted in the dispossession of agricultural land and has affected the livelihood of farmer at large. In against of this, farmers first protested to safeguard their interests through litigation and court cases challenging the establishment of SEZs. But later on, the resistance against SEZ in India became massive when political parties also joined the farmers.

Jamnagar Incidence In November 2006, farmers from the Jamnagar District in Gujarat moved the High Court of Gujarat and later to the Supreme Court in order to challenge the setting-up of a 10,000-acre (approx. 4,000-ha) SEZ by Reliance Infrastructure. They claimed that the acquisition of large tracts of agricultural land in the villages of the district not only violated the Land Acquisition Act of 1894, but was also in breach of the public interest. This led the Government to “consider” putting a ceiling on the maximum land area that can be acquired for multi-product zones and decide to “go slow” in approving SEZs.

Nandigram Violence The Nandigram violence is another famous incidence related to SEZ controversy. Nandigram is a rural area in Purba Medinipur district of the Indian state of West Bengal. It is located about 70 km south-west of Kolkata, on the south bank of the Haldi River, opposite the industrial city

ofHaldia. In 2007 the West Bengal government decided to allow Salim Group to set up a chemical hub at Nandigram under the SEZ policy. Farmers of that village were against it. So, on the order of the Left Front government on 14 March, 2007, more than 3,000 heavily armed police stormed the Nandigram area. The main objective was to remove the protestors in order to expropriate 10,000 acres of land for a Special Economic Zone (SEZ) to be developed by the Indonesian-based Salim Group. During this incidence, police shot dead at least 14 villagers and wounded 70 more including childrenandwomen. The above given examples show the controversies associated with SEZs. No doubts that these commercial hubs started with a lot of premature praise and have now became a bone of contention which is readily exploited by the political forces to the detriment of the peasants, who fear losing their means of livelihood.