| ext">Indian Trade Exports have received a radical | | | | Special Economic Zone; |
| boost in the recent years, thanks to the 274 Special | | | | Simplified compliance procedures and |
| Economic Zones (SEZs) operational on the Indian soil, | | | | documentation with an emphasis on self certification |
| since April 2000. In the fiscal year 2007-2008, | | | | Administration of SEZs |
| India’s exports from the functional SEZs, | | | | To effectively ensure the proper functioning of SEZ, |
| were up 92 percent at Rs, 66, 638 against Rs. 34, | | | | a three tier administrative set up has been |
| 615 in the previous year. | | | | formularized. |
| Exports from the functioning SEZs during the last five | | | | (a) The Board of Approval- the top body in the |
| years | | | | Department |
| Year Exports (Rs. Crores) Growth rate of exports | | | | (b) The Unit Approval Committee at the zonal level- |
| 2003-2004 13,854 39% | | | | For approval of units in the SEZs and other pertinent |
| 2004-2005 18,314 32% | | | | issues. |
| 2005-2006 22,840 25% | | | | (c) A Development Commissioner- to head each |
| 2006-2007 34,615 52% | | | | zone. |
| 2007-2008 66,638 92% | | | | The Unit Approval Committee scrutinizes the |
| Clearly, SEZs have emerged as the key that have | | | | performance of each SEZ units annually. The units are |
| opened new door of opportunities for foreign players | | | | considered liable for penal action under the provision |
| to Trade with India. They have emerged as one of | | | | of Foreign Trade (Development and Regulation) Act, |
| the strongest pillars contributing to India’s | | | | in case of violation of the conditions of the approval. |
| Export growth. | | | | Advantages for SEZ Developers |
| SEZ- Overall Scenario | | | | The advantages that will compel overseas companies |
| India was one among the foremost Asian countries | | | | to Trade with India, or in each words form joint |
| that toyed with the idea of setting up an Export | | | | ventures and attract foreign investment in India |
| Processing Zone (EPZ) model to promote Indian | | | | include, |
| exports. The idea translated into realty in 1965, with | | | | Free import/domestic procurement of goods for |
| the first EPZ being launched in Kandla. However, in an | | | | development, operation and maintenance of SEZ |
| attempt to further smoothen the roads for MNCs to | | | | units |
| trade with India, a need was felt to flaunt something | | | | 100 percent Income Tax exemption on export |
| new, precisely a zone that will make up for all the | | | | income for SEZ units under Section 10AA of the |
| missing elements that came in the way, while | | | | Income Tax Act for first 5 years, 50 percent for |
| promoting Indian exports, be it, stifling controls and | | | | next 5 years and 50 percent of the ploughed back |
| clearances, under- rated infrastructure facilities and a | | | | export profit for next 5 years. |
| oscillating fiscal regime and so forth. All this negative | | | | Free from minimum alternate tax under section |
| factors influenced the announcement of Special | | | | 115JB of the Income Tax Act. |
| Economic Zones Policy in April 2000. | | | | External commercial borrowing by SEZ |
| The principal objective of the policy was to promote | | | | unit’s up to US $ 500 million in a year sans any |
| SEZs as a prime driver for economic growth, by | | | | maturity restriction via recognized banking channels. |
| factoring in aspects such as, quality infrastructure | | | | Free from Central Sales Tax. |
| coupled with compelling fiscal packages, and bare | | | | Free from Service Tax. |
| minimum regulations. | | | | Single window clearance for Central and State |
| Broadly speaking, the objectives for launching SEZs in | | | | level approvals. |
| April 2000 are as follows: | | | | Free from State sales tax and other levies as |
| to promote trade with India, especially exports | | | | extended by the respective State Governments. |
| of goods and services | | | | The major advantages available to SEZ developers |
| to create more economic activity | | | | include:- |
| to attract investment from domestic and foreign | | | | Free from customs/excise duties for |
| sources | | | | development of SEZs for authorized operations |
| to generate more employment opportunities | | | | approved by the Board of Approval (BOA). |
| to develop modern infrastructure facilities | | | | Income Tax exemption on export income for |
| Special Economic Zones can be defined as a specific | | | | around 10 years in 15 years under Section 80-IAB of |
| region that has economic laws that are more flexible | | | | the Income Tax Act. |
| than a country’s usual economic laws. SEZs | | | | Exemption from minimum alternate tax |
| are a living roof of the potential of export-led growth | | | | Exemption from dividend distribution tax |
| strategy in propelling a nation’s into higher | | | | Exemption from Central Sales Tax (CST). |
| growth plane. | | | | Exemption from Service Tax |
| The Indian SEZ policies promote establishing of these | | | | Operational Special Economic Zones |
| zones in the government, private or joint sector. This | | | | Functional SEZs that encourage overseas |
| policies offer brilliant opportunities, inviting both Indian | | | | player’s trade with India include: |
| and International foreign players to set up operations | | | | 1. Cochin Special Economic Zone |
| in India for manufacturing of goods and services. The | | | | 2. SEEPZ Special Economic Zone |
| units set up in the zone, need to be foreign | | | | 3. Kandla Special Economic Zone |
| exchange earners but will be free from any value | | | | 4. Madras Special Economic Zone |
| addition or minimum export promotion requirements. | | | | 5. Visakhapatnam Special Economic Zone |
| The Government of India has converted around eight | | | | 6. Falta Special Economic Zone |
| EPZs into SEZs, to attract foreign players to trade | | | | 7. Surat Special Economic Zone |
| with India. This include, Kandla and Surat (Gujarat), | | | | 8. Noida Export Processing Zone |
| Cochin (Kerala), Santa Cruz (Mumbai-Maharashtra), | | | | 9. Manikanchan, Salt Lake SEZ (Gems and Jewellery) |
| Falta (West Bengal), Madras (Tamil Nadu), | | | | 10. Indore Special Economic Zone (Multi Product) |
| Visakhapatnam (Andhra Pradesh) and Noida (Uttar | | | | 11. Jaipur Special Economic Zone (Gems and |
| Pradesh). Additionally, three new Special Economic | | | | Jewellery) |
| Zones have started functioning, this include, Indore | | | | 12. Mahindra City-SEZ (Information Technology) |
| (Madhya Pradesh), Manikanchan - Salt Lake (Kolkata) | | | | 13. Salt Lake Electronic City-SEZ (Software |
| and Jaipur. | | | | Development and IT enabled Services) |
| SEZ Act 2005 | | | | 14. Mahindra City-SEZ (Apparel and fashion |
| According to the SEZ Act 2005, State Governments | | | | Technology) |
| have a major role to play in promotion of exports | | | | Foreign Direct Investment Policy on SEZ |
| and setting up of relevant infrastructure. A Single | | | | Foreign Direct Investment upto 100% is allowed via |
| Window SEZ approval mechanism has been set up | | | | automatic route for all manufacturing activities in |
| via a 19 member inter-ministerial SEZ Board of | | | | Special Economic Zones (SEZs), but there are few |
| Approval (BoA). The applications submitted by | | | | exceptions which include: |
| different State Governments/UT Administration are | | | | Manufacturing of arms and ammunition, |
| perused by BOA periodically. All decisions of the | | | | explosives and allied items of defense equipment, |
| Board of approvals are taken with consensus. | | | | defense aircraft and warships |
| As per the SEZ Rules, different minimum land | | | | Atomic substances |
| requirement are considered for different class of | | | | Distillation and brewing of alcoholic drinks |
| SEZs. Every SEZ is segregated into a processing area | | | | Narcotics and psychotropic substances and |
| where only the SEZ units would be set up and the | | | | hazardous chemicals |
| non-processing area where the support infrastructure | | | | Cigarettes/cigars and manufactured tobacco |
| would be established. | | | | substitutes |
| The SEZ Rules provide for: | | | | Sectoral norm as informed by Government shall |
| Single window clearance for setting up of an | | | | apply to foreign investment in services |
| SEZ; | | | | New SEZs |
| Single Window clearance on matters relating to | | | | SEZs schemes have been inspiring both Indian and |
| Central as well as State Governments; | | | | foreign players to set SEZs in India. |
| Single window clearance for setting up a unit in a | | | | |