Download - Special Economic Zones in India
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SEZs IN INDIA
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Structure
Part I: Evolution and FrameworkPart II: Policy FeaturesPart III: Development ProcessPart IV: Project RisksPart V: Conclusions
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INDIANNESS of SEZ
PVT SECTOR DRIVENHYBRID OF CHINESE SEZ AND EPZKEY ROLE OF STATE GOVTS. UNIQUE FISCAL REGIME:BY LAWREGULATORY REGIME EFFECTIVE AND EFFICIENT
REGULATORY REGIME: SINGLE ENFORCEMENT AGENCY
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SEZ Features (Cont’d)
SINGLE COURT LEGALFRAMEWORK: WINDOWS IN
EXISTING LAWS LEADING TO STATE & CENTRAL ACTS
SEZ REFORMS DRIVEN BY ECONOMIC NEED & LOGIC
POLITICAL ENVIRONMENT
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SEZ POLICY
EVOLVED OVER LAST THREE YEARSGOI AND RESPECTIVE STATES(12)CENTRAL SEZ ACT READYSIX STATES HAVE ENACTED STATE
SEZ ACTs
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SEZ POLICY FRAMEWORK
Income ExemptionDDT/CG/MATCST/SERVICE TAXSTATE TAXESNo license required for import.Manufacturing, trading and services
allowed.Freedom to subcontract
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SEZ Policy Cont’d
Single window approval by DCNo License required to manufacture
items reserved for SSI sector.100% FDI allowed in manufacturing
through automatic route except in a few sectors.
No cap on foreign investments items reserved for SSI.
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SEZ Policy Cont’d
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
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SEZ Policy Cont’d
100% of export proceeds in EEFC account.
Freedom to make overseas investment from it.
Insurance outside India allowedCapitalization of imports payable.Commodity hedging permitted.
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SEZ Policy Cont’d
Foreign companies permitted to set up branches for manufacturing activities
Exemption from interest rate surcharge on export finance.
SEZ allowed to write off unrealised export bills.
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Customs and Excise
Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units.
Exemption to sales made from Domestic Tariff Area to SEZ units.
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Income and Service Tax
100% IT exemption (10A) for first 5 years, 50% for 5 years thereafter and 50% of reinvestment for 10 years Exemption from DDT, & MAT Permitted to carry forward losses OBUs allowed to have full IT exemption for 5
years and 80% thereafter Exemption from Service Tax to SEZ units.
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Environment
Permitted facilities like golf courses, desalination 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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Drugs and Cosmetics
Exemption from port restriction under Drugs & Cosmetics Rules
Single window mechanism in Zones having such units
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Companies Act
Office of Registrar of Companies in SEZs.
Exemption from requirement of domicile India for 12 months prior to appointment as Director.
Enhanced limit of Rs. 2.4 crores per annum allowed for managerial remuneration
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Domestic Tariff Area (DTA) supplier
Entitled to: Drawback/DEPB CST Exemption Exemption from State levies Discharge of its EP IT exemption u/s 80HHC
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Development Process
LAND ACQUISITION MIN AREA MODULAR APPROACHINFRA/ ON SITE DEVELOPMENTEXTERNAL INFRA LINKAGESCO-DEVELOPERS
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Other Critical Policies
CUSTOMS LABOUR ENVIRONMENT POWERFOREIGN EXCHANGE CONTROL FOREIGN INVESTMENT LICENSING
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Project Risks
LOCATION LAND ACQUISITIONREGULATORY REGIME-
EFFECTIVENESSSTABILITY OF POLICY FINANCIAL CLOSURE
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Thank You
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