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PRESENTATION BY P.C. NAMBIARChairman, Export Promotion Council for Export Oriented Units and SEZs, India

ZONE DEVELOPMENT AND OPERATION

AN INDIAN PERSPECTIVE

INDIA – FEDERAL SET UP 29 STATES AND 7 UNION

TERRITORIES RULED BY 13 DIFFERENT POLITICAL PARTIES.

INDEPENDENT FEDERAL AUTHORITY ON CERTAIN VITAL ISSUES LIKE LAND USE, LABOUR ,LAW & ORDER ETC.

INDEPENDENT STATE TAX LEGISLATIONS.

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INDIA - FEDERAL SET UP SMALLEST STATE SIZE 0.370 Mn Ha

LARGEST STATE SIZE 34.226 Mn Ha

VARYING RATIO OF LITERACY RATES

UNEVEN POPULATION DENSITY

30 LANGUAGES SPOKEN WITH DIFFERENT CULTURE

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INDIA – DEMOGRAPHY LACK OF ADEQUATE INDUSTRIAL,

COMMERCIAL AND SOCIAL INFRASTRUCTURE

3 TIER GOVERNANCE ACROSS THE COUNTRY

LACK OF ECONOMIC AWARENESS

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INTRODUCTIONZONE DEVELOPMENT STARTED IN 1965

INITIALLY ONLY GOVERNMENT ZONES

STATE GOVT DEVELOPED 10 ZONES

ONLY ONE PVT ZONE UPTO 2006

SEZ ACT 2005 AND SEZ RULES 2006 ENACTED

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SEZ SIZE- SECTOR FOCUS

FOR IT/ITES SECTOR MINIMUM BUILT-UPAREA SPECIFIED

• Category “A” – 1,00,000 Sq Mtr • Category “B” - 50,000 Sq Mtrs • Category “C”- 25,000 Sq Mtrs.

SEZ SIZE – SECTOR FOCUSMulti Product SEZs - 500 Ha

Multi Services SEZs – 50 Ha

Sector specific SEZs – 50 Ha

Port or Airport based SEZs- 50 Ha (in smaller and specified sector 25 Ha)

BT, Non conventional energy or gems and jewellery , Handicrafts, electronics - 10 Ha

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FREE TRADE WAREHOUSING ZONE

FTWZ – Only FTWZ-40 Ha with a built up area of

not less than 100,000 sq.mtr)

FTWZ can be set up Sector Specific SEZ- ( Max 20%

of processing area ) in a Multi product SEZ no

limitation prescribed

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SPECIAL ECONOMIC ZONES IN INDIA.

FORMALLY APPROVED -564GOVERNMENT SPONSORED-18PRIVATE SEZs - 546--------------------------------------------------------------------NOTIFIED SEZs- 388GOVERNMENT SPONSORED-18PRIVATE SEZs-370--------------------------------------------------------------------OPERATIONAL SEZs – 192GOVERNMENT SPONSORED-18 PRIVATE SEZs- 174

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SEZ LOCATION 9 OUT OF 29 STATES DON’T HAVE

SEZ PRESENCE

3 OUT OF 7 UNION TERRITORIES DO NOT HAVE SEZ PRESENCE

NO UNIFORM FISCAL BENEFITS OFFERED BY STATES

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SEZ MAP IN TINY STATES BELOW 10 Mn HECTARES SIZE

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SMALLER SIZE STATES

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10 TO 20 Mn Ha SIZE STATES

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BIGGER SIZE STATES

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LOCATION – STATES NOT HAVING SEZsSTATES POPULATIO

NSTATE POPULATIO

N

ARUNACHAL PRADESH

1,382,611 ASSAM 31,169,272

BIHAR 103,804,637 HIMACHAL PRADESH

6,856,509

JAMMU & KASHMIR

12,548,926

MEGHALAYA 2,964,007 MIZORAM 1,091,014

SIKKIM 607,688 TRIPURA 3,671,032

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SEZ LOCATION - UNION TERRITORIES NOT HAVING SEZs

ANDAMAN & NICOBAR ISLANDS

DAMAN AND DIU

LAKSHADWEEP

INVESTMENT IN SEZsIN THE GOVERNMENT SPONSORED SEZs - US$

4,007 Mn

IN THE PRIVATE SECTOR SEZs - US$ 46,269 Mn

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FDI in Zone Development

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Cochin SEZ US$ 4.85 Mn

Falta SEZ US$ 3.44 Mn

Kandla SEZ US $ 11.46 Mn

SEEPZ, Mumbai US $ 54.54 Mn

Noida SEZ US $ 29.16 Mn

Vishakapatnam SEZ US $ 19.41 Mn

Madras EPZ US $ 40 Mn

TOTAL US $ 162.87 Mn

DIRECT EMPLOYMENT IN SEZs

IN THE GOVT. SPONSORED SEZs- 281,823 persons

IN PRIVATE SECTOR SEZs - 995,822 persons.

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SEZ PERFORMANCE NUMBER OF SEZ OPERATING UNITS - 3,818

EXPORTS AS OF 31.03.2014- US$ 82,346 Mn

DOMESTIC SALE IN INDIA AS OF 31.03.2014 – US$ 11,386 Mn

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SEZ SECTOR MIX

MULTI PRODUCTS 10%

OTHER SECTOR SPECIFIC MANUFACTURING 32%

IT/ITES , ELECTRONIC HARDWARE, SEMI CONDUCTOR SERVICES 56%

• OTHER SERVICES- 2%

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Of 192 Operational

State-wise distribution of approved SEZs (As on 01.9.2014)

States/UTs FormalApprovals

In-principle approvals

NotifiedSEZs

^Exporting SEZs (Central Govt. + State Govt./Pvt. SEZs + notified SEZs

under the SEZ Act, 2005)

Andhra Pradesh 44 4 33 18

Chandigarh 2 0 2 2

Chhattisgarh 2 1 1 1

Delhi 3 0 0 0

Dadra & Nagar Haveli 2 0 1 0

Goa 7 0 3 0

Gujarat 42 6 29 18

Haryana 39 3 28 6

Jharkhand 1 0 1 0

Karnataka 61 0 40 25

Kerala 30 0 25 14

Madhya Pradesh 19 1 9 2

Maharashtra 99 11 66 25

Manipur 1 0 1 0

Nagaland 2 0 2 0

Odisha 10 1 5 1

Puducherry 1 1 0 0

Punjab 8 0 2 2

Rajasthan 10 1 10 4

Tamil Nadu 66 5 53 34

Telangana 64 0 45 24

Uttar Pradesh 32 1 22 10

Uttarakhand 2 0 1 0

West Bengal 17 3 9 6

GRAND TOTAL 564 38 388 192

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Sector-wise Distribution of approved SEZs ( As on 20.08.2014)

Sectors Formal Approvals

In-Principle approvals

Notified SEZs

Exporting SEZs (Central

Govt./Pvt. SEZs + Notified SEZs under the SEZ

Act, 2005)

Agro 6 2 5 0

Airport based multi-product 3 0 0 0

Auto and related 1 1 1 1

Aviation/Aerospace/Animation & Gaming/Copper 7 1 6 5

Beach & Mineral/Metals 3 0 3 0

Bio-tech 30 0 19 2

Building prod./mal./transport equipments /ceramic and glass

2 2 2 2

Electronic product/Industries 3 0 3 1

Engineering 20 1 14 13

Footwear/Leather 5 0 4 3

Food Processing 5 0 4 4

FTWZ 13 6 7 3

Gems and Jewellery 13 3 6 3

Handicrafts & Carpets 5 0 3 2

IT/ITES/Electronic Hardware/Semiconductors/Servces

347 0 239 107

Metal/Stain.Steel/Alum/Foundry 7 1 4 0

Light Engieering/Metallurgical Engineering/Automotive Components

1 0 0 0 24

Sector-wise Distribution of approved SEZs ( As on 20.08.2014)

Sectors Formal Approvals

In-Principle approval

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Notified SEZs

Exporting SEZs (Central

Govt./Pvt. SEZs + Notified

SEZs under the SEZ Act,

2005)

Multi-product 24 11 16 19

Multi-Services 10 2 7 2

Non-Conventional Energy 6 0 4 2

Plastic processing 0 2 0 0

Petrochemicals & petro./oil and gas 4 1 2 1

Pharmaceuticals/Chemicals 22 2 20 11

Port-based multi-product 6 1 3 2

Power/alternate energy/solar 3 1 3 3

Textiles/Apparel/Wool 14 1 11 6

Writing and printing paper mills 2 0 1 0

Granite processing Industries and other allied machinery/manufacturing

2 0 1 0

GRAND TOTAL 564 38 388 19225

REGULATION –SETTING UP OF SEZ

BY CENTRAL GOVT

ISSUANCE OF LETTER OF APPROVAL

SEZ NOTIFICATION

AUTHORIZE OPERATIONS

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SINGLE WINDOW MECHANISM

BOARD OF APPROVALS AT CENTRAL GOVT LEVEL

UNIT APPROVAL COMMITTEE AT STATE LEVEL

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SEZ DEVELOPMENT PROCEDURE – STEP 1

RIGHTFUL POSSESSION OF LAND ON HAND

CLEARANCE FROM LOCAL GOVERNMENT

APPLICATION TO BOARD OF APPROVALS

RECOMMENDATION OF STATE GOVERNMENT

LETTER OF APPROVAL

NOTIFICATION OF SEZ

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DEVELOPMENT PROCEDURE – STEP 2

DEMARCATION OF PROCESSING AND NON-PROCESSING AREA

MASTER PLAN APPROVAL BY PLANNING AUTHORITY

BUILDING LAYOUT AND INFRASTRUCTURE DEVELOPMENT APPROVAL

POSTING OF CUSTOMS OFFICERS

EXECUTION OF BOND FOR DUTY FREE BENEFITS BY DEVELOPERS/CO-DEVELOPERS

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DEVELOPMENT PROCEDURE – STEP 3

COMPOUND WALL AROUND PROCESSING AREA

LEASING OF AREA TO UNIT HOLDERS

LETTER OF APPROVAL TO UNIT

EXECUTION OF BOND BY UNITS FOR DUTY FREE BENEFITS

PROGRESSIVE REPORTING OF SEZ PERFORMANCE BY DEVELOPER AND UNITS

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GOOD GOVERNANCEDEVELOPMENT COMMISSIONER /UNIT

APPROVAL COMMITTEE – NODAL AGENCY FOR PERMISSIONS AND APPROVALS

ASSESSMENT, EXAMINATION AND CLEARANCE MONITORED BY OFFICERS DEPUTED FROM CUSTOMS DEPARTMENT

SEZ OPERATIONS MONITORED THROUGH PERIODICAL REPORTING AND M.I.S.

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INCENTIVES FOR SEZ IN INDIA ALL MATERIALS REQUIRED FOR

INFRASTRUCTURE DEVELOPMENT BY DEVELOPERS ARE EXEMPT FROM CUSTOMS DUTY , CENTRAL EXCISE DUTY, AND STATE VAT

ALL MATERIALS REQUIRED FOR AUTHORISED OPERATIONS BY UNITS ARE EXEMPT FROM CUSTOMS DUTY, CENTRAL EXCISE DUTY AND STATE VAT

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INCENTIVES FOR SEZ

ALL SERVICES RECEIVED IN CONNECTION WITH

AUTHORIZED OPERATIONS ARE EXEMPT FROM

SERVICE TAX

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INCOME TAX- BENEFITS

100% INCOME TAX EXEMPTION FOR A BLOCK OF 10 YEARS OUT OF 15 YEARS FOR DEVELOPERS.

100% INCOME TAX EXEMPTION FOR 1ST FIVE YEARS AND 50% FOR SUBSEQUENT FIVE YEARS (FOR UNITS)

REINVESTMENT ALLOWANCE TO THE EXTENT OF 50% OF PLOUGHED BACK PROFITS CARRY FORWARD OF LOSSES(FOR UNITS).

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INVESTMENT INCENTIVES-1100% FOREIGN DIRECT INVESTMENT

UNDER AUTOMATIC ROUTE FOR MANUFACTURING SECTOR IN SEZ UNIT

NO CAP ON FDI FOR SSI RESERVED ITEMS.

SETTING UP OFFSHORE BANKING UNITS ALLOWED IN SEZS

100% INCOME TAX EXEMPTION FOR 3 YEARS AND 50% FOR NEXT TWO YEARS FOR OFF SHORE BANKING UNITS

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INVESTMENT INCENTIVES-2 EXTERNAL COMMERCIAL BORROWINGS UPTO

USD 500 MILLION A YEAR ALLOWED WITHOUT ANY MATURITY RESTRICTION FOR UNITS.

EEFC ACCOUNT FOR EXPORT PROCEEDS ALLOWED WITH FREEDOM TO INVEST OVERSEAS.

EXEMPTION FROM INTEREST RATE , SURCHARGE ON IMPORT FINANCE.

ENVIRONMENTAL CLEARANCE ON PRIORITY.

NORMS FOR SEZ SIZE REDUCED TO SUIT INDUSTRIES

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SEZ – DEVELOPMENT ISSUES WHILE THERE IS A CENTRAL SEZ ACT,

MANY STATES DON’T HAVE THE CORRESPONDING STATE SEZ ACT

NATURAL RESOURCES UNEVENLY DISTRIBUTED

70% POPULATION DEPENDS ON AGRICULTURE AND FOOD PROCESSING SECTOR NOT FULLY DEVELOPED

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Some of the IT/ITES/EHTP SEZs

Wipro SEZ, Andhra Pradesh HCL Technologies SEZ, Noida (UP)

EON Kharadi SEZ, Pune Mahindra SEZ, Chennai

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SERUM BIO-PHARMA PARK SEZ , PUNE , INDIAINDIA ‘S FIRST BIO-PHARMA SEZ

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