April 8, 2023SEZ 1

SPECIAL ECONOMICS ZONE

MADE BY:SHIVANGI RAWAT

April 8, 2023SEZ 2

•INTRODUCTION•OBJECTIVES•STRUCTURE OF SEZ•ADMINISTRATIVE LAYOUT•FACILITIES OFFERED•BENEFITS OF SEZs•PROBLEM•LIST OF DEVELOPERS

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A Special Economic Zone (SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. SEZ include a wide range of zone type as follows:

-FTZ-EPZ-FZ-IE-FREE PORTS-URBAN ENTERPRISE ZONES

SEZ – An Overview

•SEZs, the new engines for export led economic growth in India,

defined as:

“Specifically delineated duty-free enclave and shall be deemed to be

foreign territory for the purposes of trade operations and duties and

tariffs”

. . . . EXIM Policy 2000, Chapter 9 para 30

•Extremely successful Chinese format to promote exports, attract FDI

and foster overall economic growth

•Shenzhen SEZ, started in 1981, has achieved 38% GDP growth CAGR

(highest recorded so far) mainly due to:

Liberal economic framework

Integrated infrastructure at very competitive prices

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Objectives of the SEZ

(a) generation of additional economic activity

(b) promotion of exports of goods and services;

(c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities;

(e) development of infrastructure facilities;

Structure of SEZ in India

PROCESSINGManufacturing

activitiesProvide servicesIndulge in tradeOr warehousing

NON-PROCESSINGwhere the supporting

infrastructure is to be created,Housing.

Administrative layout of SEZ

Board of approval

Approval committee

SEZ units

Incentives and facilities offered to the SEZs

Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units. 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.

Exemption from minimum alternate tax under section 115JB of the Income Tax Act.

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External commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels.

Exemption from Central Sales Tax. Exemption from Service Tax.

Single window clearance for Central and State level approvals. Exemption from State sales tax and other levies as extended by the respective State Governments.

Facilities to SEZ Developers

100% FDI allowed for : townships and recreational facilities on

a case to case basis, franchise for basic telephone service in

SEZIncome Tax Benefit under (80 IA) to developers for any block

of 10 years in 15 yearsDuty free import/domestic procurement of goods for

development, operation and maintenance of SEZsExemption from Service TaxIncome of infrastructure capital fund/company from

investment in SEZ exempt from Income Tax

(Contd.)

Developer permitted to transfer infrastructure facility for operation and maintenance.

Generation, transmission and distribution of power in SEZs allowed.

Full freedom in allocation of space and built up area to approved SEZ units on commercial basis.

Authorized to provide and maintain service like water, electricity, security, restaurants and recreation centers on commercial lines.

Facilities to SEZ Enterprises•Exemption from customs/excise duties.•Income tax :100% Income-Tax exemption for first 5 years and 50% for 2 years thereafter.•Foreign Direct Investment :100% foreign direct investment is freely allowed in manufacturing sector in SEZ units under automatic route, except prohibited items.No cap on foreign investments for SSI reserved items

•Central Sales Tax Act :Exemption to sales made from Domestic Tariff Area to SEZ units•Service Tax :Exemption from Service Tax to SEZ units

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Banking / External Commercial Borrowings :

-External commercial borrowings by units up to $ 500

million a year allowed without any maturity restrictions.

-Freedom to bring in export proceeds without any time limit.

-Flexibility to keep 100% of export proceeds in EEFC

account. Freedom to make overseas investment from it.

-Exemption from interest rate surcharge on import finance.

-SEZ units allowed to ‘write-off’ unrealized export bills.

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Benefits of SEZExports from the functioning SEZs during the last three years are as under:

Year Value (Rs. Crore)

Growth Rate (over previous year)

2003-2004 13,854 39%

2004-2005 18,314 32%

2005-2006 22,840 25%

2006-2007 34,615 52%

2007-2008 66,638 92%

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-Investment and employment in the SEZs set up prior to the SEZ Act, 2005.

-Investment and employment in the SEZs notified under the SEZ Act 2005:

Current investment and employment:   Investment:           Rs. 83450crore Employment:        1,13,426 persons

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Problem in SEZ

Transparency in policy formulation.Payment problem.Openness in land acquisition.Prime agriculture land.

SEZ

List of Developers who have set up SEZs

Nokia SEZ in Tamil Nadu  Quark City SEZ in Chandigarh Flextronics SEZ in Tamil Nadu Mahindra World City in Tamil Nadu Motorola, DELL and Foxconn  Apache SEZ (Adidas Group) in Andhra Pradesh Divvy's Laboratories, Andhra Pradesh Rajiv Gandhi Technology Park, Chandigarh ETL Infrastructure IT SEZ, Chennai Hyderabad Gems Limited, Hyderabad

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THANKS………