special economic zonefinal

8/3/2019 Special Economic Zonefinal

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Special Economic Zone BY:-

ASHFAQ &UJJAWAL



What is SEZ?

• A geographical region that has economic laws moreliberal than a country's typical economic laws.

• Covers a broad range of more specific zone types,including Free Trade Zones (FTZ), Export Processing

Zones (EPZ), Free Ports etc.

• A spatial economic island where more liberal economiclaws operate than outside that specified area.

• Main objective to attract FDI by excluding a specifiedgeographical area from the operation of certain tax lawsand import and export laws.



Continued..

• No. of developing countries have resorted to this

strategy to attract FDI like China, India, Iran,Jordan, Poland, Kazakhstan etc.

• In India, SEZ were started from April 2000.

• As on today 101 SEZs are in operation and inprinciple approval has been given for setting upanother 117 SEZs.



Shenzhen SEZ



Types of SEZ

• SECTOR SPECIFIC SEZs.

• MULTI-PRODUCT SEZs.

• Port/ Airport Based SEZs

• Free Trade and Warehousing Zones



• Defined as a zone meant exclusively for one or moreproducts or services in one sector.

• Minimum area requirement is 100 hectares (reduced to

50 hectares for specified States and Territories).

• For Electronic hardware and software including IT/ITES,minimum area required is 10 Hectares with a minimumbuilt up processing area of one lakh square meters.

SECTOR SPECIFIC SEZs.



• Signifies an SEZ where units may be set up formanufacture of services of two or more goods/servicesin a sector or goods/services falling in two or moresectors.

• Minimum area requirement for SEZ exclusively forservices is 100 hectares.

• Minimum area requirement is 1000 hectares(reduced to 200 hectares for specified States andTerritories like in Assam , Meghalaya, Nagaland,

Mizoram, Manipur, J&K, Tripura , Sikkim , Himachal

MULTI-PRODUCT SEZ



PORT/AIRPORT BASED SEZs

• Freeport's typically encompass much largerareas. They accommodate all types ofactivities, including tourism and retail sales,

permit on-site residence, and provide abroader set of incentives and benefits.

• Size of this type is greater than100 km2Market of this type Domestic, internal andexport markets

• Objective of this is integrated development



The Subic Bay International Airport, the gateway to Subic

Bay Freeport, is a modern, international airport with 10,000

sq. m passenger terminal, capable of handling 700 passengers

at any given time and featuring the very latest technology forsecurity and comfort.



SUBIC BAY



Rehabilitated Marine Terminal at the NSD (Naval Supply Depot)

Part of the rehabilitation is the widening of the marine terminalapron by 12 meters (each side).



The new container terminal at the Cuba Point.

Around two million cu.m. of earth was moved to construct the30-hectare container yard. Specifications: 2 berths; Depth: 13

meters; Length: 560 meters.



SUBIC BAY – Tourism



Free trade zones, also known as commercialfree zones and free commercial zones.

Objective is to support trade

Size is less than 50 hectares Market is domestic and re-export

Eligibility activity is trade-related activities

example is the Colon Free Zone in Panama.

FREE TRADE AND WAREHOUSING ZONES



JEBEL ALI FREE TRADE ZONE



Jebel Ali Free Trade Zone



• FDI- 100% permitted under automatic route

• Objectives- Development of infrastructure facilities,

Investment Promotion, Promotion of exports of goods and

services, Generation of employment opportunities etc.• Establishment Procedure- SEZ can be established either bythe Central Government, State Government or any otherentity.

• Requirements- Minimum area requirements for different class

of SEZs, every SEZ is divided into a processing area( forunits) and the non-processing area (for supportinginfrastructure).

• Simplified Procedure- Single window clearance for settingup SEZ as well as units within SEZ

SPECIAL ECONOMIC ZONESFuelling India’s Economic Growth



• To Provide Internationally CompetitiveEnvironment

• To Increase Share In Global Exports• To Encourage FDI And Enhance GDP

• To Act As Laboratories For Changes In Our

Policies

ROLE OF SEZS IN INDIAN ECONOMY



SEZ – Current Status

• 396 SEZs formally approved: – 19 Multi Product SEZs; – 6 Port based Multi Product SEZs; – 132 Sector Specific SEZs; – 249 EH/IT/ITES SEZs

• 169 valid in-principle approvals;

• 151 SEZs notified; over 45 SEZs functional

• 2006-07 Exports at US$8.3 billion (Rs. 34,787 Crores)

• Growth in exports 52% over 2005-06

• Projected exports –2007-08 – US$15 billion(Rs.67,088 crores)(200% increase in two years)



Tax Incentives

T I ti



Tax Incentives

• Direct Tax Benefit to Developers

• 100% tax holiday for 10 consecutive years out of block of15 years

• Profit & gains derived from business of developing SEZnotified on or after 1st April 2005

• Transferee Developer can also claim deduction forbalance period of 10 years on Operation & Maintenanceincome

• Minimum Alternative Tax provisions not applicable

• Exemption from Dividend Distribution Tax

• Direct Tax Benefits to Units

• 100% of profits and gains derived from the export for fiveConsecutive Years from which business commences.

• 50% of for further five A.Y. and



• Direct Tax benefits for Units • Minimum Alternative Tax provisions not applicable

• Capital gain tax exemption on relocation to SEZ

• Indirect Tax• Exemption from payment of Import duty

• Exemption from payment of Excise duty

• Exemption from payment of CST and VAT on purchasefrom DTA

• Exemption from Service tax



SWOT Analysis for Indian SEZs• Strengths:

• Skilled Manpower – knows English

• Worldwide acceptance of capabilities in fields like

• Pharmaceutical manufacturing & research

• Clinical trials

• Manufacturing auto parts

• Engineering designing & consultancy, IT & ITES

• Entertainment etc

• Financial & other institutional Networks like StockExchanges, Insurance Companies, Educational Institutes

• Attraction of a large ‘Indian’ market:

• growing middle class with purchase power



SWOT Analysis for Indian SEZs• Weakness:

• Infrastructure bottlenecks –connectinginfrastructure like Roads leading to SEZs.

• Political changes

• Convertibility of Currency on Capital A/c

• Zones by & large are still zones not smart cities.

• Inappropriate locations

• Long gestation period 4 to 5 years in absence ofinfrastructure development.



SWOT Analysis for Indian SEZs

• Opportunities:

• An alternative manufacturing base, particularlycompared to Chinese SEZs.

• Services SEZs do not require movement of inputand output physically and hence, surroundinginfrastructure may not matter much.

• For multi-product SEZs, almost 23 ports areavailable. Most of them are likely to be EDIcompliant.

• New small ports & airports are also being developed

keeping SEZ concept in mind.



SWOT Analysis for Indian SEZs

• Threats:

• Loosing edge of low labour costs - many countriesare competing.

• Formation of economic blocks, Effect onGovernment Revenues.

• Negotiations for FTAs with many countries mayerode competitiveness.

• The pattern of buying & selling may not continue.With relocations of industries in other third worldcountries, new competitors will emerge.



VIDEO ON KOREA FREE ECONOMY ZONE



SUWALKI SPECIAL ECONOMIC ZONE

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