Guide To Sez - India - Sample


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The concept of Special Economic Zones (SEZs) is not new in India; it has evolved from Export Processing Zones and Software Technology Parks (STPs). Favourable government policies have encourages SEZ set-up and boosted the employment and infrastructure development in India.

The report provides an overview of SEZs including SEZ evolution in India, types of SEZs and minimum land area requirements fro setting up SEZs and life cycle of SEZ set up. Establishment procedure outlines legal and regulatory framework for SEZ in India and various requirements that need to be fulfilled by the SEZ developer and unit operating in SEZ.

The report highlights the various incentives available to developer for setting up SEZ and to unit operating in SEZ. The report provides a brief scenario of SEZs in India and analyses SEZ distribution terms, approval status, geographic and sector wise distribution. The report also analyses performance of SEZs, based on parameters such as share of SEZ export in India’s total exports, sector wise exports, investments and employment generated.

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Guide To Sez - India - Sample

  1. 1. Guide to SEZ - India June 2009
  2. 2. Executive Summary SAMPLE Introduction <ul><ul><li>SEZ policy introduced in 20--; SEZ bill passed in 20-- </li></ul></ul><ul><ul><li>Three types of SEZs present in India – Sector - specific, Multi–product and SEZ in a port/airport </li></ul></ul><ul><ul><li>SEZ area comprises of - Processing Area and Non Processing Area </li></ul></ul><ul><ul><ul><li>Minimum area requirement for setting up SEZs varies from a -b hectares </li></ul></ul></ul><ul><ul><li>There are four different types of SEZ development models - Industrial Parks, Fully Integrated , Outsourced Facility and Shared Infrastructure </li></ul></ul><ul><ul><ul><li>Fully integrated model is popular in India </li></ul></ul></ul>Incentives & Establishment Procedure <ul><ul><li>Government provide various incentives to promote SEZs. Developers and unit can avail various tax benefits like exemption from Income tax, customs duty, distribution tax </li></ul></ul><ul><ul><li>SEZs in India are governed by an administrative set up consisting of Board of Approval, Development Commissioner, SEZ Authority and Approval Committee </li></ul></ul><ul><ul><li>The developer of SEZ and the unit are required to follow certain norms like: </li></ul></ul><ul><ul><ul><li>Conformance to all environmental rules ; Positive net foreign exchange requirement for units; Minimum requirement of a% stake for developers </li></ul></ul></ul>SEZ Scenario – India <ul><ul><li>There are 3 stages in approval of SEZ - In-principle approval, Formal approval and Notified SEZs </li></ul></ul><ul><ul><li>Notified SEZs comprise a small proportion of total SEZs </li></ul></ul><ul><ul><li>IT / ITeS sector leads with highest number of formal approvals </li></ul></ul><ul><ul><li>Southern and Western states lead in SEZ development </li></ul></ul>Performance of SEZs <ul><ul><li>SEZs accounted for over b% share in India’s exports in 20- - --; c% y-o-y growth in SEZ exports </li></ul></ul><ul><ul><li>Gems and Jewelry sector was leading sector in SEZ exports </li></ul></ul><ul><ul><li>Employment in SEZs grew at a rate of d % annually </li></ul></ul><ul><ul><li>Investments in SEZ witnessed a growth of e% per annum </li></ul></ul>
  3. 3. <ul><li>Introduction </li></ul><ul><li>Establishment Procedure </li></ul><ul><li>Incentives </li></ul><ul><li>SEZ Scenario – India </li></ul><ul><li>Performance of SEZs </li></ul><ul><li>Upcoming SEZs </li></ul><ul><li>Appendix </li></ul>
  4. 4. SEZs can be categorized on basis of sector, function or location and required to have processing as well as non-processing area SAMPLE Source: <ul><li>Manufacture one or more goods in a particular sector </li></ul><ul><li>Render one or more services in a particular sector </li></ul><ul><li>Manufacture multiple goods in one sector or across multiple sectors </li></ul><ul><ul><li>Trading and warehousing </li></ul></ul><ul><ul><li>Render two or more services in a sector or multiple sectors </li></ul></ul><ul><li>SEZ in an existing port or airport for manufacture of goods falling in two or more sectors or for trading and warehousing or rendering of services </li></ul>Sector – Specific SEZ Multi – Product SEZ SEZ in a port or airport Types of SEZ SEZ Layout Processing Area Non - Processing Area <ul><li>Processing area is the demarcated area in SEZ where units can be located for manufacture of goods or rendering of services </li></ul><ul><li>Minimum processing area has been uniformly fixed at </li></ul><ul><ul><li>x% for Multiproduct SEZs </li></ul></ul><ul><ul><li>y% for product specific SEZs </li></ul></ul><ul><li>Non-processing area is intended to provide support facilities to SEZ processing area and may include: </li></ul><ul><ul><li>Educational institutions </li></ul></ul><ul><ul><li>Hospitals </li></ul></ul><ul><ul><li>Hotels </li></ul></ul><ul><ul><li>Recreation and entertainment facilities </li></ul></ul><ul><ul><li>Residential and business complexes </li></ul></ul>1,100%
  5. 5. Legal framework for setting up SEZ is defined under SEZ Act and State SEZ policy Legal Framework State SEZ policy SEZ ACT 2005 SEZ Rules 2006
  6. 6. Majority of SEZs under development are less than 49 hectares in area SAMPLE SEZ Approval Status Approval status Area wise SEZ distribution Source: Up to 49 b% 101-200 c% 50-100 d% 201-500 e% 1000+ a% f% 501-1000 Approval status area wise * Area in hectares w% Notified SEZ Area in hectares A u% Formal Approval B v% In-principle approval C D x% Formal Approval E y% In-principle approval z% Notified SEZ F Number of SEZs Total = U Total = X hectares Notified SEZs comprise a small proportion of SEZs 31% Definition SEZ Status <ul><li>Final stage after which physical development work begins </li></ul>Notified <ul><li>Given when the land has not yet been secured but all other criteria are fulfilled </li></ul>In-Principle Approval <ul><li>Given when land is available to set up the SEZ </li></ul>Formally Approved
  7. 7. IT / ITeS SEZs has the maximum number of approved SEZs due to smaller land requirements compared to other sector <ul><li>IT/ITeS sector has highest formal approvals, but covers only a% of the land area of SEZs </li></ul><ul><li>Almost b-c% of IT/ITeS SEZs are operational </li></ul><ul><li>IT/ITeS sector is popular in SEZs due to: </li></ul><ul><ul><li>Availability of trained manpower </li></ul></ul><ul><ul><li>Smaller land requirement as compared to other SEZs, which results in speedier land acquisition </li></ul></ul><ul><ul><li>Uncertainty regarding STPI tax exemptions which are due to expire in 20-- </li></ul></ul>SAMPLE i% IT/ ITES/ Electronic Hardware j% Pharma / Chemicals k% Engineering l% Multi-Product m% Textile / Apparel n% Bio Tech o% Multi Services p% Others q% Multi-Product r% Textile / Apparel s% Multi Services t% IT/ ITES/ Electronic Hardware Others u% Engineering v% FTWZ w% Auto Related x% Electronic Product y% e% Pharma / Chemicals f% Textile / Apparel g% Multi Services h% Others a% IT/ ITES/ Electronic Hardware b% Bio Tech c% Multi-Product d% Engineering Formally approved SEZs In-principle approved SEZs Source: Total = X Overview Notified SEZs Total = Z Total = Y 2,500%
  8. 8. Establishment of SEZs have boosted the international trade in India <ul><li>Exports from special economic zones (SEZs) rose u% during the year to end-March 2009 </li></ul><ul><li>It out paced India’s overall exports growth of just v% </li></ul><ul><li>Superior infrastructure in SEZ has helped exporters cut costs and remain competitive </li></ul>SAMPLE Exports Sector wise exports 2007- 08 Exports from SEZ Source: E Y 2007-08 INR bn A U 2003-04 B V 2004-05 C W 2005-06 D X 2006-07 % Share 4.88 N Miscellaneous O Total M Non conventional Energy L Biotech K Leather footwear and sports goods J Electronics I Food and Agro Industry H Plastics and Rubber G Textile and garments F Chemicals and Pharma E Engineering D Computer/ Electronic Software C Electronics Hardware B Trading and Service A Gems and Jewellery Exports in INR bn Sector
  9. 9. Thank you for the attention About Netscribes Netscribes is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business & corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base. Netscribes is a one-stop shop designed to fulfil clients’ profitability and growth objectives. The Guide to SEZ report is a special feature from Research on India. For more detailed information or customized research requirements please contact: Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd. or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and prior permission is required for guidelines on reproduction. Natasha Mehta, CFA Phone: +65 8448 0449 E-Mail: [email_address] Gagan Uppal Phone: +91 98364 71499 E-Mail: [email_address] Research on India is a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quick insights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries on