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16926018 Sez An Overview

16926018 Sez An Overview






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  • Can somebody clarify if we can transfer existing plant and machinery to the new SEZ unit? Is there a limit on the amount or % of the total investment which can be thus transferred?
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    16926018 Sez An Overview 16926018 Sez An Overview Presentation Transcript

    • 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 06/29/09 3
    • 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
    • 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; SEZ 06/29/09 5
    • Structure of SEZ in India PROCESSING NON-PROCESSING Manufacturing where the activities supporting Provide services infrastructure is to Indulge in trade be created, Or warehousing 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.
    • ØExternal commercial borrowing by SEZ units up to US $ 500 million in a year without any maturity restriction through recognized banking channels. ØExemption from Central Sales Tax. ØExemption from Service Tax. ØSingle window clearance for Central and State level approvals. ØExemption from State sales tax and other levies as extended by the respective State Governments. SEZ 06/29/09 9
    • Facilities to SEZ Developers 100% FDI allowed for : townships and recreational facilities on a case to case basis, franchise for basic telephone service in SEZ Income Tax Benefit under (80 IA) to developers for any block of 10 years in 15 years Duty free import/domestic procurement of goods for development, operation and maintenance of SEZs Exemption from Service Tax Income of infrastructure capital fund/company from investment in SEZ exempt from Income Tax
    • (Contd.) üDeveloper permitted to transfer infrastructure facility for operation and maintenance. üGeneration, transmission and distribution of power in SEZs allowed. üFull freedom in allocation of space and built up area to approved SEZ units on commercial basis. üAuthorized 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
    • ● 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. SEZ 06/29/09 13
    • Benefits of SEZ Exports from the functioning SEZs during the last three years are as under: SEZ 06/29/09 14
    • -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 SEZ 06/29/09 15
    • Problem in SEZ üTransparency in policy formulation. üPayment problem. üOpenness in land acquisition. üPrime agriculture land. SEZ 06/29/09 16
    • List of Developers who have set up SEZs qNokia SEZ in Tamil Nadu qQuark City SEZ in Chandigarh qFlextronics SEZ in Tamil Nadu qMahindra World City in Tamil Nadu qMotorola, DELL and Foxconn qApache SEZ (Adidas Group) in Andhra Pradesh qDivvy's Laboratories, Andhra Pradesh qRajiv Gandhi Technology Park, Chandigarh qETL Infrastructure IT SEZ, Chennai qHyderabad Gems Limited, Hyderabad
    • THANKS……… SEZ 06/29/09 18