The concept of SEZ is expected to bring large dividends to the State in terms of economic and industrial development and the generation of new employment opportunities. The SEZs are expected to be engines for economic growth..
Special Economic Zone (SEZ) is defined as "a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purposes of trade operations and duties and tariffs" .
Special Economic Zone is one or more areas of a country where the tariffs and quotas are eliminated and bureaucratic requirements are lowered so that more companies are attracted to the area. The companies establishing in the area also get extra incentives for doing business.
SEZs are an acknowledgement of the potential of export-led development strategy in accelerating economic growth.
Government of India have notified Special Economic Zones (SEZs) Act 2005 and notified Special Economic Zone Rules 2006 with a view to augmenting infrastructure facilities for export production.
Setting up of Special Economic Zones are permitted in the public, private, joint sector or by the State Governments.
The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment include:-
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.
External commercial borrowing by SEZ units upto 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.
SEZ Approval Consequent upon the SEZ Rules coming into effect w.e.f. 10th February, 2006, Twenty-five meetings of the Board of Approvals have since been held. During these meetings, formal approval has been granted to 462 SEZ proposals. There are 135 valid in-principle approvals. Out of the 462 formal approvals, 222 SEZs have been notified. Benefits derived from SEZs Benefit derived from SEZs is evident from the investment, employment, exports and infrastructural developments additionally generated. The benefits derived from multiplier effect of the investments and additional economic activity in the SEZs and the employment generated thus will far outweigh the tax exemptions and the losses on account of land acquisition. Stability in fiscal concession is absolutely essential to ensure credibility of Government intensions. Exports from the functioning SEZs during the last five years : 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%
Rigid custom procedure for bondings & bank guarantees
Restrictive FDI policy
Procedural constraints & severe infrastructural deficiencies
During 1991-2000, wide-ranging measures were initiated by the GoI for revamping and restructuring EPZs.
This phase was thus marked by progressive liberalisation of policy provisions and relaxation in the severity of controls and simplification of procedures.
Focus had been on delegating powers to zone authorities, providing additional fiscal incentives, simplifying policy provisions and providing greater facilities. The EXIM Policy (1997-2002) introduced a new scheme from April 1, 2000 for establishment of the Special Economic Zones (SEZs) in different parts of the country. From November 1, 2000 the EPZs at Kandla, Santa Cruz (Mumbai), Cochin and Surat have been converted into SEZs. In 2003, other existing EPZs namely, Noida, Falta, Chennai, Vizag were also converted into SEZs. As on June 2005, 53 SEZs have been approved by the Government of India out of which 11 SEZs are functional and the rest 42 SEZs are under establishment. Contd………. Evolution : from EPZs to SEZs
Agriculture (a term which encompasses farming) is the process of producing food, feed, fiber and other goods by the systematic raising of plants and animals.
India has a labour force of 509.3 million.
60% of which is employed in agriculture and related industries.
agricultural crops include rice, wheat, oilseed, cotton, jute, tea, sugarcane, and potatoes.
The agricultural sector accounts for 28% of GDP.
Service and industrial sectors make up 54% and 18% respectively.
Agriculture accounts for 8.56 % of India’s exports. About 43 % of India's geographical area is used for agricultural activity.
Agriculture is still the largest economic sector and plays a significant role in the overall socio-economic development of India
SEZ: Independent force to boost Indian Economy SEZ is a better proposition .
SEZ policy is nowhere in conflict with agriculture sector. In fact it’s a lucrative proposition. India will have to gear-up with its modernization and reformation of agriculture sector to make it competent and profitable globally.
Wal-Mart’s role in Indian agriculture would be one such step to make the farmers use modern technology to make them eligible for profit sharing partnership proposal.
That depends on the efforts that government of India and its population put in. The SEZ conflict with agriculture as of now seems more like a political war fought with the help of pawns for immediate political mileage.
Definitions in Special Economic Zones Act,2005
" Unit" means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after commencement of this Act (Section 2(zc) of Special Economic Zones Act ,2005)
“ Offshore Banking Unit” means a branch of a bank located in a Special Economic Zone and which has obtained the permission under clause ( a ) of sub-section ( 1 ) of section 23 of the Banking Regulation Act, 1949 (Section 2(u) of Special Economic Zones Act ,2005)
“ International Financial Services Centre” means an International Financial Services Centre which has been approved by the Central Government under sub-section ( 1 ) of section 18 (Section 2(q) of Special Economic Zones Act ,2005)
“ entrepreneur” means a person who has been granted a letter of approval by the Development Commissioner under sub-section ( 9 ) of section 15 (Section 2(j) of Special Economic Zones Act ,2005)
“ existing Unit” means every Unit which has been set up on or before the commencement of this Act (Section 2(l) of Special Economic Zones Act ,2005)
New Unit Any person, who intends to set up a Unit for carrying on the authorised operations in a Special Economic Zone, may submit a proposal to the Development Commissioner concerned
Existing Unit An existing Unit shall be deemed to have been set up in accordance with the provisions of SEZ Act,2005 and such Units shall not require approval under the SEZ Act, 2005 .
(Section 15(1) of SEZ Act,2005)
Procedure for establishment of Unit ( if proposal not related to Foreign collaboration and FDI ) Application to Development Commissioner with a copy to developer Development Commissioner shall scrutinise proposal and place before approval committee Approval Committee approve the proposal Development Commissioner will issue a letter of approval in Form G for setting up the unit
Procedure for establishment of Unit ( if proposal relates to Foreign collaboration and FDI ) Application to Development Commissioner with a copy to developer Development Commissioner shall scrutinise proposal and place before Board Board shall approve the proposal Development Commissioner will issue a letter of approval in Form G for setting up the unit
Letter of Approval to a Unit-Rule 19(2) and (3)
What is a Letter
Validity of a Letter
The Letter of Approval shall be valid for one year within which period the Unit shall commence production or service or trading or Free Trade and Warehousing activity .(Rule 19(4) of SEZ Rules ,2006)
Foreign companies can also set up manufacturing units as their branch operations in the Special Economic Zones in accordance with the provisions of Foreign Exchange Management (Foreign exchange derivatives contracts) Regulations, 2000.
providing water, electricity and such other services,
Delegation of power to the Development Commissioner under the Industrial Disputes Act, 1947 and other related Acts in relation to the Unit
Declaration of the Special Economic Zone as a Public Utility Service under the Industrial Disputes Act, 1947
Providing single point clearance system to the Developer and unit under the State Acts and rules
Forms used A Application for setting up SEZ B Format for letter of approval for SEZ developers C Format for Letter of approval for providing Infrastructure facilities in SEZ D Bond-cum Legal Undertaking for developers E Format for Quarterly and half-yearly report for SEZ developer/co-developer to be furnished to Development commissioner
Forms used Contd.. F Consolidated Application Form G Format for letter of approval for Unit H Bond-cum Legal Undertaking for SEZ unit I Annual Performance report for units J Form for Appeal K Permanent Identity Card
Check list for the proposals to be taken up by BOA
Name of the Developer.
Proposed area of the location of the SEZ.
Status of recommendation of the proposal by the State Government (if available).
Whether proposal is for formal or in-principle approval? (In case land is in possession of the promoter, it is considered for formal approval)
Is it a multi-product SEZ?
If it is a sector specific SEZ, the sector is.
Whether it meets the area requirements.
Area of the SEZ (in hectares)
Check list for the proposals to be taken up by BOA …
Whether Form- A has been filed?
Whether undertaking and affidavit has been submitted?
Whether project report has been submitted?
Whether land is owned/leased and is in possession of the Developer?
Does the proposal meet the area requirements of the Rules?
Whether the land has existing structures or is vacant?
Whether the land is contiguous?
Projected investment in the project.
Check list for the proposals to be taken up by BOA….
Projected exports from the project.
Projected employment from the project.
Share capital and Reserves of the Developer Company.
Source of funds for the project.
Audited Accounts of the Developer for last 3 years (for all the constituents in case the Developer is a SPV).
Extent of FDI
Source of FDI
Whether provisions contained in the Press Note No. 5 (2005 Series), issued by the Ministry of Commerce and Industry have been followed in respect of Telecom/IT SEZ development?
The developer holding land on lease basis shall assign lease hold right to the entrepreneur holding valid Letter of Approval.(Rule 11(6))
The lease period shall be co-terminus with the validity of the Letter of Approval.(Rule 11(5))
Developer may grant on lease land or built up space, for creating facilities such as canteen, public telephone booths, first aid centres, creche and such other facilities as may be required for the exclusive use of the Unit. .( Proviso to Rule 11(5))
No vacant land in the non-processing area shall be leased for business and social purposes such as educational institutions, hospitals, hotels, recreation and entertainment facilities, residential and business complexes, to any person except a co-developer approved by the Board :
Provided that the developer or co-developer may lease the completed infrastructure along with the vacant land appurtenant thereto for such purposes
Provided further that infrastructure for business or social purposes in the Special Economic Zone, as may be approved by the Board, shall be eligible for exemptions, concessions and drawback.”.
(b) without referring the proposal for setting up the
Special Economic Zone to the Board; and
(c) after identifying the area;
suo moto set up and notify the Special Economic Zone
(Proviso to sub section 4 of section 3 of SEZ Act ,2005)
Flow Chart for Setting up SEZ SEZ can be formed in two ways By Applying to SG By applying to Board of Approval SG forward the Proposal to BOA Obtain the concurrence of SG BOA approves the proposal SG=Sate Government
Flow Chart for Setting up SEZ contd .. Central Government shall issue letter of Approval to developer Developer shall furnish to Central Government information about area Central Government will notify the area as SEZ
Distance from the nearest Sea Port/Air Port/Rail or Road
Details of Lease of Land
Proposed investment details
Means of financing
Details of areas (Processing areas and non-processing area) used for various purposes in SEZ
Activities Proposed in Processing and non-processing area
Details of employment likely to be generated
Kinds of SEZ Kinds of SEZ SEZ for multi-product SEZ for specific sector SEZ in a port or airport
Minimum Contiguous Area Requirement Type Area for specific states/UT Min.Processing Area Multi-product 1000 hectares 200 hectares 25 % (old) 35% (new) ( may be relaxed to 25% by CG on Board recommendation) Multi -services 100 hectares 100 hectares 25% Sector specific 100 hectares 50 hectares 50% Electronic Hardware and software 10 hectares( and min. built up area of 1 lakh sq.mtrs) 10 hectares and min. built up area of 1 lakh sq.mtrs) 50%
Minimum Contiguous Area Requirement Type Area for specific states/UT Min.Processing Area Bio- technology/ Non- conventional energy 10 hectares (old) 10 hectares( with a min. built up area of 40000 sq.m) (new) 10 hectares (old) 10 hectares( with a min. built up area of 40000 sq.m) (new) 50 % Gems and jewellery sector 10 hectares (old) 10 hectares( with a min. built up area of 50000 sq.m) (new) 10 hectares (old) 10 hectares ( with a min. built up area of 50000 sq.m) (new) 50 %
Minimum Contiguous Area Requirement Type Area for specific states/UT Min.Processing Area Free Trade and Warehousing Zone - Stand alone 40 hectares (with 1 Lac square meter built up area) 40 hectares (with 1 Lac square meter built up area) 50 %(new) Free Trade and Warehousing Zone - SEZ for a specific sector No minimum area requirement but subject to max area not exceeding 20% of the processing area No minimum area requirement but subject to max area not exceeding 20% of the processing area
Minimum Contiguous Area Requirement SEZ Amendment Rules,2006 ( came into force on 10.08.2006)
1. Minimum processing area for multi- product shall be at least thirty-five per cent of the area which may be relaxed up to twenty-five per cent by the Central Government on recommendations of the Board for the reasons to be recorded in writing
1. the area shall be ten hectares or more with a minimum built-up area as under :
( i ) forty thousand square meters in case of a Special Economic Zone proposed to be set up exclusively for bio-technology and non-conventional energy sectors including solar energy equipments/cells but excluding a Special Economic Zone set up for non-conventional energy production and manufacturing;
Corporate farming is a term that describes the business of agriculture.
Specifically, what is seen by some as the practices of would-be mega corporations involved in food production on a very large scale.
It is a modern food industry issue, and encompasses not only the farm itself, but also the entire chain of agriculture-related business, including seed supply, agrichemicals, food processing, machinery, storage, transport, distribution, marketing, advertising, and retail sales.
Critics argue that the ultimate goal of corporate farming is to vertically integrate the entire process of food production, from the development of proprietary strains of DNA through to the distribution and sale of food to consumers.
Some corporations are considered to be well on the way to achieving this objective, and have become very large in the process, such as Archer Daniels Midland and the privately held Cargill, with 2004 revenues of $62.9 billion. citation needed ]
"Corporate farming" is a fairly broad term that deals with the general practices and effects of a small number of large, global corporations that dominate the food industry.
It does not refer simply to any incorporated agribusiness enterprise, although most agricultural businesses today are in some way economically connected to the dominant food industry players. As such, it may be thought of as a movement, which is at times also referred to as "anti-corporate farming".
The core argument for the methods criticized as corporate farming is essentially: "This is the way to keep up with population growth, and to make inroads into feeding billions of people to developed nation standards— this is the only way to feed the world ." Indeed, rapid technological development and large-scale global production management are responsible for an unprecedented abundance of inexpensive, widely available, attractive, "safe" food. By lowering the cost of raw food inputs, creating sophisticated long-distance distribution networks, producing processed convenience foods, and making food available year-round in vastly stocked supermarkets , corporate farming has presented consumers in the wealthiest regions of the world with an immense variety of food, at relatively low cost. Today, in North America , only about 10% of average income is spent on food. By this measure, provided these methods are sustainable , corporate farming would appear to be a tremendous success
"Corporate farming" is a fairly broad term that deals with the general practices and effects of a small number of large, global corporations that dominate the food industry. It does not refer simply to any incorporated agribusiness enterprise, although most agricultural businesses today are in some way economically connected to the dominant food industry players. As such, it may be thought of as a movement, which is at times also referred to as "anti-corporate farming".
India to promote corporate contract farming Commodity Online NEW DELHI: Worried over the slow growth in agricultural sector, the government is planning for expansion in corporate contract farming. Minister of State for Food Processing Subodh Kant Sahai said the government is open to corporate contract farming. While domestic corporate bigwigs such as Reliance and Bharti have already taken up the contract farming route to feed their retail chains, global majors Wal-Mart, Tesco and Carrefour are also eyeing foray into India retail.
Corporate contract farming has taken off in states like Punjab, Haryana, Maharashtra and Gujarat. Providing the private sector a more level playing field would help raise the country’s overall farm goods’ processing level, the minister said. So far, 17 states have made a provision for contract farming in their respective Agricultural Produce Marketing Committee Act to provide legal framework. In seven more states, there exist no regulatory laws preventing such an arrangement.
India’s is world’s second largest producer of fruit and vegetables. Its annual post harvest loss on fresh fruit and vegetables on lack of processing facilities has been pegged at Rs 40,000 crore. The minister prescribed market-oriented farming to minimise post-harvest loss. Large-scale corporate farming will also lift the food processing sector. During the 11th Five Year Plan (2007-12), the growth target for the food processing sector is 7 per cent, while agriculture sector is seen growing only at 4 per cent.
Every bit of farm produce should be viewed as processing raw material, Sahai said. India aims at raising the level of food processing in farm products to 20 per cent by 2015 from the current 6 per cent. Underscoring the critical role of states in raising the country’s overall food processing level, the minister said that states should adopt a fresh look at their agricultural policy. The ministry has written to all chief ministers to accord high priority to food processing in a bid to raise rural income.
- In the 1990s, as a part of reforms, powers delegated to zone authorities, additional fiscal incentives were given, policy provisions were simplified and greater facilities were provided leading to some, not very significant, improvements.
SMALL SIZE OF EPZs Location Size (Sq.miles) Kandla (Gujarat) 1.17 SEEPZ (Mumbai) 0.15 Cochin (Kerala) 0.16 NOIDA (UP) 0.48 Chennai (TN) 0.41 Vizag (AP) 0.56 Falta (WB) 0.44