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SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
SEZ & EOU
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SEZ & EOU

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  • The present norms of the minimum size of land required to set up SEZ:IT-ITeS, gems and jewellery, electronics and biotec SEZ : 10 hectares. Multiproduct SEZ: 1,000 hectares. Port/airport-based SEZz: 100 hectares.
  • In SEZ there is physical control of over movement of good, no such control in case on EOUCustoms clearance with in zone itself, for EOU fast track clearance scheme for clearance of imported consignmentsIn relation to restriction under companies act on managerial remuneration are not applicable for SEZ, applicable for EOU
  •  SEZ approval mechanism has been provided through a 19 member inter-ministerial SEZ Board of Approval (BoA).
  • software technology parks of IndiaElectronic Hardware Technology Parkexport processing zones 
  • - SEEPZ Special Economic Zone- Kandla Special Economic Zone- Cochin Special Economic Zone- Madras Special Economic Zone- Visakhapatnam SEZ- Falta Special Economic Zone- Noida Export Processing Zone
  • Transcript

    • 1. SEZ & EOU – IMPACT ON LOGISTICS Group Members: Kunal Singh 2010C43 Prashant Petkar 2010B43 Tarun Vir Singh 2010B41 1
    • 2. AGENDA• SEZ – an Introduction• Types of SEZ• EOU – an Introduction• How is SEZ different from EOU?• Comparison of benefits• Tax benefits• Logistic parks• FTWZ• Logistics infrastructure• Sub-contracting• Other policies• Recent updates 2
    • 3. SEZS – AN INTRODUCTIONA Special Economic Zone (SEZ) is a geographical region that has more liberal economic laws than the ones generally followed in the rest of the country.The Special Economic Zones Policy• Announced in April 2000• An engine for economic growth supported by quality infrastructure• Attractive fiscal package both at the Central and State level• Single window clearanceThe main objectives of the Act are• Generation of additional economic activity• Promotion of exports of goods and services• Promotion of investment from domestic and foreign sources• Creation of employment opportunities and development of infrastructure facilities 3
    • 4. TYPES OF SEZ• Multi-product SEZ: Here units may be set up for manufacture of goods / services falling in two or more different sectors, for trading and warehousing.• Sector specific SEZ: This zone would be exclusively for one or more products / services in a particular sector.• Port / Airport SEZ: This kind of SEZ exists in an existing port / airport.• Free Trading & Warehousing SEZ: The objective of such a zone is to create trade related infrastructure to facilitate import & export and facilitate trade transactions in free currency. In a stand alone Free Trading and Warehousing Zone at least 50% of the area should be earmarked for developing processing area, free trading and warehousing for multi products. 4
    • 5. SEZS• Goods landed, handled, manufactured or reconfigured, & re-exported without intervention from customs authorities.• When goods are moved to consumers in the rest of the country, they become subject to the prevailing customs duties.• SEZs are notified areas with concessions in land and tax rates.• Provide services like modern automated warehouses and cold chains, multimodal transport facility, container freight stations, unloading of cargo for distribution, redistribution, packaging and repackaging.• Access to cheap capital made available for investments in infrastructure, enabling them to extend longer credit periods to their clients and supplementing their working capital.• No multiple check points and documentation requirements, which would lead to speedier delivery of cargo. 5
    • 6. EOUS – AN INTRODUCTIONThe Export Oriented Units (EOUs) Scheme• Introduced in early 1981• Complementary to the SEZ scheme• Offers a wide option in locations with reference to factors like • Source of raw materials • Ports of export • Availability of technological skills • Existence of an industrial base and • The need for a larger area of land for the project.EOUs are mainly concentrated in Textiles and Yarn, Food Processing, Electronics, Chemicals, Plastics, Granites and Minerals/ Ores. 6
    • 7. EOUS – SALIENT FEATURES• Total Customs & Central excise duty exemption.• Income tax exemptions (Section 10A, 10B, etc……)• Reimbursement of Central sales tax (CST) on purchases made from Domestic Tariff area (DTA)• Exports through third party permitted• No restrictions on foreign shareholding and 100% convertibility of export earnings at market rate 7
    • 8. HOW SEZ IS DIFFERENT FROM EOU? • Units to be located within specified Zones in respect to SEZ, where as for EOU units can be set up at any prescribed places as declared. • No minimum investment limit for SEZ, where as for EOU minimum investment limit is Rs. 100 lakhs as on date of commercial production • Supplies from SEZ to DTA is normal, Whereas for EOU sale within India on payment of excise duty /customs duty of similar goods is payable and sometimes as a % of normal customs duty • In respect to sales (SEZ) no limit, except to have positive net foreign exchange (NFE), (EOU) sale UPTO 50% (FOB on sales of previous year) in DTA and has to fulfil positive net foreign exchange. • Physical exit is necessary in case of de-bonding as SEZ, for EOU unit can exit (de-bond) with permission of Development Commissioner, on payment of applicable duties. • SEZ supplier need not pay CST or service tax, EOU has to pay CST or service tax but eligible for refund. 8
    • 9. COMPARISON OF BENEFITS – SEZ VS EOU 9
    • 10. TAX BENEFITS IN SEZ• Deduction from Profits and Gains from export of goods/services as follows (Section 10AA) 100% income tax exemption for first 5 years 50% income tax exemption for next 5 years• Exemption from Dividend Distribution Tax• No import duty on goods imported• No excise duty on goods procured from DTA (Domestic Tariff Area)• No service tax on services availed from DTA (Domestic Tariff Area)• No Central Sales Tax (CST) on goods procured from DTA (Domestic Tariff Area) 10
    • 11. TAX BENEFITS IN EOU• Imported capital goods are allowed to be warehoused for 5 years.• B-17 Bond - to take care of the interests of revenue arising out of goods lost in transit, goods taken into Domestic Tariff Area for job work/ repair/ display etc but not brought back etc.• Transhipment of import /export goods between port of import/export and units premises; duty-free import/procurement and warehousing/storage in the unit; movement of duty-free goods for job work and return; temporary clearance for repair and display in exhibitions, testing/approvals etc.; and transfer from one warehouse to another. 11
    • 12. LOGISTICS PARKS• By 2012 – 110 logistic parks, 3500 acres, investment $1 billion, located mostly near industrial hubs.• Reliance Logistics Ltd (RLL) plans to set up logistics parks within all the upcoming SEZs being established by the Reliance Industries group.• Will cater to the entire range of logistic requirements of the SEZs.• Sri City, a multi-product SEZ in Andhra Pradesh, has set aside about 500 acres in the tax-free enclave for investors to develop logistics and warehousing infrastructure.• Accommodate about 20 large logistics companies• Signed up with Bangalore-headquartered A S Cargo for developing logistics infrastructure at an investment of Rs 100 crore. 12
    • 13. FTWZ• FTWZ are aimed at facilitating import and export of goods.• The Central Government has allowed SEZ developers to offer space for warehousing and without obtaining prior permission from it.• Trading and warehousing units located within free trade warehousing zones, can carry two-way transactions within the domestic market.• Under the SEZ Act, units in these zones are given 100 per cent tax exemption on their income for the first five years and 50 per cent in the next five years.• FTWZ would be a key Link in Logistic and Global Supply chains – servicing both the India and the Globe 13
    • 14. FTWZ• All benefits available to the SEZs shall be applicable to the FTWZs• Each Zone would provide ‘World Class’ Infrastructure for : • Warehousing for various kinds of products • Handling and Transportation Equipment • Commercial office space • All related utilities –telecom, power, water, etc • One stop clearance of Import and Export of goods• Duty Deferment Benefits–Custom Duty deferment benefits for products requiring longer storage time 14
    • 15. OPERATIONAL BENEFITS• In-house Customs Clearance• Self-certification for Imports & Exports• In-house logistics & Warehousing Zone• Exports can be made directly from the sub-contractor’s premises located anywhere• No license required for imports• Inter-SEZ units job-work and sale allowed• 24X7 Electricity & Water• No routine examination of goods by customs in SEZ units 15
    • 16. LOGISTICS INFRASTRUCTUREConnectivity is assured through:• Rail • Dedicated rail route made into Multi-modal Logistics Corridor • Exclusive Rail Infrastructure for SEZ • Dedicated Rail Sidings • Dedicated Railway Complex • Support Infrastructure • Bonded Transit Warehouse • Open Storage Space • Service Equipment• Wherever the SEZs are landlocked, inland container depots are an integral part of SEZ . 16
    • 17. LOGISTICS INFRASTRUCTURE• Road • Dedicated Road Corridors of International Standards • Separate corridor for Sea – Road • Separate corridor for Sea – Rail • Exclusive corridor for truck routes • Separate corridor for non-industrial traffic, primarily be intra-zone Multimodal Logistics Corridor• Air • Temporary in-zone Airstrip • Dedicated Airport within the Zone • Additional lighting facility for Night landing • Nearby Airport Enhancement 17
    • 18. LOGISTICS FACILITIES• Single Product Storage Facilities• Shared warehousing• Shared Equipments• Reduction in custom clearance time and better logistics connectivity leading to improved delivery time• Support Facilities and Effective Management• Container Freight Stations• Silos• Cold Storages• Waterside Infrastructure• Infrastructure for Ship Repairs• Docking & Mechanized conversion/fabrication/dismantling• Synchro-lifts/ship-lifts• Common facilities for 2-way movement of liquid inputs/ outputs for SEZ units 18
    • 19. TAXATION IN A TYPICAL SUPPLY CHAIN OF INDIA 19
    • 20. BENEFITS in a SEZ/EOU Unit Developer / Co-developer No customs duty No customs duty No excise duty No excise dutyDevelopment stage No sales tax No sales taxOperation stage No service tax No service tax(Capital goods, No purchase tax No purchase taxconsumables, No stamp duty & registration fees No stamp duty & registration feescomponents & spares) No stamp duty on mortgages No stamp duty on mortgages No electricity duty No electricity duty Exemption from Income tax 100% for the first 5 years No income tax for 10 yearsProfit stage 50% for the next 5 years No dividend distribution tax 50% of profits ploughed back for the next 5 years Reduced cost of infrastructure Reduced cost of utilities Reduced cost of raw materialsResults of benefits Reduced cost of capital Reduced cost of manpower Operational ease 20 Global competitiveness
    • 21. TAX BENEFITS• Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units• Exemption from Central Sales Tax.• Exemption from State sales tax and other levies as extended by the respective State Governments.• 12.24% Service Tax exempted• Exemption from customs/excise duties for development and operation of SEZs.• The units in the Zone can import duty-free • Raw material • Components • Consumable, spare parts • Packing material • Capital items (machinery) are exempted, irrespective of the value • No license is required for imports, including second hand machineries 21
    • 22. LOGISTICS COST BENEFITS• No excise duty and sales tax on sales by DTA units to SEZ units• Office of the Development Commissioner of the Zone refunds CST paid arising out of Inter State Sales or by Domestic purchases• Loading and unloading costs are cheaper due to service tax exemptions• No upper limit on DTA sales in a SEZ 22
    • 23. SUB-CONTRACTING• SEZ unit can undertake job work from a DTA unit for export on the basis of annual permission by the specified officer.• Such sub- contract is permissible for the SEZ unit subject to the condition that the DTA exporter should supply all raw materials.• The Specified Officer may permit the Unit to export the finished goods directly from the sub-contractor’s premises.• A Unit may sub-contract a part of production or production process in another Unit within the same Special Economic Zone. 23
    • 24. OTHER POLICIES• A company can set up units both in the SEZ and DTA, provided separate accounting procedures are maintained by the units. A unit in the DTA cannot export to itself in the SEZ• Tax benefit if any machinery/plant previously used for any purpose being transferred to a new business, and the total value of it does not exceed 20% of the total value 24
    • 25. RECENT UPDATES• MAT was hiked to 18.5%.• Union Finance minister Pranab Mukherjee said there would be no more tax-free zones in the country.• Tax-free zone status in Himachal Pradesh and Uttarakhand was being withdrawn gradually following opposition by different states.• From December 2008 till now, the Board of Approval for SEZs had de- notified or cancelled 33 SEZ projects.• The Tax Benefit ended in March this year, with the government now appointed Deloitte to come up with a report to suggest a new inceptive policy. 25
    • 26. The revenue foregone by the Centre in 2009-10 due to tax breaks on exportprofits of business entities in tax-free enclaves accounted for Rs 26,976 crore 26
    • 27. EXPORT PERFORMANCES OF SEZYear Value (Rs. Crore) Growth Rate ( over previous year )2003-2004 13,854 39%2004-2005 18,314 32%2005-2006 22 840 25%2006-20007 34,615 52%2007-2008 66,638 93%2008-2009 99,689 50%2009-2010 2,20,711.39 121.40% 27
    • 28. THANK YOU 28

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