Special Economic Zone, Export Oriented Units, Software Technology Parks

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Special Economic Zone, Export Oriented Units, Software Technology Parks

  1. 1.  INCEPTION  Asia’s First Export Processing Zone developed in Kandla in 1965 with a view to promote exports. Due to shortcomings experienced on account of multiplicity of controls and clearances, absence of World class Infrastructure, and an unstable fiscal regime and with a view to attract larger foreign Investments in India , the Special Economic Zone Policy was announced in 2000.  SEZ’s in India functioned from 1st November2000- 9th February 2006 under the provisions of Foreign Trade Policy and fiscal Incentives were made effective through the provision of relevant statutes.
  2. 2. • THE SEZ ACT 2005, was passed by parliament on May 2005, however after extensive consultations , supported by SEZ rules it came into effect on 10th February 2006. •SEZ rules provided for  Simplified procedures for development, operation, and maintenance of the Special Economic Zones and for setting up units and conducting business in SEZs Single window clearance for setting up of an SEZ Single window clearance for setting up a unit in a Special Economic Zone Single Window clearance on matters relating to Central as well as State Governments Simplified compliance procedures and documentation with an emphasis on self certification.
  3. 3.  INCENTIVES & FACILITIES OFFERED TO SEZ The Incentives & Facilities Offered to SEZ are in two ways: a) Incentives & Benefits offered to the Units in SEZ b) Incentives & Benefits offered to SEZ Developers. a) Incentives & Benefits offered to the Units in SEZ  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.
  4. 4. b) Incentives & Benefits Offered to SEZ Developers  Exemption from customs/excise duties for development of SEZs for authorized operations approved by the BOA.  Income Tax exemption on income derived from the business of development of the SEZ in a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act. Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act. Exemption from dividend distribution tax under Section 115O of the Income Tax Act. Exemption from Central Sales Tax (CST). Exemption from Service Tax (Section 7, 26 and Second Schedule of the SEZ Act)
  5. 5. Export Performance in SEZ's 140% 120% Growth Percentage 100% 80% 60% 40% 20% 0% Series1 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 39% 32% 25% 52% 93% 50% 121.40%
  6. 6. There are 173 Operational SEZ’s in India. Some of them are:  SEEPZ Special Economic Zone  Kandla Special Economic Zone Cochin Special Economic Zone Madras Special Economic Zone Vishakhapatnam SEZ  Falta SEZ  NOIDA Export Promoting Zone
  7. 7.  EOU scheme was introduced in the year 1980 vide Ministry of Commerce resolution dated 31st December 1980. The purpose of the scheme was basically to boost exports by creating additional production capacity. It was introduced as a complementary scheme to the Free Trade Zones/ Export Processing Zone (EPZ)Scheme introduced in the sixties, which had not attracted many units due to locational restrictions. T he exporters showed willingness to set up units with long term commitment to exports under Customs bond operations provided they had the freedom to locate them in places of their choice and given most of the benefits as provided to units set up in the Zones
  8. 8. The Export Oriented Units (EOUs) are governed by the provisions of Chapter 6 of the Foreign Trade Policy (FTP) and its procedures, as contained in the Handbook of Procedure (HBP)  The Scope of EOU has changed over the years. It was initially set up for manufacturing sector with certain minimum value addition in terms of export earnings. Presently it includes not just the aforesaid but also services, software development, repair, remaking, reconditioning, reengineering, agric ulture etc.
  9. 9.  EOUs are allowed to procure raw materials/ capital goods duty free, either through import or through domestic sources.  Reimbursement of Central Sales Tax (CST) Reimbursement of duty paid on fuels procured from domestic oil companies. CENVAT credit on the goods and service and refund thereof. Fast track clearance facilities; Exemption from Industrial Licensing for manufacture of items reserved for SSI sector.
  10. 10. Software Technology Parks of India was established and registered as an Autonomous Society under the Societies Registration Act 1860, under the Department of Information Technology, Ministry of Communications and Information Technology, Government of India on 5th June 1991 with an objective to implement STP Scheme, set-up and manage infrastructure facilities and provide other services like technology assessment and professional training.
  11. 11.  To promote the development and export of software and software services including Information Technology (IT) enabled services/ BioIT.  To provide statutory and other promotional services to the exporters by implementing Software Technology Parks (STP)/ Electronics and Hardware Technology Parks (EHTP) Schemes and other such schemes which may be formulated and entrusted by the Government from time to time. To provide data communication services including value added services to IT / IT enabled Services (ITES) related industries. To promote micro, small and medium entrepreneurs by creating conducive environment for entrepreneurship in the field of IT/ITES.
  12. 12.  to establish Software technology park’s / centers at various locations in the country. To perform various financial management functions which comprises inter alia the following activities. To do all such acts and things as may be required in order to ful fill the objectives of STPI.

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