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Sez india


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Sez india

  2. 2. WHAT IS A SEZ ?  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".
  3. 3. SEZ: A BRIEF REVIEW It covers a broad range of more specific zones including :• • • • • • Free Trade Zones (FTZ) Export Processing Zones (EPZ) Free Zones (FZ) Industrial Estates (IE) Free Ports (FP) Urban Enterprise Zones and others
  4. 4. History of Free Trade Zones • First Free Trade Zone in the world had started on 1st January 1965 at Kandla Port , Kutch, India. • By 1978 India had another four free trade zones at Mumbai , Chennai , Noida and Falta. • In 1978 China had gone through major economic make over and they had realized power in concept of Free Trade Zone’s.
  5. 5. Cont.. • First Chinese Free Trade Zone became operational in 1984 – Shenzhen • In year 2000 one zone of Shenzhen was Exporting thrice of India. • As on today there are about 2000 operation free trade zones spread over 150 countries in world
  6. 6. Kinds of SEZ
  7. 7. Fundamentals of SEZs  SEZs (special economic zones) are fundamentally different from the traditional free zones.  They are much larger in size; offer broader range of activities such as  a single-window management,  streamlined procedures,  duty-free privileges,  also access to the domestic market on a dutypaid basis.
  8. 8. Cont..  Whether the enclave is termed an EPZ, FTZ or SEZ, the cardinal factors are  appropriate infrastructure and transport facilities,  low factor cost,  flexible labour laws,  convertibility of currency,  stable legal and administrative regime, and  a commitment to the canons of an open economy
  9. 9. OBJECTIVES OF SEZ ACT Generation of additional economic activity Promotion of exports of goods and services Promotion of investment from domestic and foreign sources Creation of employment opportunities Development of infrastructure facilities
  10. 10. ROLE OF SEZ IN INDIAN ECONOMY • To provide internationally competitive environment • To encourage FDI and enhance GDP • To increase share in global exports  SEZ exports accounting for 26% of India’s total export in 2011.
  11. 11. SALIENT FEATURES OF SEZ • Self certification for export and import  Import and export movements of goods are based on self declaration  No routine examination is made unless specific order from Development Commissioner or authority. • Sub contracting  A SEZ unit may sub contract a part of it’s product or production process to different units, even in abroad.
  12. 12. • Fiscal incentives-Tax  Exemption from excise and customers duty on procurement of capital assets, consumable stores, rawmaterials from domestic market  Exemption from sales tax, import duty, Income tax, minimum alternative tax and dividend distribution tax • Single Window Clearance  Submit regularity documents at single locations  Less proceedings and save time
  13. 13. SOME OF IMPORTANT SEZ IN INDIA  INDIA • Karnataka Biotechnology and Information Technology Services - SEZ on biotechnology sector in Bangalore's Electronics City, over an area of 43 acres • Shree Renuka Sugars Limited - SEZ on sugarcane processing complex covering 100 hectares, comprising a sugar plant, power station and distillery, at Burlatti in Belgaum district
  14. 14. Ittina Properties Private Limited and three other - SEZs in IT sector, covering electronics, hardware and software sectors in Bangalore, over an area of 15.732 hectares  Wipro Infotech - SEZ on IT / ITES at Electronics City, Sarajpur Bangalore  Hewlett Packard India Software Operation Pvt. Ltd. SEZ on IT
  15. 15. • Food processing and related SEZ services in Hassan, over an area of 157.91 hectares • SEZs on pharmaceuticals, biotechnology and chemical sectors in Hassan, covering of 281.21 hectares • • • • • • • SEEPZ - Andheri (East), Mumbai Khopata - Multi-product, Mumbai Navi Mumbai - Multi-product, Mumbai Salt Lake Electronic City, West Bengal Manikanchan - Jems and jewelery, West Bengal Calcutta Leather Complex, West Bengal Falta food processing unit, West Bengal
  16. 16. Area Allocation in terms of use.
  17. 17. Area Requirements
  18. 18. Entities in SEZ
  19. 19. Sectoral Focus
  20. 20. ADVANTAGES OF SEZ • Growth and development • Attracts Foreign Direct Investment • Exposure to technology and global market • Increasing GDP and Economic Model • Employment opportunities are created
  21. 21. DISADVANTAGES OF SEZ • Land acquisition at very low prices • Farmers loose their livelihood • Tax holidays affect GDP
  22. 22. Benefits & Incentives for SEZ Units
  23. 23. Benefits & Incentives for SEZ Units
  24. 24. SEZ Policy of 2000  New Policy in April 2000. SEZs permitted to be set up in the public, private, joint sector or by the State Governments  Minimum size of 1000 hectares (4 sq. miles)  Simplified procedures and more incentives
  25. 25.  Main measures were:  Conditions for automatic approval relaxed considerably  Customs procedures simplified  Units could produce items reserved for SSI units in domestic market  100% FDI investment for manufacturing  Profits could be repatriated fully  Freedom for sub-contracting  100% I.T. exemption for five years  Exemption from Central Excise Duty on capital goods, raw materials, consumable spares from domestic market  Reimbursement of CST paid on domestic purchases
  26. 26. Positive Impacts • To Nation – World class business environment – Increased FDI – Higher economic growth – Infrastructural development – Export growth – Employment Opportunities – Exposure to technology and global markets
  27. 27. Positive Impacts • TO Business houses – Hassle free operating environment – Single window clearance – Simplified procedure for setting up business, compliance proc with with self certification – Duty free import – Tax exemption- VAT, CST, ST, other levies – External commercial borrowings – 100% profit reptriation from export earnings
  28. 28. Positive Impacts • To People – Employment opportunities – Impact on lifestyle and standard of living – Business infrastructure combined with social facilities – Better work culture , good education, leadership vision
  29. 29. Hurdles • To Nation – Loss of revenue • To Business – Land acquisition – Single window actually is not – No strategic planning for electicity, water
  30. 30. Hurdles • To People – Grabbing of fertile land – Water scarcity- Threat to access – Food scarcity – Exploitation of labour – Landless farmers • To Environment  Mangrove destruction  Destruction of ground water recharge system  Pollution
  31. 31. SWOT ANALYSIS OF INDIAN SEZ  STRENGTH • Based on Western model or SEZ in China • An established legal redress system • Relatively low labour costs • Employment opportunities • India’s large English speaking and skilled workforce • Exposure to technology and global market
  32. 32. • Worldwide acceptance of capabilities in fields like • • • • • • Pharmaceutical manufacturing & research Clinical trials Manufacturing auto parts Engineering designing & consultancy, IT & ITES Malls and hotels Hospital • Financial & other institutional Networks like Insurance Companies
  33. 33.  WEAKNESS • Poor infrastructure and transport facilities • High cost of capital • Inadequate institutional support • Political changes • Inappropriate locations
  34. 34.  OPPORTUNITIES • An alternative manufacturing base, particularly compared to Chinese SEZs • Investments in core strength areas like IT and software products and services. • New small ports & airports are also being developed keeping SEZ concept in mind • A large NRI base who have traditionally invested less in Greenfield development in India
  35. 35.  THREATS • The pattern of buying & selling may not continue. With relocations of industries in other third world countries, new competitors will emerge • opposing interests • Prospect of even more restrictive labour laws being introduced • Increasing rejection rate for proposals to establish SEZs
  36. 36. Flow Chart for Setting up SEZ
  37. 37. Flow Chart for Setting up SEZ contd..
  38. 38. REASONS FOR FAILURE SEZs in India (ii) (iii) (iv) (v) (vi) Inadequate infrastructure Restrictive policies Lengthy procedures – No Single Window Locational disadvantages Stringent labour laws - 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.
  39. 39. SMALL SIZE OF EPZs
  40. 40. Current Status of SEZ’s in India
  41. 41. Performance of SEZ’s In India
  42. 42. The government does not provide information on jobs lost, only on jobs created. • Finance Minister P. Chidambaram wrote to Cabinet colleagues saying: “SPECIAL ECONOMIC ZONEs per se will distort land, capital, and labour cost, which will encourage relocation or shifting of industries in clever ways that can’t be stopped. This will be further aggravated by the proliferation of a large number of SPECIAL ECONOMIC ZONEs in and around metros.”)
  43. 43. Impact of the Special Economic Zone • • • • • • • Affluent of the industry will deteriorate physical condition of soil. The chemical affluents from the industries will also effect the bio-resources. The sub-surface and under ground water quality will be impaired, because of heavy metals etc., through the contaminated water from the surface. The fertile land will become unproductive for the agriculture. The environment will be affected by such pollution. The land value will be decreased. The Socio-economic conditions of the people in the area will be effected.
  44. 44. • Environment (Protection) Act is inapplicable to SPECIAL ECONOMIC ZONEs. No environmental clearance needed. • Violates Panchayat Raj Act (1996) for local self government. • Violates laws granting rights and control to Adivasi communities over their land. • Violates many international conventions on human rights.
  45. 45. CONCLUSION • SEZ policy has no doubt given a boost to the Indian Economy but comparison of implementation with other countries brings out lacunas in India’s SEZ Policy. • The reasons for disparities can be attributed to many reasons as listed below.  Improper SEZ policy  Irresponsible planning while locating SEZ  Ineffective Land Acquisition Policies  Improper Rehabilitation Policy
  46. 46. CONCLUSION • Key challenges in the SEZs programme will be •Due exercise of control while approving and locating SEZ’s. •Compensation for acquisition shall be on the basis of market prices . •Give share of acquired land in the developed area to the owners. •Provision of employment for Landless labourers . •Provision of revenue for ULBs on sharing basis to compensate their withdrawal once the area is notified as SEZ. •Development of SEZs needs to be integrated with existing Master Plans and Regional Plans. •There is need to develop regional/sub regional plan around the SEZ areas.
  47. 47. Thank you