1) Special Economic Zones (SEZs) in India aim to provide internationally competitive environments to increase exports, attract foreign direct investment, and enhance economic growth. 2) The approach includes special fiscal incentives for private developers, infrastructure support from state governments, and attractive facilities for setting up business units. A single window system streamlines central and state regulations. 3) Developers and business units in SEZs receive various tax exemptions and other benefits like duty-free imports. State policies provide further incentives to encourage the development of SEZs across the country.

1. Special Economic Zones in India
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2. SEZ AND WORLD TRADE
SEZ exports in 2000 : 850 billion
• China : 45%
• Indonesia : 10%
• Philippines : 57%
• Costa Rica : 56%
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3. ROLE OF SEZS IN INDIAN ECONOMY
• to provide internationally competitive
environment
• to increase share in global exports
• to encourage FDI and enhance GDP
• to act as laboratories for changes in our
policies.
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4. OUR APPROACH
• Special fiscal regime, to attract private
investments for developers
• GOI and SG to develop the external
infrastructure
• Attractive facilities for setting up units
• Key role for State Government and private
sector in the development of SEZs
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5. OUR APPROACH (contd.)
• Deregulation and single window for State and
Central laws
• Legal framework : windows in existing laws
leading to Special Central and State
legislation for SEZ
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6. LEGAL AND POLICY FRAMEWORK-
AN UPDATE
• Developer of SEZ
• Units in SEZs
• DTA supplier
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7. DEVELOPER OF SEZ
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8. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs
• 100% FDI allowed for:
(b) townships with residential, educational
and recreational facilities
(b) franchise for basic telephone service in
SEZ.
• Income Tax exemption to developers for
any block of 10 years in 15 years
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9. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs (Contd)
• Duty free import/domestic procurement of
goods for development, operation and
maintenance of SEZs
• Exemption from Service Tax and the Central
Sales Tax
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10. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs (Contd)
• Income of infrastructure capital fund/co.
from investment in SEZ exempt from Income
Tax
• Investment made by individuals etc in a SEZ
also eligible for exemption under section 88
of Income Tax Act
• Developer permitted to transfer
infrastructure facility for Operation and
Maintainence, inclusive of Income Tax
benefits
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11. FACILITIES NOTIFIED FOR
DEVELOPERS OF SEZs (Contd)
• Guidelines issued on generation, transmission and
distribution of power in SEZs
• Allocation of power to SEZs from central quota
• Freedom in allocation of space and built up area to
approved SEZ units on commercial basis.
• Authorised to provide and maintain services like
water, electricity, security, restaurants and
recreation centres on commercial lines.
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12. UNITS IN A SEZ
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13. FACILITIES NOTIFIED FOR
SEZ UNITS
• No license required for import.
• In addition to manufacturing, trading
and services also allowed.
• Freedom to subcontract.
• Single window approval by
Development Commissioner of the
zone.
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14. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
• No license needed to manufacture items
reserved for SSI sector
• 100% FDI allowed in manufacturing
through automatic route except in sectors
such as defense, atomic energy.
• No cap on foreign investments for items
reserved for SSI.
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15. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Under FEMA
• Guidelines issued by RBI in Nov 2002 for
setting up Off-shore Banking Units in
SEZs.
• External commercial borrowings by units
allowed without any maturity restrictions.
• Freedom to bring in export proceeds
without any time limit
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16. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Under FEMA (contd.)
• Freedom to make overseas investment
• Insurance outside India allowed
• Capitalisation of import payables
• Commodity hedging permitted.
• Foreign cos permitted to set up
branches for manufacturing activities
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17. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Customs and Excise :
• Duty free import or domestic
procurement of goods for development,
operation and maintenance of SEZ units.
Central Sales Tax Act :
• Exemption to sales made from Domestic
Tariff Area to SEZ units.
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18. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Income Tax Act:
• 100% IT exemption (10A) for first 5 years,
50% for 2 years thereafter and 50% of
reinvestment for 3 years
• Permitted to carry forward losses
• Offshore Banking Units allowed to have full
IT exemption for 3 years and 50% for next
two years.
Service Tax:
• Exemption from Service Tax to SEZ units.
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19. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Environment
• Permitted facilities like golf
courses, de-salination plants,
hotels and non-polluting service
industries in the Coastal
Regulation Zone area
• Exemption from public hearing
under Environment Impact
Assessment Notification.
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20. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Drugs and Cosmetics :
• Exemption from port restriction
under Drugs & Cosmetics Rules
• Single window mechanism in
Zones having such units
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21. FACILITIES NOTIFIED FOR
SEZ UNITS (Contd.)
Companies Act :
• SEZ to have Regional office of Registrar of
Companies.
• Exemption from requirement of domicile in
India for 12 months prior to appointment
as Director.
• Enhanced limit of Rs. 2.4 crores per
annum allowed for managerial
remuneration
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22. FACILITIES NOTIFIED FOR
DTA SUPPLIER
Supplies from Domestic Tariff Area
(DTA) to SEZ to be treated as physical
export under IT, Customs and CST Act
DTA supplier entitled to :
• Drawback/DEPB
• CST Exemption
• Exemption from State levies
• Discharge of its EP
• IT exemption u/s 80HHC
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23. PROGRESS – STATE POLICY
• AP ,UP, Maharashtra, Madhya Pradesh, Gujarat ,
Karnataka , Rajasthan and TN announced SEZ
Policy.
• Enabling notifications issued by Maharashtra, MP,
AP, Rajasthan and UP
• UP and MP have enacted State SEZ Act ; Gujarat
and Maharashtra likely to do in near future
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24. FEATURES OF STATE SEZ POLICY:
• Exemption from state sales tax /VAT and other
state levies
• Exemption from electricity duty
• Single window approval for state level clearances
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25. FEATURE OF STATE SEZ POLICY
(Contd.)
• Declaration of Development Commissioner
as Labour Commissioner under the
Industrial Disputes Act.
• Simplification of returns and inspection
systems.
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26. COMMITMENTS FOR THE
IMMEDIATE FUTURE
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27. GOVERNMENT OF INDIA
• Enactment of Central SEZ Act
• Exemption of the SEZs from restrictive labour laws
• Facilitation of external infrastructure needs
• Special emphasis on sector specific and port based
SEZs
• Domestic and External marketing of SEZs
• Working with State Governments for State
SEZ legislation
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28. PROGRESS-PHYSICAL
All 8 EPZs converted into SEZs :-
• Kandla ( Gujarat) : 1965 (625 Acres)
• Seepz( Maharashtra) : 1975 (110 Acres)
• Noida (U P) : 1986 (310 Acres)
• Madras ( T N) : 1986 (262 Acres)
• Cochin ( Kerala ) : 1986 (103 Acres)
• Falta ( W B) : 1986 (280 Acres)
• Visakhapatnam( AP) : 1994 (360 Acres)
• Surat ( Gujarat ) : 1998 (103 Acres)
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29. PROGRESS-PHYSICAL (contd)
Formal Approvals Given to SEZs
• Indore ( Madhya Pradesh)
• Navi-Mumbai (Maharashtra)
• Sitapura (Jaipur)
• Positra (Gujarat)
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30. 15 SEZ approved in principle:
• Maha-Mumbai ( Maharashtra )
• Vallarpadam/Puthuvypeen (Kerala)
• Moradabad (U.P.)
• Jodhpur(Rajasthan)
• Nangunery ( T N)
• Paradeep & Gopalpur (Orissa)
• Kulpi and Salt Lake (W B)
• Bhadohi, Kanpur, Greater NOIDA
• Visakhapatnam and Kakinada, (A P)
• Hassan ( Karnataka)
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31. FOR DETAILS VISIT
WWW.SEZINDIA.NIC.IN
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32. THANK YOU
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