Law of export processing zones

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Law of export processing zones

  1. 1. Law of Export Processing Zones Dr. Tabrez Ahmad Professor of Law Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 1
  2. 2. Agenda  Introduction  Special Support  Objective  Indicative List of Industries  Setting up firms in EPZ  Facilities  Imports to EPZ  Incentives offered in EPZ Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 2
  3. 3. Introduction 1. 2. 3. 4. 5. 6. EPZ stands for Export Processing Zone. Export Processing zones proliferated in the late 20th century. Most EPZs located in developing countries. EPZs employing increased from 22.5 to 43 million people in 2003. The basic objectives of EPZs to enhance foreign exchange earnings and to generate employment opportunities. EPZs also known as Special Economic Zones in some countries. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 3
  4. 4. Intro… Some countries have created special authority for EPZ called as Export Processing Zone Authority. Just like the official body to promote, attract and facilitate foreign investment in EPZs. Few governments have adopted an 'Open Door Policy' to attract foreign investment. An EPZ is defined as a territorial or economic enclave in which goods may be imported and manufactured. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 4
  5. 5. EPZ Special Support:      Plots/factory BLDG in custom bonded area Infrastructural facilities Administrative facilities Fiscal & non-fiscal incentives EPZ attracts : foreign & local investment Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 5
  6. 6. Objective:  Provide special areas where potential investors would find a congenial investment climate & free from cumbersome procedures.  Promotion of foreign (FDI) & local investment  Diversifiaction of export  Dev. OF backward & forward linkages  Generation of employment  Transfer of technology  Upgradation of skill  Development of management Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 6
  7. 7. Indicative List of Industries: Backward and forward linkage Industries Garments and Garments Accessories Agro-based Industries Woven and Knitted Fabrics Leather Products and Foot-Wear Medical and Biological Instruments Engineering Products Pharmaceutical Products Products Industries based on new uses of Jute Cutting/Polishing of Precious and Semi Household Fittings and Equipment Horological Instruments Scientific Measuring Instruments Do-it-yourself Tools and Equipment Printing and Copying Equipment & Accessories Textile Chemicals Software Optical Goods Electronic Products Toys Head-Wear Plastic Moulded Precious stones Jewellery Laboratory Ware Aircraft Instruments Musical instruments Printing and Publishing NB: This list is not exhaustive, only indicative. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 7
  8. 8. Setting up firms in EPZ  India allows foreign investment in EPZs in convertible foreign currencies with the option of establishing public or private limited companies, or sole proprietorship or partnership undertakings. Industries allowed to be established in EPZs are classified as follows: (a) Type A: 100 per cent foreign-owned firms, including investment by Indian nationals ordinarily resident abroad. Such as NIKE, REEBOK, ADIDAS. (b) Type B: Joint venture projects between foreign and Indian entrepreneurs resident in India. Such as , Falcon. (c) Type C: 100 per cent Indian entrepreneurs resident in India. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 8
  9. 9. Incentives offered in EPZ  Fiscal incentives  Tax holiday for 10 years;  Exemption of income tax on interest on borrowed capital;  Relief from double taxation subject to bilateral agreements;  Complete exemption from dividend tax  Exemption of income tax on salaries  Duty-free import of machinery;  Non-fiscal incentives  Project expansion and product diversification without permission;  Off-shore, local and international banking facilities;  Freedom from national import policy restrictions;  Expeditious import of raw materials on a documentary acceptance basis;  Back-to-back letter of credit for the import of raw materials Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 9
  10. 10. Facilities  Secured and protected industrial area;  Land and factory buildings for rent;  Electricity, telecommunication, gas and water facilities;  Export and import permits issued in one day;  Work permits for foreign nationals; Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 10
  11. 11. Exports from EPZ  Sales of Bangladesh goods against payment in foreign currency are treated as exports.  Concerning the repatriation of export procedures.  exports made from EPZs must be declared to Customs using export forms .  as per conditions of export letter of credit/ export agreement will be treated as valid documents  air waybill and other title documents of export consignments Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 11
  12. 12. Imports to EPZ  EPZ enterprises must submit six copies of an import declaration.  The import declaration will be registered in the customs station.  Then, five copies of the declaration will be handed over to the importer or authorized agent.  The import declaration will be endorsed as "Passed out of Customs Control" by an authorized officer.  The goods will be escorted from the port to the EPZ enterprises without examination. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 12
  13. 13. Labour Issues in EPZ  EPZ Authority is vested with the responsibility to administer labour matters for all enterprises located in EPZs  Minimum Wages may be fixed for  Skilled  Unskilled  Trainee etc. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 13
  14. 14. Why Invest in EPZ • LAW & ORDER SITUATION  INFRASTRUCTURE FACILITIES  REDUCTION OF LEAD TIME  COST OF DOING BUSINESS • FRIENDLY POLICY OF GOVT  INCENTIVES  WIN – WIN VENTURES Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in 14
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