PPT ECONOMICS

8/7/2019 PPT ECONOMICS

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Liberal economical laws

Duty-free areas

Own infrastructure & support services

Conducive atmosphere to promote investment and exports

SPECIAL ECONOMIC ZONE

(SEZ)


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The category SEZ includes following Zones:

Free Trade Zones (FTZ)

Export Processing Zones (EPZ)

Free Zones (FZ)

Industrial Estates (IE)

Free Ports

Urban Enterprise zones and others


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OBJECTIVES


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OBJECTIVES:

Creation of employment opportunities

Promotion of investment from domestic & foreign sources

Development of infrastructure facilities

Generation of additional economic activity

Promotion of exports of goods & services


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SEZS IN INDIA


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MAJOR REAL ESTATE

SEZ DEVELOPERS


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DLF

HDIL

Parsvnath Omaxe

BPTP Real Estate

Ansal API

MAJOR REAL ESTATE SEZ DEVELOPERS

Panchshil Realty Group

Adarsh Builders

Reliance India

CIDCO

Raheja Developers


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WHO CANSET UP SEZ?


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WHO CAN SET UP SEZ?

Central Government State Government

Private/Public CompanyForeign Company

Jointly by any of the above


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APPROVAL MECHANISM


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DEVELOPER

STATE GOVT

BOA

APPROVAL

MECHANISM

Proposal

Recommendation


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APPROVAL MECHANISM:

The developer submits the proposal for establishment of SEZ

to the concerned State government.

The State Govt. has to forward the proposal with its

recommendation within 45 days of the receipt of the proposal

to the Board of Approval (BOA)

Optional facility to submit the proposal directly to the BOA


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ADMINISTRATIVE SET UP


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BOARD OF APPROVAL

APPROVAL COMMITTEE

SEZ UNITS



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TERMS &CONDITIONS


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TERMS & CONDITIONS:

SEZ: Minimum area of 1000 hectares

Above condition will not be applicable to product specific and

port/airport based SEZs.

Unit should be approved under SEZ scheme

Security arrangements should be adequate as per standards

An Inland Container Depot (ICD) will be an integral part of SEZs

Abide Local laws, Rules and Regulations


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ADVANTAGES &

INCENTIVES


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OPERATIONAL FISCAL

FDIINCOME TAX

CUSTOM & EXCISE

ADVANTAGES & INCENTIVES


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OPERATIONAL ADVANTAGES:

Sectoral restrictions on manufacturing sector inapplicable

within SEZ

All SEZ activities on self certification basis

Single window clearance

Inter unit transfer of goods permitted

No routine customs examination of export and import cargo

Forward looking labor laws under consideration


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FISCAL ADVANTAGES:

100% FDI for manufacturing units operating inside SEZsthrough automatic approval route in almost every sector.

100% profit repatriation facility from export earnings

permission to sell within Domestic Tariff Area (DTA) and an

exemption from a Special Addition

Duty (SAD) subject to the company having a positive Net

Foreign Exchange Position (NFEP)


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CUSTOMS AND EXCISE:

ySEZ units may import or procure from the domestic sources,

duty free, all their requirements of capital goods, raw

materials, consumables, spares, packing materials, office

equipment, DG sets etc. for implementation of their project in

the Zone without any license or specific approval.

y

Duty free import/domestic procurement of goods for settingup of SEZ units.

yGoods imported/procured locally duty free could be utilized

over the approval period of 5 years.


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Physical export benefit

100% IT exemption (10A) for first 5 years and 50% for 2 years therea

Reinvestment allowance to the extend of 50% of ploughed back pro

Carry forward of losses

Foreign Direct Investment: 100% foreign direct investment is under the automatic route is

allowed in manufacturing sector in SEZ units except arms and

ammunition, explosive, atomic substance, narcotics and

hazardous chemicals, distillation and brewing of alcoholic drinks


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treated as exports while those

from SEZs to DTAs to be treated

as imports

investments in SEZ treated as

infrastructure development and

eligible for exemption

local inputs at reduced cost

without the excise, VAT and

other levies of India

duty free import of materials for

construction, capital goods and


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BANKING / INSURANCE/EXTERNAL COMMERCIAL BORROWINGS:

Setting up Off-shore Banking Units allowed in SEZs.

OBUs allowed 100% Income Tax exemption on profit for 3

years and 50 % for next two years

External commercial borrowings by units up to $ 500 million

a year allowed without any maturity restrictions

No time limit for export proceeds

Flexibility to keep 100% of export proceeds in EEFC account.

Freedom to make overseas investment from it.


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SERVICE TAX:

Exemption from Service Tax to SEZ units

ENVIRONMENT:

Non-polluting industries in IT are allowed, facilities like golf courses, desalination

plants, hotels and non-polluting service industries in the Coastal Regulation Zone

area

Exemption from public hearing under Environment Impact Assessment Notification

DRUGS AND COSMETICS:

Exemption from port restriction under Drugs & Cosmetics Rules.


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SUB-CONTRACTING/CONTRACT FARMING:

SEZ units may sub-contract part of production or production process through

units in the Domestic Tariff Area or through other EOU/SEZ units

SEZ units may also sub-contract part of their production process abroad.

Agriculture/Horticulture processing SEZ units allowed to provide inputs and

equipments to contract farmers in DTA to promote production of goods as per

the requirement of importing countries.

COMPANIES ACT:

Enhanced limit of Rs. 2.4 crores per annum allowed for managerial

remuneration

Agreement to opening of Regional office of Registrar of Companies in SEZs.

Exemption from requirement of domicile in India for 12 months prior to

appointment as Director.


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DISADVANTAGES


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SEZs would result in the Finance Ministry losing revenue to

the tune of over Rs.1,00,000 Cr annually due to various tax

concessions and exemptions.

The SEZs are mainly coming up in Maharashtra, Gujarat,

Tamilnadu, Karnataka, Haryana, Orissa. This could lead to

regional imbalances.

Eg: No SEZ has yet come up in the North-east region which

already suffers from the problem of alienation.

DISADVANTAGES


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In India, farmers are emotional about the land that they have farmed for

years and just giving it up is not something that can be easily digested. They

are unhappy with the compensation.

Huge tracts of agricultural and forested land will be converted for industrial

purposes for the setting up of SEZs which affects the ecological system.

Clusters of development - promoting heightened economic activity can widen

the already existing gap between developed and impoverished areas.

Employee Working Conditions Since relaxed labor laws are applicable in the

SEZs, workers enjoy no rights including the fundamental rights of association

and protests.


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CONTROVERSIES


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EXPORT PERFORMANCE


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8552 9190 1005313854

1830922840

34615

66638

125950

0

20000

40000

60000

80000

100000

120000

140000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

rend In Export performance of SEZs

Exports (In Cr)

EXPORT PERFORMANC E

OF INDIAN SEZS


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7%9%

39%

32%

25%

52%

92% 89%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Percentage Growth in Exports

Growth Rate (%)

EXPORT PERFORMANCE

OF INDIAN SEZS (%)


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Electronics

19%

Engineering

4%

Gems and Jewellery

46%

Chemicals and

Pharmaceuticals

3%

Plastic and Rub ber

1%

Food and Agro

2%

Trading and Service

7%

Textiles and Garments

4%

Others

14%

Sector-Wise Exports (06-07)

SECTOR WISE PERFORMANCE

OF INDIAN SEZS (06 07)


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Electronics

23%

Engineering

3%

Gems and Jewellery

35%

Drugs and

Pharmaceuticals

2%

Plastic

and

Rubber

1%

Food and Agro

1%

Trading and S ervice31%

Textiles & Garments

2%Others

2%

Sector-Wise Exports (07-08)

SECTOR WISE PERFORMANCE

OF INDIAN SEZS (07 08)


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4.20% 4.40% 3.90%4.70%

5.10% 5.13%

6.14%

10.17%

15.73%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

SEZ Exports As % Share of Total Exports

EXPORT PERFORMANCE

OF INDIAN SEZS


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FOREIGN DIRECT

INVESTMENT


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FOREIGN DIRECT INVESTMENT

Foreign direct investment (FDI) has attracted over Rs. 10,900

Crore in the last three years

TOTAL INVESTMENT IN SEZTotal investment in Special Economic Zones as of 30.6. 2008:

Rs. 81093 Crore


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RECENT NEWS


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Flaws in SEZ policy forcing major players to plan exit

(10th Oct 09)

SEZ exports doubles in first fiscal despite

contraction in World Trade

(11th Nov 09)

(Ref.: www.indianrealitynews.com)

RECENT NEWS


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