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Write up for sez

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Megha Vijay

SEZs are geographically bounded zones with more liberal economic laws related to trade and exports compared to other parts of India. SEZs provide 100% income tax exemption for 5 years and other benefits like duty exemptions and single window clearance. They aim to increase foreign investment by providing world-class infrastructure and incentives. Currently there are 14 functional SEZs located across major cities in India that have attracted many businesses. SEZ units must achieve positive net foreign exchange and abide by regulations while enjoying tax and duty benefits. State governments play a role in recommending SEZ proposals to the central government.

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WRITE UP FOR SEZ Submitted by:- MEGHA VIJAY NUPUR BAGRIL Parul Sharma Section- C
Introduction A Special Economic Zone in short SEZ is a geographically bound zones where the economic laws in matters related to export and import are more broadminded and liberal as compared to rest parts of the country. SEZs are projected as duty free area for the purpose of trade, operations, duty and tariffs. SEZ units are self-contained and integrated having their own infrastructure and support services. Within SEZs, a units may be set-up for the manufacture of goods and other activities including processing, assembling, trading, repairing, reconditioning, making of gold/silver, platinum jewellery etc. As per law, SEZ units are deemed to be outside the customs territory of India. Goods and services coming into SEZs from the domestic tariff area or DTA are treated as exports from India and goods and services rendered from the SEZ to the DTA are treated as imports into India. Benefits of SEZ Apart from providing state-of-the-art infrastructure and access to a large well-trained and skilled work force, the SEZ also provides enterprises and developers with a favorable and attractive framework of incentives which include 100% income tax exemption for a period of five years and an additional 50% tax exemption for two years thereafter. Similarly, 100% FDI is also provided in the manufacturing sector. Exemption from industrial licensing requirements and no import license requirements is also given to the SEZ units. The area under 'SEZ' covers a wide range of zones, including Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Trade Zones (FTZ), Free Ports, Urban Enterprise Zones and others. Usually the goal of an SEZ structure is to increase foreign investment in the country. At present there are fourteen functional SEZs located at Santa Cruz (Maharashtra), Cochin (Kerala), Kandla and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta and Salt Lake (West Bengal), Nodia (Uttar Pradesh), Indore (Madhya Pradesh), Jaipur (Rajasthan), etc. Attractive incentive and great investment opportunities have attractive many business tycoons to step into the SEZ all over the country. The first step was taken by the Mahindra World City at Chennai. The SEZ was promoted by Mahindra & Mahindra Ltd and later on by the Tamil Nadu Industrial Development Corporation. Mahindra & Mahindra Ltd holds 89% equity in the same. Later on, Reliance Industries also signed a pact with the Haryana government for setting up of the Rs. 25,000 crore multi products SEZ near Gurgaon in 2006.
Obligations under SEZ Unit It is compulsory for every SEZ units in India to achieve positive net foreign exchange earning as per the formula given in paragraph Appendix 14-II (para 12.1) of Handbook of Procedures, Vol.1. For this particular purpose, a legal undertaking is required which has to be executed by a separate unit of the Development Commissioner. The is responsible for providing periodic reports to the Development Commissioner and Zone Customs as provided in Appendix 14-I F of the Handbook of Procedures, Vol.1 Role of State Government in Establishment of SEZ Units State Governments play a very active role to play in the establishment of SEZ unit. Any proposal for setting up of SEZ unit in the Private / Joint / State Sector is routed through the concerned State government who in turn forwards the same to the Department of Commerce with its recommendations for consideration. Before recommending any proposals to the Ministry of Commerce & Industry (Department of Commerce), the States Government properly checks all the necessary inputs such as water, electricity, etc required for the establishment of SEZ units. The State Government has to forward the proposal with its recommendation within 45 days from the date of receipt of such proposal to the Board of Approval. The applicant also has the option to submit the proposal directly to the Board of Approval. Representative of the State Government, who is a member of the Inter-Ministerial Committee on private SEZ, is also consulted while considering the proposal. 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. 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. 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. 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 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 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 Certain Provisions not to Apply to SEZ: After introduction of Special Economic Zones Rules,2006 following are not applicable to SEZ Chapter X-A Of The Customs Act, 1962 Special Economic Zones (Customs Procedure) Regulations, 2003 Special Economic Zones Rules,2003 Section 52 states that these will be withdrawn by issue of Notification.
QUESTIONS:- Q1) Why your SEZ so special ? Ans:- 100% income tax exemption. External commercial borrowing. Benefit to local supplier. Single window clearance. Q2) What are main issues? Ans:- Inadequate Infrastructure. Political Interference. Unethical Practices. Financial Ministry. Labour Exploitation.
Q3) What are the terms and condition of your SEZ? Ans:- Only units approved under SEZ scheme would be permitted to be located in SEZ. Shall abide by local laws, rules, regulations. Fullfill all the requirement . Q4) What are the advantages? Ans:- 15 year corporate tax holiday on export profit. Allowed to carry forward losses. Exemption from payment of service tax. Duty free import of goods foe setting up of the SEZ unit.

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Write up for sez

  • 1. WRITE UP FOR SEZ Submitted by:- MEGHA VIJAY NUPUR BAGRIL Parul Sharma Section- C
  • 2. Introduction A Special Economic Zone in short SEZ is a geographically bound zones where the economic laws in matters related to export and import are more broadminded and liberal as compared to rest parts of the country. SEZs are projected as duty free area for the purpose of trade, operations, duty and tariffs. SEZ units are self-contained and integrated having their own infrastructure and support services. Within SEZs, a units may be set-up for the manufacture of goods and other activities including processing, assembling, trading, repairing, reconditioning, making of gold/silver, platinum jewellery etc. As per law, SEZ units are deemed to be outside the customs territory of India. Goods and services coming into SEZs from the domestic tariff area or DTA are treated as exports from India and goods and services rendered from the SEZ to the DTA are treated as imports into India. Benefits of SEZ Apart from providing state-of-the-art infrastructure and access to a large well-trained and skilled work force, the SEZ also provides enterprises and developers with a favorable and attractive framework of incentives which include 100% income tax exemption for a period of five years and an additional 50% tax exemption for two years thereafter. Similarly, 100% FDI is also provided in the manufacturing sector. Exemption from industrial licensing requirements and no import license requirements is also given to the SEZ units. The area under 'SEZ' covers a wide range of zones, including Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Trade Zones (FTZ), Free Ports, Urban Enterprise Zones and others. Usually the goal of an SEZ structure is to increase foreign investment in the country. At present there are fourteen functional SEZs located at Santa Cruz (Maharashtra), Cochin (Kerala), Kandla and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta and Salt Lake (West Bengal), Nodia (Uttar Pradesh), Indore (Madhya Pradesh), Jaipur (Rajasthan), etc. Attractive incentive and great investment opportunities have attractive many business tycoons to step into the SEZ all over the country. The first step was taken by the Mahindra World City at Chennai. The SEZ was promoted by Mahindra & Mahindra Ltd and later on by the Tamil Nadu Industrial Development Corporation. Mahindra & Mahindra Ltd holds 89% equity in the same. Later on, Reliance Industries also signed a pact with the Haryana government for setting up of the Rs. 25,000 crore multi products SEZ near Gurgaon in 2006.
  • 3. Obligations under SEZ Unit It is compulsory for every SEZ units in India to achieve positive net foreign exchange earning as per the formula given in paragraph Appendix 14-II (para 12.1) of Handbook of Procedures, Vol.1. For this particular purpose, a legal undertaking is required which has to be executed by a separate unit of the Development Commissioner. The is responsible for providing periodic reports to the Development Commissioner and Zone Customs as provided in Appendix 14-I F of the Handbook of Procedures, Vol.1 Role of State Government in Establishment of SEZ Units State Governments play a very active role to play in the establishment of SEZ unit. Any proposal for setting up of SEZ unit in the Private / Joint / State Sector is routed through the concerned State government who in turn forwards the same to the Department of Commerce with its recommendations for consideration. Before recommending any proposals to the Ministry of Commerce & Industry (Department of Commerce), the States Government properly checks all the necessary inputs such as water, electricity, etc required for the establishment of SEZ units. The State Government has to forward the proposal with its recommendation within 45 days from the date of receipt of such proposal to the Board of Approval. The applicant also has the option to submit the proposal directly to the Board of Approval. Representative of the State Government, who is a member of the Inter-Ministerial Committee on private SEZ, is also consulted while considering the proposal. 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. FACILITIES NOTIFIED FOR SEZ UNITS No license required for import. In addition to manufacturing, trading and services also allowed. Freedom to subcontract.
  • 4. Single window approval by Development Commissioner of the zone. 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. 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 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 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 Certain Provisions not to Apply to SEZ: After introduction of Special Economic Zones Rules,2006 following are not applicable to SEZ Chapter X-A Of The Customs Act, 1962 Special Economic Zones (Customs Procedure) Regulations, 2003 Special Economic Zones Rules,2003 Section 52 states that these will be withdrawn by issue of Notification.
  • 5. QUESTIONS:- Q1) Why your SEZ so special ? Ans:- 100% income tax exemption. External commercial borrowing. Benefit to local supplier. Single window clearance. Q2) What are main issues? Ans:- Inadequate Infrastructure. Political Interference. Unethical Practices. Financial Ministry. Labour Exploitation.
  • 6. Q3) What are the terms and condition of your SEZ? Ans:- Only units approved under SEZ scheme would be permitted to be located in SEZ. Shall abide by local laws, rules, regulations. Fullfill all the requirement . Q4) What are the advantages? Ans:- 15 year corporate tax holiday on export profit. Allowed to carry forward losses. Exemption from payment of service tax. Duty free import of goods foe setting up of the SEZ unit.