Special Economic Zones (Sez) in India

5 May 2017

Special Economic Zones (Sez) in India. BY bradY237 Special Economic Zones (SEZ) in India. 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 ncluding 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.

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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 avourable 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 (‘E), Free Trade Zones (FTZ), Free Ports, Urban Enterprise Zones and others. Usually he 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), Noida (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 Handbook of Procedures, Vol. l . 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 14-1 F of the Handbook of Procedures, Vol. l 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. History of SEZ’S The world first known instance of SEZ have been found in an industrial park set up in Puerto Rico in 1947. In the 1960s, Ireland and Taiwan followed suit, but in the 1980s China made the SEZs gain global currency with its largest SEZ being the metropolis of Shenzhen.

From 1965 onwards, India experimented with the concept of such units in the form of Export Processing Zones (EPZ). But a revolution came in 2000, when Murlisone Maran, then Commerce Minister, made a tour to the southern provinces of China. After returning from the visit, he incorporated the SEZs into the Exim Policy of India. Five ear later, SEZ Act (2005) was also introduced and in 2006 SEZ Rules were formulated. Terms and Conditions Only units approved under SEZ scheme would be permitted to be located in SEZ. 1.

The SEZ units shall abide by local laws, rules, regulations or laws in regard to area planning, sewerage disposal, pollution control and the like. They shall also comply with industrial and labour laws as may be locally applicable. 2. Such SEZ shall make security arrangements to fulfill all the requirements of the laws, rules and procedures applicable to such SEZ. 3. The SEZ should have a minimum area of 1000 ectares and at least 35 % of the area is to be earmarked for developing industrial area for setting up of processing units. 4.

Minimum area of 1000 hectares will not be applicable to product specific and port/airport based SEZs. 5. Wherever the SEZs are landlocked, an Inland Container Depot (ICD) will be an integral part of SEZs. 6. Detailed guidelines on setting up of SEZ in the Private/Joint/State Sector is given in Appendix 14-11. N of Handbook of Procedures Volume l. A SEZ unit which has been set up for carrying on manufacturing, trading or service activity has both advantages as well as disadvantages. SEZ advantages are quite far more as compared to its disadvantages which are almost negligible.

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