chi_ip n sez

8/8/2019 chi_IP n SEZ

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INDUSTRIAL PARKS AND SEZ


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WH AT IS INDUSTRIAL PARKS

y An industrial park is an area zoned and planned for thepurpose of industrial development.

y L ocated outside the residential area of a city

y provided with good transportation access


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Featuresy D edicated infrastructure in a delimited areay Attract new business by providing an integrated

infrastructure in one locationy

Set aside industrial uses fromurban areasy Reduce the environmental and social impact of the industrial

uses.y L ocalized environmental controls


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Gov t. Policyy Introduced by the Government of India in 1997.

y Objective was to give impetus to the infrastructure sector.

y The scheme was revised in 2002 and was valid up to March 2006.

y The scheme extends 100% tax holiday on profits derived by an undertaking from theactivity of developing, developing and operating, or maintaining and operating anIndustrial Park and is applicable to allIndustrial Parks set up between April 1, 2006 andMarch 31, 2009.

y The objective of providing a tax holiday is to promote and encouragecapital investment.The industrial units set up under the new scheme can undertake certain specifiedmanufacturingactivities.

y To gain the tax benefits, adeveloper essentially needs to comply with certain conditions,such as minimum requirement of 30 units, all units of same group would be consideredas a single unit, a single unit cannot occupy more than 25% of total area, minimum areaof 50,000 square metres (540,000 sq ft) needs to be developed, etc.


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WH AT IS SEZy A Special Economic Zone (SEZ) is a geographical region that

has economic laws that are more liberal than a country'stypical economic laws

y

SEZs inI

ndia seek to promote the value addition componentin exports, generate employment as well as mobilize foreignexchange


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OBJECTIVES of SEZy (a) Generation of additional economic activity y (b) Promotion of exports of goods and servicesy (c) Promotion of investment from domestic and foreign

sourcesy (d) Creation of employment opportunitiesy (e) D evelopment of infrastructure facilities


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ROUTES FOR FOREIGN DIRECTINVESTMENT

y A utomatic Route

y FIPB Route

y CCFI Route


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APPR OVAL MECH ANISMy The Board of Approval is the apex body in theD epartmenty The Unit Approval Committee at the Zonal level dealing

with approval of units in the SEZs and other related issues,

and each Zone is headed by aD

evelopment Commissioner,who also heads the Unity Approval Committee.


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SEZ In st itut ion a l Framew o rk- Over view


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INCENTIVE/ FACILITIES TO SEZENTERPRISESy O perational advantagesy Fiscal advantagesy Customs and Excisey Income taxy Foreign Direct Investmenty Banking / Insurance/External Commercial

Borrowings

N EXT


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Op erat ion a l ad va n tages

y Sectoral restrictions on manufacturing sector inapplicablewithin SEZ

y All SEZ activities on self certification basisy

Single window clearancey Inter unit transfer of goods permittedy N o routine customs examination of export and import cargoy Forward looking labour laws under consideration

BACK


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Fis ca l ad va n tages

y 100% FDI for manufacturing units operating inside SEZs throughautomatic approval route in almost every sector

y 100% profit repatriation facility from export earningsy Permission to sell withinD omestic Tariff Area (D TA) and an

exemption from a Special AdditionD

uty (SAD

) subject to thecompany having a positiveN et Foreign Exchange Position (N FEP)y Supplies fromD TAs to be treated as exports while those from

SEZs toD TAs to be treated as importsy Investments in SEZ treated as infrastructure development and

eligible for exemption local inputs at reduced cost without theexcise, VAT and other levies of India

y D uty free import of materials for construction, capital goods andgoods required for O&M

BACK


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Cust oms a n d Excise

y SEZ 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,D G sets etc. forimplementation of their project in the Zone without any license orspecific approval.

y Duty free import/domestic procurement of goods for setting up of SEZunits.

y Goods imported/procured locally duty free could be utilized over theapproval period of 5 years.

y D omestic sales by SEZ units will now be exempt from SAD .y D omestic sale of finished products, by-products on payment of

applicable Custom duty.y D omestic sale rejects and waste and scrap on payment of applicable

Custom duty on the transaction value.

BACK


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Inco me ta x

y Physical export benefity 100% IT exemption (10A) for first 5 years and 50% for 2

years thereafter.y

Reinvestment allowance to the extend of 50% of ploughed back profitsy Carry forward of losses

BACK


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Fo re ig n D ire c t Investme n t

y 100% foreign direct investment is under the automatic routeis allowed in manufacturing sector in SEZ units except armsand ammunition,explosive, atomic substance, narcotics andhazardous chemicals,distillation and brewing of alcoholicdrinks and cigarettes , cigars and manufactured tobaccosubstitutes.

y N o cap on foreign investments for SSI reserved items.

BACK


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Ba n kin g / In sura n ce /Ex ter n a l Commer cia l Bo rrowin gsy Setting up Off-shore Banking Units allowed in SEZsy OBUs allowed 100%Income Tax exemption on profit for 3 years

and 50 % for next two yearsy External commercial borrowings by units up to $ 500 million a

year allowed without any maturity restrictionsy Freedom to bring in export proceeds without any time limity Flexibility to keep 100% of export proceeds in EEFC accounty Freedom to make overseas investment from ity

Commodity hedging permittedy Exemption from interest rate surcharge on import financey SEZ units allowed to write-off unrealized export bills

BACK


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SEZ In vestme n ts (state-w ise)

Maharashtra9%

Karnataka

8%

Andhra Pradesh8%

Haryana64%

Gujarat5%

TamilN adu1%

Uttar Pradesh0%

West

engal3%

Orissa2%

Rajasthan0%

S EZ INVESTM ENTS

Maharashtra

KarnatakaAndhra Pradesh

Haryana

Gujarat

Tamil N adu

Uttar Pradesh

est Bengal

Orissa

Rajasthan


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Loc at ion Of SEZ in In d iay Santacruz (Maharashtra)y Cochin (Kerala)y Kandla and Surat (Gujarat)y Chennai (TamilN adu)y Visakhapatnam ( Andhra Pradesh)y Falta ( est Bengal)y N oida ( Uttar Pradesh)y Indore (Madhya Pradesh)


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Future Loc at ion sy N avi Mumbai and Kopata (Maharashtra)y N anguneri (TamilN adu)y Kulpi and SaltL ake ( est Bengal)y Paradeep and Gopalpur (Orissa)y Bhadohi, Kanpur, Moradabad and GreaterN oida (U.P.)y Vishakhapatnam and Kakinada (Andhra Pradesh)y Vallarpadam/Puthuvypeen (Kerala)y Hassan ( Karnataka)y Jaipur and Jodhpur ( Rajasthan)


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