presentation on sez concept in india

8/7/2019 Presentation on SEZ Concept in India

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Special EconomicSpecial Economic

Zones (SEZ) in IndiaZones (SEZ) in India

1SEZ in India



Concept and Meaning of SEZConcept and Meaning of SEZ

India was one of the first in Asia to recognize theIndia was one of the first in Asia to recognize theeffectiveness of the Export Processing Zone (EPZ)effectiveness of the Export Processing Zone (EPZ)model in promoting exports, with Asias first EPZ set model in promoting exports, with Asias first EPZ set up in Kandla in 1965.up in Kandla in 1965.

With a view to overcome the shortcomingsWith a view to overcome the shortcomingsexperienced on account of the multiplicity of controlsexperienced on account of the multiplicity of controlsand clearances; absence of worldand clearances; absence of world--class infrastructure,class infrastructure,andand an unstable fiscal regime and with a view toan unstable fiscal regime and with a view toattract larger foreign investments in India, theattract larger foreign investments in India, the

Special Economic Zones (SEZs) PolicySpecial Economic Zones (SEZs) Policy waswasannounced in April 2000announced in April 2000

2SEZ in India



Definition of SEZDefinition of SEZ

SEZ in India

3

SpecialSpecial EconomicEconomic ZoneZone meansmeans anan areaarea thatthat hashas beenbeen specifiedspecified asasanan enclaveenclave thatthat isis dutyduty freefree andand isis treatedtreated asas aa foreignforeign territoryterritoryforfor variousvarious purposespurposes suchsuch asas tariffs,tariffs, tradetrade operations,operations, andand dutiesduties..

A A SpecialSpecial EconomicEconomic ZoneZone (SEZ)(SEZ) hashas economiceconomic lawslaws thatthat areare moremore

liberalliberal thanthan aa country'scountry's typicaltypical economiceconomic lawslaws..

TheThe categorycategory 'SEZ''SEZ' coverscovers aa broadbroad rangerange ofof specificspecific zonezone

SEZSEZ includesincludes FreeFree TradeTrade ZonesZones (FTZ),(FTZ), ExportExport ProcessingProcessing ZonesZones(EPZ),(EPZ), FreeFree ZonesZones (FZ),(FZ), IndustrialIndustrial EstatesEstates (IE),(IE), FreeFree Ports,Ports, UrbanUrbanEnterpriseEnterprise ZonesZones andand othersothers..



History of Special Economic ZonesHistory of Special Economic Zones

FromFrom 19651965 onwards,onwards, IndiaIndia experimentedexperimented withwith thetheconceptconcept ofof suchsuch unitsunits inin thethe formform ofof ExportExport ProcessingProcessingZonesZones (EPZ)(EPZ)..

ButBut aa revolutionrevolution camecame inin 20002000,, whenwhen MurlisoneMurlisone MaranMaran,,

thenthenC

ommerceC

ommerce Minister,Minister, mademade aa tourtour toto thethe southernsouthernprovincesprovinces ofof ChinaChina.. After After returningreturning fromfrom thethe visit,visit, heheincorporatedincorporated thethe SEZsSEZs intointo thethe EximExim PolicyPolicy ofof IndiaIndia.. FiveFiveyearyear later,later, SEZSEZ Act Act ((20052005)) waswas alsoalso introducedintroduced andand inin20062006 SEZSEZ RulesRules werewere formulatedformulated..

4SEZ in India



objectives of setting upobjectives of setting up SEZ in IndiaSEZ in India

Generation of additional economic activityGeneration of additional economic activity Promotion of exports of goods and servicesPromotion of exports of goods and services Promotion of investment from domestic and foreign sourcesPromotion of investment from domestic and foreign sources Creation of employment Creation of employment Development of infrastructure facilitiesDevelopment of infrastructure facilities Simplified procedures for development, operation, and maintenance of Simplified procedures for development, operation, and maintenance of

the Special Economic Zones and for setting up units and conductingthe Special Economic Zones and for setting up units and conductingbusinessbusiness

Single window clearance for setting up of a SEZ and an unit in SEZSingle window clearance for setting up of a SEZ and an unit in SEZ Single window clearance on matters relating to Central as well as StateSingle window clearance on matters relating to Central as well as State

GovernmentsGovernments Easy and simplified compliance procedures and documentations withEasy and simplified compliance procedures and documentations with

stress on self certificationstress on self certification

5SEZ in India



Benefits from SEZsBenefits from SEZs Investment of the order of Rs.100,000 crore includingInvestment of the order of Rs.100,000 crore including

FDI of US $ 5FDI of US $ 5--6 billion by the end of December 2007,6 billion by the end of December 2007,andand

500,000 direct jobs by December 2007.500,000 direct jobs by December 2007.

At present, 1016 units are in operation in the SEZs, At present, 1016 units are in operation in the SEZs,

providing direct employment to over 1.79 lakh persons;providing direct employment to over 1.79 lakh persons;about 40 per cent of whom are women.about 40 per cent of whom are women.

Exports from the SEZs during the 10Exports from the SEZs during the 10--year period couldyear period couldtouch 352 billion dollars, nearly half of Indias totaltouch 352 billion dollars, nearly half of Indias totalannual exports, with IT and ITeS SEZs contributing 30annual exports, with IT and ITeS SEZs contributing 30

per cent at 105 billion dollarsper cent at 105 billion dollars

6SEZ in India



Facilities of SEZ in IndiaFacilities of SEZ in India

SEZ in India

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Facilitated with out Facilitated with out--sourcing of subcontract capacities for export production against orderssourcing of subcontract capacities for export production against orderssecured by other SME unitssecured by other SME units

All SEZ units, (excluding gems and jewelry units) may sell goods up to 50% of FOB value of All SEZ units, (excluding gems and jewelry units) may sell goods up to 50% of FOB value of exports subject to fulfillment of positive NFE on payment of concessional duties. Within theexports subject to fulfillment of positive NFE on payment of concessional duties. Within theentitlement of domestic tariff area (DTA) sale, the unit may sell in DTA its products similarentitlement of domestic tariff area (DTA) sale, the unit may sell in DTA its products similarto the goods, which are exported or expected to be exported from the unitsto the goods, which are exported or expected to be exported from the units

Facilitated with out Facilitated with out--sourcing of subcontract of production or part of production process tosourcing of subcontract of production or part of production process toIndian or any foreign unitsIndian or any foreign units

Sale to direct tariff agreement is subject to mandatory requirement of registration forSale to direct tariff agreement is subject to mandatory requirement of registration forpharmaceutical products and inclusive of bulk drugspharmaceutical products and inclusive of bulk drugs

For Software services units, the sale in the DTA in any mode, including on line dataFor Software services units, the sale in the DTA in any mode, including on line data

communication shall be permitted up to 50% of FOB value of exports and / or 50% of communication shall be permitted up to 50% of FOB value of exports and / or 50% of foreign exchange earned through exports of such services, where the payment of suchforeign exchange earned through exports of such services, where the payment of suchservices offered to its overseas clients, is received in foreign exchangeservices offered to its overseas clients, is received in foreign exchange

SEZ units associated with manufacturing gems and jewelry may sell up to 10% of FOBSEZ units associated with manufacturing gems and jewelry may sell up to 10% of FOBvalue of exports of the preceding year in direct trade agreement and subject to fulfillment value of exports of the preceding year in direct trade agreement and subject to fulfillment of positive NFE. Further, in case of sale of plain jewelry, the recipient of such trade shallof positive NFE. Further, in case of sale of plain jewelry, the recipient of such trade shallpay concessional rate of duty as applicable. Furthermore, in case of studded jewelry, dutypay concessional rate of duty as applicable. Furthermore, in case of studded jewelry, dutyshall be payable as recommended and amended from time to timeshall be payable as recommended and amended from time to time

Total exemption of duties / taxes on scrap or waste or remnants in case the said crap orTotal exemption of duties / taxes on scrap or waste or remnants in case the said crap orwaste or remnants are destroyed as per the approval of the customs authorities of Indiawaste or remnants are destroyed as per the approval of the customs authorities of India

If the end products is a byIf the end products is a by--product and it is included in the LOP, then it may also be sold inproduct and it is included in the LOP, then it may also be sold inthe direct tariff area, subject to achievement of positive NFE on payment of applicablethe direct tariff area, subject to achievement of positive NFE on payment of applicableduties within the provisions of such laws. The sale of such byduties within the provisions of such laws. The sale of such by--products by units those areproducts by units those arenot entitled to direct tariff area salesnot entitled to direct tariff area sales

Facilitated with out Facilitated with out--sourcing of subcontract capacities for export production against orderssourcing of subcontract capacities for export production against orderssecured by other unitssecured by other units



SEZ in India

9

The main objectives of theThe main objectives of the

SEZ Act areSEZ Act are::

Generation of additional economic activity;Generation of additional economic activity; Promotion of exports of goods and services;Promotion of exports of goods and services;

Promotion of investment from domestic andPromotion of investment from domestic andforeign sources;foreign sources;

Creation of employment opportunities; andCreation of employment opportunities; and Development of infrastructure facilitiesDevelopment of infrastructure facilities



SEZ in India

10

The salient features/provisionsThe salient features/provisionsof SEZ Rulesof SEZ Rules

Different minimum land requirement for different class of SEZs;Different minimum land requirement for different class of SEZs;

Every SEZ is divided into a processing area where alone the SEZEvery SEZ is divided into a processing area where alone the SEZunits would come up and the nonunits would come up and the non--processing area where theprocessing area where thesupporting infrastructure is to be created;supporting infrastructure is to be created;

Simplified procedures for development, operation andSimplified procedures for development, operation andmaintenance of the Special Economic Zones and for setting upmaintenance of the Special Economic Zones and for setting up

units and conducting business in SEZs;units and conducting business in SEZs; Single window clearance for setting up of an SEZ;Single window clearance for setting up of an SEZ;

Single window clearance for setting up a unit in a SpecialSingle window clearance for setting up a unit in a SpecialEconomic Zones;Economic Zones;

Single window clearance for matters relating to Central as well asSingle window clearance for matters relating to Central as well asState Governments;State Governments;

Simplified compliance procedures and documentation with anSimplified compliance procedures and documentation with an

emphasis on self certification.emphasis on self certification.



SEZ ControversySEZ Controversy

SEZ in India

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In spite of the strong objectives of the IndianIn spite of the strong objectives of the IndianGovernment The SES policy is in following controversyGovernment The SES policy is in following controversy

Generation of little new activity as there may beGeneration of little new activity as there may berelocation of industries to take advantage of taxrelocation of industries to take advantage of taxconcessions,concessions,

Revenue lossRevenue loss ddue to Tax exemption .ue to Tax exemption .

LargeLarge--scale land acquisition by the developers, may leadscale land acquisition by the developers, may leadto displacement of farmers with meager compensation,to displacement of farmers with meager compensation,

Acquisition of prime agricultural land, having serious Acquisition of prime agricultural land, having seriousimplications for food security,implications for food security,Misuse of land by the developers for real estateMisuse of land by the developers for real estate

Uneven growth aggravating regional inequalities.Uneven growth aggravating regional inequalities.



SEZsSEZs -- A global Overview A global Overview

SEZ in India

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World Bank estimates, as of 2007 there are more than 3,000World Bank estimates, as of 2007 there are more than 3,000

projects taking place in SEZs in 120 countries worldwide.projects taking place in SEZs in 120 countries worldwide. The SEZ concept proved a success in China and Poland. InThe SEZ concept proved a success in China and Poland. In

China over 20 per cent of Foreign Direct Investment (FDI) flowsChina over 20 per cent of Foreign Direct Investment (FDI) flowsinto SEZ and generated 10 per cent of exports. Poland's SEZsinto SEZ and generated 10 per cent of exports. Poland's SEZsreceived 35 per cent of FDI flows.received 35 per cent of FDI flows.

Indian must reIndian must re--design the SEZ policy to suit its needs and not design the SEZ policy to suit its needs and not borrow the Chinese model.borrow the Chinese model.

SEZs have been implemented using a variety of institutionalSEZs have been implemented using a variety of institutionalstructures across the world ranging from fully publicstructures across the world ranging from fully public(government operator, government developer, government (government operator, government developer, government regulator) to 'fully' private (private operator, private developer,regulator) to 'fully' private (private operator, private developer,public regulator).public regulator).

presentation on sez concept in india

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