special economic s

8/8/2019 Special Economic s

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Objec tive s :

T o promote and expand industrial units with export potential and employment generation.

T o encourage decentralization of economic activities from large cities.T o promote specialized pattern of industrial development.

T o develop state-of-art infrastructure and services.T o develop fast means of transport and communication.T o develop SEZs as generator of economic momentum so as to have wide regional impact in the hinterland.


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Scope s and C over ag e :

SEZs may be developed as per the industrial policy of the respective State Governments.

T he SEZs may be developed for an ultimate population of 2-3 lakhs.


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SEZ - A Fav ore d D e stinati on :

Fiscal Incentives Thrust or Self & Regulatory Certification &

Benefits in-zoneempowerment

Self- ContainedSelf-managed

SEZ

Integrated Infrastructure


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H ist ory Of SEZ (Int er nati onal)F irst Known SEZ Puerto Rico 1947

Ireland and T aiwan followed 1960s

China made the SEZs Global Currency with its largest SEZ Shenzen 1980

Revolution came in 2000 incorporation of SEZ in

EXIM Policy.

5 years Later SEZ Act (2005) introduced.


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H ist ory Of SEZ(INDIA)

All 8 EPZs are converted into SEZs Kandla (Gujarat) :1965 (625 acres) SEEPZ (Maharasthra) :1975 (110 acres)

Noida (UP) :1980 (310 acres) Chennai ( T N) :1986 (262 acres) Cochin (Kerala) :1986 (103 acres) F alta (W.B) :1986 (280 acres) Visakhapatnam(AP) :1994 (360 acres) Surat (Gujarat) :1998 (103 acres)


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SELECTION CRITERIA(i) SEZs shall be located outside an urban agglomeration/municipal limit of a million plus city, and form part of the City Region.

(ii) Sufficient land and water resources for a population threshold of 2-3 lakhs need to be available.(iii) Possibility of developing accessibility/connectivity of SEZs in relation to the mother city with 8-lane expressway needs to be a pre-requisite along with

proximity to Railway network/Airport.(iv) Site shall be away from flood prone zone and other natural disaster prone areas.

.contd.


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.contd (v) It shall cause minimum dislocation of existing rural

settlements.(vi) T here shall not be any adverse impact on the natural environment and therefore, areas selected may be barren or grassland. Cultivate land may be taken up but should be considered only if adequate other land is not available. However, large scale conversion of fertile agriculture land into urban use needs to avoided.(vii) Site shall have potential for development as a self- contained entity along with environment sustainability.

(viii) Equity for the poor in terms of provision of housing for service personnel needs to be ensured.(ix) As far as possible SEZs shall be self contained withrespect to basic facilities and requirements.


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SEZ Term s and C onditi ons :

O nly units approved under SEZ scheme would be permitted to be located in SEZ.

Shall abide by local laws, rules, regulations.

F ulfill all the requirements applicable to suchSEZ.

Minimum area of 1000 hectares & atleast 35% of the area is to be developing industrial area.


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Fe atu re s, B e nef its and Fa c ilitie s of IndianSEZ po licy:

T he zones are proposed to be setup by private sector or by State governments in association with Private sector. A unit set up in SEZ has the following facilities and incentives: State Governments have a lead role in the setting up of SEZ.

A framework is being developed by creating special window under

existing rules and regulations of the Central and State governments of SEZ.100% F oreign Direct Investment ( F DI) is allowed for townships withresidential educational, recreational facilities and franchise for basic telephone service in SEZs.

A 10-year tax holiday (i.e. a tax holiday for any consecutive block of 10 years in the first 15 years of operation) has been provided for undertakings involved in developing and/or operating and/or maintaining notified SEZs before March 31, 2006.Duty free imported/domestic procurement of goods for setting up,development, operation and maintenance of SEZs.

..contd.


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.contd.Income of an infrastructure capital fund/company form investment in a SEZ is expert from Income tax.

Investment made by individuals in SEZs is also eligible for exemption under section 88 of Incometax Act, 1961.Generation, T ransmission and distribution of power in SEZs is allowed.F ull freedom in allocation of space and built up area for

approved SEZ units on commercial basis. Authorization to provide and maintain services like water,electricity, security, commercial lines is allowed.15 year corporate tax holiday on export profit 100% for initial 5

years, 50% for the next 5 years and up to 50% for the balance 5

years equivalent to profits ploughed back for investment. Allowed to carry forward losses.No license required for import.Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years.

Exemption from customs duty on import of capital goods, raw materials consumables s ares etc. .contd.


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..contd.Exemption from Central Excise duty on the procurement of capital goods, raw materials, consumable spares, etc., from the domestic market.Exemption from payment of Central Sales T ax on the sale or

purchase of goods provided that, the goods are meant for undertaking authorized operation.Exemption from payment of Service T ax.T he sale of goods or merchandise that is manufactured outside the SEZ (i.e. in D T A) and which is purchased by the Unit (Situated in the SEZ) is eligible for deduction and such sale would be deemed to be export.T he SEZ unit is permitted to realize and repatriate to India the full export value of goods or software within a period of twelve months from the date of export.Write-off of unrealized export bills is permitted up to an annual limit of 5% of their average annual realization.No routine examination by Customs officials of export and import cargo.Setting up O ff-shore Banking Units ( O BU) allowed in SEZs.

..contd.


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..contd.O BU allowed 100% income tax exemption on profit earned for three years and 50% for next two years.

Exemption from requirement of domicile in India for 12 months prior to appointment as Director.Since SEZ units are considered as public utility services no strikes would be allowed in such companies without

giving the employer 6 weeks prior notice in addition to the other conditions mentioned in the Industrial Disputes Act,

1947.T he Government has exempted SEZ Units from the payment of stamp duty and registration fees on the lease/license of plots.External Commercial Borrowings (ECBs) up to $ 500 million a year allowed without any maturity restrictions.Enhanced limit of Rs. 2.40 crores per annum allowed for managerial remuneration.


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Bu rning issu e s of SEZ :

Inadequate infrastructure Restrictive policies Lengthy procedures No Single Window

Locational disadvantages Labour exploitation Political interference

Land acquisitions

Unethical practices


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Imp a c t of SEZ on Indian E co nomy :

1. Regionalities 2. Cultural Discourse 3. T ax Revenues

4. Jobless Growth5. Exploitation of Labour 6. Vulnerability of the Rural Poor 7. Creation of Negligible Employment 8. Encouragement of Real Estate sector leads to

uneven development


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Conc lusi on

It is concluded that a lot of serious contemplation and recommendation has to be done before we start copying China blindly. SEZ should be developed

keeping in mind the social structure of India and the benefit of people. It should not be used as a tool of destroying them and making the country weak socially, psychologically and economically. India should follow the example of developed countries like Japan while establishing SEZ as in the long-run SEZ can benefit the economy if developed in a systematic manner.


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Q ueries???


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SPECIAL T HANKS TO

Dr Sardar Gugloth

FO R HIS KIND SUPP O R T AND ASSIS T ANCE

THANK YOU

special economic s

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