Special Economic Zones( Sachin Patil, Muktainagar

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SPECIAL ECONOMICS ZONESPECIAL ECONOMICS ZONE

20 March 2010SEZ 1

Presented by:

Sachin Patil,

40, MBA II, NMU


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20 March 2010SEZ 2

INTRODUCTIONOBJECTIVESSTRUCTURE OF SEZADMINISTRATIVE LAYOUTFACILITIES OFFEREDBENEFITS OF SEZs

LIST OF DEVELOPERS


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AASpecial Economic ZoneSpecial Economic Zone ((SEZSEZ) is a) is ageographical region that has economicgeographical region that has economiclaws that are more liberallaws that are more liberal than a cthan a country'sountry'stypical economic laws.typical economic laws.

20 March 2010SEZ 3


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SEZSEZ An OverviewAn Overview

Defined as:Specifically delineated duty-free enclave and shall be deemed to be

foreign territory for the purposes of trade operations and duties and

tariffs

. . . . EXIM Policy 2000Extremely successful Chinese format to promote exports, attract FDI

and foster overall economic growth

Shenzhen SEZ, started in 1981, has achieved 38% GDP growth mainly

due to:

Liberal economic framework

Integrated infrastructure at very competitive prices


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Integrated Infrastructure

Fiscal

incentives &

regulatory

benefits

Thrust on self-

certification &

in-zone

empowerment

Self-contained &

Self-managed

SEZ

India provides the boldest policy framework


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Objectives of the SEZObjectives of the SEZ

GGeneration of additional economic activityeneration 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;Creation of employment opportunities;

Development of infrastructure facilities;Development of infrastructure facilities;

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Administrative layout of SEZ

Board of approval

Approval

committee

SEZ units


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Type of SEZ Min. AreaRequired

(ha)

Area Reserved forProcessing Zone

In North EastStates, HP,J&K,

Uttaranchal,Sikkim, Goa, UT

Multi Product 1000 25% 200

Services 100

Specific sector, SEZ in aport or Airport

100 50% 50

Hardware, software, IT 10 Min built up area 1Lac sq. m

Biotechnology, Gems &Jewellary, Nonconventional energyresources

10

Free trade &Warehousing

40 Min built up area1 lac sq. m


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Incentives and facilities offered to theIncentives and facilities offered to the

SEZsSEZsDuty free import/domestic procurement of goods fordevelopment, operation and maintenance of SEZ units.

100% Income Tax exemption on export income for SEZ unitsunder Section 10AA of the Income Tax Act for first 5 years,50% for next 5 years thereafter and 50% of the ploughed backexport profit for next 5 years.

Exemption from minimum alternate tax under section 115JBof the Income Tax Act.


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20 March 2010SEZ 10

External commercial borrowing by SEZ units up to

US $ 500 million in a year without any maturityrestriction through recognized banking channels.

Exemption from Central Sales Tax.

Exemption from Service Tax.

Single window clearance for Central and State level

approvals.

Exemption from State sales tax and other levies asextended by the respective State Governments.


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100% FDI allowed for : townships and recreational facilities in

SEZ

Income Tax Benefit under (80 IA) to developers for any block

of 10 years in 15 years

Duty free import/domestic procurement of goods for

development, operation and maintenance of SEZs

Exemption from Service Tax

Income of infrastructure capital fund/company from investmentin SEZ exempt from Income Tax


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Developer permitted to transfer infrastructure facility

for operation and maintenance.

Generation, transmission and distribution of power

in SEZs allowed.

Full freedom in allocation of space and built up area

to approved SEZ units on commercial basis.

Authorized to provide and maintain service like

water, electricity, security, restaurants and recreation

centers on commercial lines.


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Facilities to SEZ EnterprisesFacilities to SEZ Enterprises

Exemption from customs/excise duties.Income tax :100% Income-Tax exemption for first 5 years and 50% for 2

years thereafter.

Foreign Direct Investment :100% foreign direct investment is freely allowed inmanufacturing sector in SEZ units under automatic route,except prohibited items.

Central Sales Tax Act :

Exemption to sales made from Domestic TariffArea to SEZunitsService Tax :Exemption from Service Tax to SEZ units


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Banking / External Commercial Borrowings :Banking / External Commercial Borrowings :

--External commercial borrowings by units up to $ 500External commercial borrowings by units up to $ 500

million a year allowed without any maturity restrictions.million a year allowed without any maturity restrictions.

--Freedom to bring in export proceeds without any time limit.Freedom to bring in export proceeds without any time limit.

--Flexibility to keep 100% of export proceeds in EEFCFlexibility to keep 100% of export proceeds in EEFC

account. Freedom to make overseas investment from it.account. Freedom to make overseas investment from it.

--Exemption from interest rate surcharge on import finance.Exemption from interest rate surcharge on import finance.

--SEZ units allowed to writeSEZ units allowed to write--off unrealized export bills.off unrealized export bills.20 March 2010SEZ 14


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Benefits of SEZBenefits of SEZ

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Exports from the functioning SEZs during the last threeyears are as under:

Year Value (Rs. Crore) Growth Rate (over previous year)

2003-2004 13,854 39%

2004-2005 18,314 32%

2005-2006 22,840 25%

2006-2007 34,615 52%

2007-2008 66,638 92%


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--Investment and employment in the SEZs set upInvestment and employment in the SEZs set up

prior to the SEZ Act, 2005.prior to the SEZ Act, 2005.

--Investment and employment in the SEZs notifiedInvestment and employment in the SEZs notifiedunder the SEZ Act 2005:under the SEZ Act 2005:

Current investment and employment:Current investment and employment:Investment:Investment: Rs. 83450croreRs. 83450croreEmployment:Employment: 1,13,426 persons1,13,426 persons

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Problem in SEZProblem in SEZ

Transparency in policy formulation.Payment problem.Openness in land acquisition.Prime agriculture land.

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LList of Developers who have set upist of Developers who have set up

SEZsSEZs

Nokia SEZ in Tamil NaduQuark City SEZ in ChandigarhFlextronics SEZ in Tamil Nadu

Mahindra World City in Tamil NaduMotorola, DELL and FoxconnApache SEZ (Adidas Group) in Andhra PradeshDivvy's Laboratories, Andhra Pradesh

RajivG

andhi Technology Park, ChandigarhETL Infrastructure IT SEZ, ChennaiHyderabad Gems Limited, Hyderabad


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20 March 2010SEZ 19

THANKS

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Special Economic Zones( Sachin Patil, Muktainagar