Special Economic Zone

To facilitate investments in India, the government of India has developed a concept of Special Economic Zones named as SEZ.

A policy was introduced in India for setting up of Special Economic Zones in the country with a view:

• To provide an internationally competitive and hassle free environment for exports.
• Units set up in SEZ for manufacturing of goods and rendering of services.
• The units in the SEZs have to be a net foreign exchange earner but they shall not be subjected to any pre-determined value addition or minimum export performance requirements.
• Sales in the Domestic Tariff Area by SEZ units shall be subject to payment of full Custom Duty and import policy in force.
• Offshore banking units may be set up in the SEZs.
• Promotion of investments from domestic and foreign sources.
• Employment generation.
• Promotion of exports of goods and services.
• Technology transfer and expansion targeting a global reach.
• Development of Integrated world class infrastructure for exports.

Special Incentives for SEZ Units

• A designated duty free enclave and to be treated as foreign territory for trade operations and duties and tariffs.
• No licence required for import. Exemption from customs duty on import of capital goods, raw materials, consumables, spares etc.
• Exemption from Central Excise duty on procurement of capital goods, raw materials, consumable spares etc. from the domestic market.
• Supplies from DTA to SEZ units treated as deemed exports.
• Reimbursement of Central Sales Tax paid on domestic purchases.
• 100% income tax exemption for a block of five years,50% tax exemptions for two years and upto 50% of the Profits ploughed back for next 3 years under section 10-A of Income tax Act.
• Supplies from DTA (Domestic Tariff Area) to SEZ to be treated as exports under 80HHC of the IT Act.
• Carry forward of losses
• 100% Income-tax exemption for 3 years & 50% for 2 years under section 80-LA of the Income-tax Act for off-shore banking units.
• Reimbursement of duty paid on furnace oil, procured from domestic oil companies to SEZ units as per the rate of Drawback notified by the Directorate General of Foreign Trade.
• SEZ units may be for manufacturing, trading or service activity.
• SEZ unit to be positive net foreign exchange earner within three years.
• Performance of the units to be monitored by a Committee headed by Development Commissioner and consisting of Customs.
• 100% Foreign Direct Investment in manufacturing, sector allowed through automatic route barring a few sectors.
• Facility to retain 100% foreign exchange receipts in EEFC Account.
• Facility to realize and repatriate export proceeds within 12 months.
• Re-export imported goods found defective, goods imported from foreign suppliers on loan basis etc. without G.R. Waiver under intimation to the Development Commissioner.
• "Write-off" of unrealized export bills upto 5%.
• Commodity hedging by SEZ units permitted
• Capitalization of import payables
• No cap on foreign investment for SSI reserved items.
• Exemption from industrial licensing requirement for items reserved for SSI sector.
• Profits allowed to be repatriated freely without any dividend balancing requirement.
• Domestic Sales on full duty subject to import policy in force.
• No fixed wastage norms.
• Full freedom for subcontracting including subcontracting abroad.
• Subcontracting facility available to jewellery units
• Duty free goods to be utilized in 5 years.
•  Job work on behalf of domestic exporters for direct export allowed.
• No routine examination by Customs of export and import cargo.
• No separate documentation required for customs and Exim Policy.
• In house customs Clearance.
• Support services like banking, post office clearing agents etc. provided in Zone Complex.
• Developed plots and ready to use build up space
• Exemption from Custom/Excise Duty on goods for setting up units in the zone.

Kind of SEZ zones
To understand the concept better, the SEZ can be categorized in two parts –

• Product specific SEZ zones: Under product Specific SEZ zone, the approval is given for a specific product like IT, automobile etc and the owner or user of SEZ zone can only run an industry of that specific product for which the approval was granted by the Government.

• Multiproduct SEZ zone: Under Multiproduct SEZ zones, the owner has taken permission to set up any kind of industry, he wish so. Therefore, any kind of industry / business can be set up in a Multiproduct SEZ zone.

Setting up business under SEZ units
To avail the above mentioned benefits an investor must setup its business under SEZ zones. There are two ways of setting up business in SEZ zones.

• Applying and getting approved its own SEZ zone by applying with concerned authorities.
• Lease out the property in an already approved SEZ zone
  There are various developers who have already got SEZ zones approved by the Government of India. Some have product specific SEZ zones whereas some are having multiproduct SEZ zones with them. Therefore the person interested in investing in India and also wants to save his energies and time can invest in already approved SEZ unit and can avail the above mentioned benefits and facilities.

It is also to be noted that the new SEZ licenses are not ordinarily issued these days as the recent policy of Govt of India

Services provided by Bhartiya Society

• The Bhartiya Society facilitates the investor to create its own SEZ unit. It takes care of all the functions vis a vis locating the land, getting SEZ approved from Government and other concerned authorities, construction, furnishing, recruitment etc, as per the requirement. The appropriate land is already available with in resources of Bhartiya Society.
• Since, we are in touch with various developers of SEZ units and therefore can select and negotiate the deal in an already approved SEZ zone on behalf of investor.