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ZONE DEVELOPMENT AND OPERATION AN INDIAN PERSPECTIVE

PRESENTATION BY P.C. NAMBIAR Chairman, Export Promotion Council for Export Oriented Units and SEZs, India. ZONE DEVELOPMENT AND OPERATION AN INDIAN PERSPECTIVE. INDIA – FEDERAL SET UP. 29 STATES AND 7 UNION TERRITORIES RULED BY 13 DIFFERENT POLITICAL PARTIES.

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ZONE DEVELOPMENT AND OPERATION AN INDIAN PERSPECTIVE

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  1. PRESENTATION BY P.C. NAMBIARChairman, Export Promotion Council for Export Oriented Units and SEZs, India ZONEDEVELOPMENT AND OPERATIONAN INDIAN PERSPECTIVE

  2. INDIA – FEDERAL SET UP • 29 STATES AND 7 UNION TERRITORIES RULED BY 13 DIFFERENT POLITICAL PARTIES. • INDEPENDENT FEDERAL AUTHORITY ON CERTAIN VITAL ISSUES LIKE LAND USE, LABOUR ,LAW & ORDER ETC. • INDEPENDENT STATE TAX LEGISLATIONS.

  3. INDIA - FEDERAL SET UP • SMALLEST STATE SIZE 0.370 Mn Ha • LARGEST STATE SIZE 34.226 Mn Ha • VARYING RATIO OF LITERACY RATES • UNEVEN POPULATION DENSITY • 30 LANGUAGES SPOKEN WITH DIFFERENT CULTURE

  4. INDIA – DEMOGRAPHY • LACK OF ADEQUATE INDUSTRIAL, COMMERCIAL AND SOCIAL INFRASTRUCTURE • 3 TIER GOVERNANCE ACROSS THE COUNTRY • LACK OF ECONOMIC AWARENESS

  5. INTRODUCTION • ZONE DEVELOPMENT STARTED IN 1965 • INITIALLY ONLY GOVERNMENT ZONES • STATE GOVT DEVELOPED 10 ZONES • ONLY ONE PVT ZONE UPTO 2006 • SEZ ACT 2005 AND SEZ RULES 2006 ENACTED

  6. SEZ SIZE- SECTOR FOCUS FOR IT/ITES SECTOR MINIMUM BUILT-UP AREA SPECIFIED • Category “A” – 1,00,000 Sq Mtr • Category “B” - 50,000 Sq Mtrs • Category “C”- 25,000 Sq Mtrs.

  7. SEZ SIZE – SECTOR FOCUS • Multi Product SEZs - 500 Ha • Multi Services SEZs – 50 Ha • Sector specific SEZs – 50 Ha • Port or Airport based SEZs- 50 Ha (in smaller and specified sector 25 Ha) • BT, Non conventional energy or gems and jewellery , Handicrafts, electronics - 10 Ha

  8. FREE TRADE WAREHOUSING ZONE • FTWZ – Only FTWZ-40 Ha with a built up area of not less than 100,000 sq.mtr) • FTWZ can be set up Sector Specific SEZ- ( Max 20% of processing area ) in a Multi product SEZ no limitation prescribed

  9. SPECIAL ECONOMIC ZONES IN INDIA. • FORMALLY APPROVED -564 • GOVERNMENT SPONSORED-18 • PRIVATE SEZs - 546 • -------------------------------------------------------------------- • NOTIFIED SEZs- 388 • GOVERNMENT SPONSORED-18 • PRIVATE SEZs-370 • -------------------------------------------------------------------- • OPERATIONAL SEZs – 192 • GOVERNMENT SPONSORED-18 • PRIVATE SEZs- 174

  10. SEZ LOCATION • 9 OUT OF 29 STATES DON’T HAVE SEZ PRESENCE • 3 OUT OF 7 UNION TERRITORIES DO NOT HAVE SEZ PRESENCE • NO UNIFORM FISCAL BENEFITS OFFERED BY STATES

  11. SEZ MAP IN TINY STATES BELOW 10 Mn HECTARES SIZE

  12. SMALLER SIZE STATES

  13. 10 TO 20 Mn Ha SIZE STATES

  14. BIGGER SIZE STATES

  15. LOCATION – STATES NOT HAVING SEZs

  16. SEZ LOCATION - UNION TERRITORIES NOT HAVING SEZs ANDAMAN & NICOBAR ISLANDS DAMAN AND DIU LAKSHADWEEP

  17. INVESTMENT IN SEZs • IN THE GOVERNMENT SPONSORED SEZs - US$ 4,007 Mn • IN THE PRIVATE SECTOR SEZs - US$ 46,269 Mn

  18. FDI in Zone Development

  19. DIRECT EMPLOYMENT IN SEZs • IN THE GOVT. SPONSORED SEZs- 281,823 persons • IN PRIVATE SECTOR SEZs - 995,822 persons.

  20. SEZ PERFORMANCE • NUMBER OF SEZ OPERATING UNITS - 3,818 • EXPORTS AS OF 31.03.2014- US$ 82,346 Mn • DOMESTIC SALE IN INDIA AS OF 31.03.2014 – US$ 11,386 Mn

  21. SEZ SECTOR MIX Of 192 Operational • MULTI PRODUCTS 10% • OTHER SECTOR SPECIFIC MANUFACTURING 32% • IT/ITES , ELECTRONIC HARDWARE, SEMI CONDUCTOR SERVICES 56% • OTHER SERVICES- 2%

  22. REGULATION –SETTING UP OF SEZ • BY CENTRAL GOVT • ISSUANCE OF LETTER OF APPROVAL • SEZ NOTIFICATION • AUTHORIZE OPERATIONS

  23. SINGLE WINDOW MECHANISM • BOARD OF APPROVALS AT CENTRAL GOVT LEVEL • UNIT APPROVAL COMMITTEE AT STATE LEVEL

  24. SEZ DEVELOPMENT PROCEDURE – STEP 1 • RIGHTFUL POSSESSION OF LAND ON HAND • CLEARANCE FROM LOCAL GOVERNMENT • APPLICATION TO BOARD OF APPROVALS • RECOMMENDATION OF STATE GOVERNMENT • LETTER OF APPROVAL • NOTIFICATION OF SEZ

  25. DEVELOPMENT PROCEDURE – STEP 2 • DEMARCATION OF PROCESSING AND NON-PROCESSING AREA • MASTER PLAN APPROVAL BY PLANNING AUTHORITY • BUILDING LAYOUT AND INFRASTRUCTURE DEVELOPMENT APPROVAL • POSTING OF CUSTOMS OFFICERS • EXECUTION OF BOND FOR DUTY FREE BENEFITS BY DEVELOPERS/CO-DEVELOPERS

  26. DEVELOPMENT PROCEDURE – STEP 3 • COMPOUND WALL AROUND PROCESSING AREA • LEASING OF AREA TO UNIT HOLDERS • LETTER OF APPROVAL TO UNIT • EXECUTION OF BOND BY UNITS FOR DUTY FREE BENEFITS • PROGRESSIVE REPORTING OF SEZ PERFORMANCE BY DEVELOPER AND UNITS

  27. GOOD GOVERNANCE • DEVELOPMENT COMMISSIONER /UNIT APPROVAL COMMITTEE – NODAL AGENCY FOR PERMISSIONS AND APPROVALS • ASSESSMENT, EXAMINATION AND CLEARANCE MONITORED BY OFFICERS DEPUTED FROM CUSTOMS DEPARTMENT • SEZ OPERATIONS MONITORED THROUGH PERIODICAL REPORTING AND M.I.S.

  28. INCENTIVES FOR SEZ IN INDIA • ALL MATERIALS REQUIRED FOR INFRASTRUCTURE DEVELOPMENT BY DEVELOPERS ARE EXEMPT FROM CUSTOMS DUTY , CENTRAL EXCISE DUTY, AND STATE VAT • ALL MATERIALS REQUIRED FOR AUTHORISED OPERATIONS BY UNITS ARE EXEMPT FROM CUSTOMS DUTY, CENTRAL EXCISE DUTY AND STATE VAT

  29. INCENTIVES FOR SEZ • ALL SERVICES RECEIVED IN CONNECTION WITH AUTHORIZED OPERATIONS ARE EXEMPT FROM SERVICE TAX

  30. INCOME TAX- BENEFITS • 100% INCOME TAX EXEMPTION FOR A BLOCK OF 10 YEARS OUT OF 15 YEARS FOR DEVELOPERS. • 100% INCOME TAX EXEMPTION FOR 1ST FIVE YEARS AND 50% FOR SUBSEQUENT FIVE YEARS (FOR UNITS) • REINVESTMENT ALLOWANCE TO THE EXTENT OF 50% OF PLOUGHED BACK PROFITS CARRY FORWARD OF LOSSES(FOR UNITS).

  31. INVESTMENT INCENTIVES-1 • 100% FOREIGN DIRECT INVESTMENT UNDER AUTOMATIC ROUTE FOR MANUFACTURING SECTOR IN SEZ UNIT • NO CAP ON FDI FOR SSI RESERVED ITEMS. • SETTING UP OFFSHORE BANKING UNITS ALLOWED IN SEZS • 100% INCOME TAX EXEMPTION FOR 3 YEARS AND 50% FOR NEXT TWO YEARS FOR OFF SHORE BANKING UNITS

  32. INVESTMENT INCENTIVES-2 • EXTERNAL COMMERCIAL BORROWINGS UPTO USD 500 MILLION A YEAR ALLOWED WITHOUT ANY MATURITY RESTRICTION FOR UNITS. • EEFC ACCOUNT FOR EXPORT PROCEEDS ALLOWED WITH FREEDOM TO INVEST OVERSEAS. • EXEMPTION FROM INTEREST RATE , SURCHARGE ON IMPORT FINANCE. • ENVIRONMENTAL CLEARANCE ON PRIORITY. • NORMS FOR SEZ SIZE REDUCED TO SUIT INDUSTRIES

  33. SEZ – DEVELOPMENT ISSUES • WHILE THERE IS A CENTRAL SEZ ACT, MANY STATES DON’T HAVE THE CORRESPONDING STATE SEZ ACT • NATURAL RESOURCES UNEVENLY DISTRIBUTED • 70% POPULATION DEPENDS ON AGRICULTURE AND FOOD PROCESSING SECTOR NOT FULLY DEVELOPED

  34. Some of the IT/ITES/EHTP SEZs

  35. SERUM BIO-PHARMA PARK SEZ , PUNE , INDIA INDIA ‘S FIRST BIO-PHARMA SEZ

  36. Thank You

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