Q. What is a Special Economic Zone ?
Special Economic Zone (SEZ) is a specifically delineated duty free enclave
and shall be deemed to be foreign territory for the purposes of trade
operations and duties and tariffs in India.
Q. Where SEZs are located in India ?
At present, there eight functional Special Economic Zones located at Santa
Cruz (Maharashtra) ( which ic product specific) , Cochin (Kerala), Kandla
and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh),
Falta (West Bengal), and Noida (Uttar Pradesh) in India. Further a Special
Economic Zone at Indore ( Madhya Pradesh ) is already in operation. In
addition more than 150 in principle approvals have been given for setting up
new SEZs across India.
Q. Who can set up SEZs?
Any private/public/joint sector or State Government or its agencies can set
up Special Economic Zone (SEZ).
Q Can Foreign Companies set up SEZs ?
Q How can one apply for setting up of SEZs ?
We offer end to end solutions from project report to commencement of
commercial operation of SEZs from the point of view of Developers as well as
Companies intending to open units in SEZs. Feel free to contact us for more
Q. Are there any terms & conditions for setting up
of SEZ ?
Only units approved under SEZ scheme would be permitted to be located in SEZ.
The SEZ units shall abide by local laws, rules, regulations or bye-laws in
regard to area planning, sewerage disposal, pollution control and the like.
They shall also comply with industrial and labour laws as may be locally
applicable. Such SEZ shall make security arrangements to fulfill all the
requirements of the laws, rules and procedures applicable to such SEZ.
The Multi-Product SEZs should have a minimum area of 1000 hectares and at
least 35 % ( now it is proposed to increase it to 50% by some state
governments) of the area is to be earmarked for developing industrial area
for setting up of units. IT & ITES SEZs can be established in an area
minimum 10 Hectares and above.
Minimum area of 1000 hectares will not be applicable to product specific and
port/airport based SEZs . Wherever the SEZs are landlocked, an Inland
Container Depot (ICD) will be an integral part of SEZs.
Q What are the Incentive available to SEZ Developer
100% FDI allowed for:
(a) townships with residential, educational and recreational facilities on a
case to case basis,
(b)franchise for basic telephone service 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 /CST.
The income of infrastructure company investing in SEZ is exempt from Income
Q. How I&E can do for you ?
We offer end to end solutions from preparation of project report to
commencement of commercial operation of SEZs. Companies intending to set-up
SEZs either product specific or multi-product can get in touch with us. We
also take up assignments of opening Units for Manufacturing Companies. Feel
free to contact us for more information.
Q. What are the incentive/facilities available for SEZ units?
Following incentive/ facilities to SEZ enterprises :
Customs and Excise :
Duty Benefits: SEZ units may import or procure from the domestic sources all
their requirements of capital goods, raw materials, consumables, spares,
packing materials, office equipment, DG sets etc. duty free.
Duty free import/domestic procurement of goods for setting up of SEZ
Goods imported / procured locally duty free could be utilised over the
approval period of 5 years.
Domestic sales by SEZ units will now be exempt from SAD.
Domestic sale of finished products, by-products on payment of applicable
Domestic sale rejects and waste and scrap on payment of applicable Custom
duty on the transaction value .
Income Tax Benefits:
100% IT exemption (10A) for first 5 years and 50% for 2 years thereafter.
Reinvestment allowance to the extend of 50% of ploughed back profits
Carry forward of losses
Foreign Direct Investment :
100% foreign direct investment is under the automatic route is allowed in
manufacturing sector in SEZ units except arms and ammunition, explosive,
atomic substance, narcotics and hazardous chemicals, distillation and
brewing of alcoholic drinks and cigarettes , cigars and manufactured tobacco
No cap on foreign investments for SSI reserved items.
Banking / Insurance/External Commercial Borrowings
Setting up Off-shore Banking Units allowed in SEZs.
OBU’s allowed 100% Income Tax exemption on profit for 3 years and 50 % for
next two years.
External commercial borrowings by units up to $ 500 million a year allowed
without any maturity restrictions.
Flexibility to keep 100% of export proceeds in EEFC account.
Commodity hedging permitted.
Exemption from interest rate surcharge on import finance.
SEZ units allowed to ‘write-off’ unrealized export bills.
Central Sales Tax Act :
Exemption to sales made from Domestic Tariff Area to SEZ units.
Exemption from Service Tax to SEZ units
SEZs permitted to have non-polluting industries in IT and facilities like
golf courses, desalination plants, hotels and non-polluting service
industries in the Coastal Regulation Zone area Exemption from public hearing
under Environment Impact Assessment Notification.
Companies Act :
Enhanced limit of Rs. 2.4 crores per annum allowed for managerial
remuneration Agreement to opening of Regional office of Registrar of
Companies in SEZs. Exemption from requirement of domicile in India for 12
months prior to appointment as Director.
Drugs and Cosmetics :
Exemption from import restriction under Drugs & Cosmetics Rules for
registration of drugs prior to imports.
SEZ units may sub-contract part of production or production process through
units in the Domestic Traiff Area or through other EOU/SEZ units. SEZ units
may also sub-contract part of their production process abroad.
Q. Whether SEZs have been exempted from Labour
Normal Labour Laws are applicable to SEZs, which are enforced by the
respective state Governments. The state Government have been requested to
simplify the procedures/returns and for introduction of a single window
clearance mechanism by delegating appropriate powers to Development
Commissioners of SEZs.