Special
Economic Zone (SEZ) is a specifically designed place where the goods are sold
sans duty. At present there eight functional Special Economic Zones in India
and are located at Santa Cruz (Maharashtra), Cochin (Kerala), Kandla and Surat
(Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh), Falta (West
Bengal) and Nodia (Uttar Pradesh) in India. A Special Economic Zone has to be
operational soon at Indore (Madhya Pradesh).
In
addition 18 approvals have been given for setting up of SEZ at Positra
(Gujarat), Navi Mumbai and Kopata (Maharashtra), Nanguneri (Tamil Nadu), Kulpi
and Salt Lake (West Bengal), Paradeep and Gopalpur (Orissa), Bhadohi, Kanpur,
Moradabad and Greater Noida (U.P.), Vishakhapatnam and Kakinada (Andhra
Pradesh), Vallarpadam/Puthuvypeen (Kerala) Hassan (Karnataka), Jaipur and
Jodhpur (Rajasthan).
India
was among the first ones in Asia to acknowledge the effectiveness of the Export
Processing Zone (EPZ) model in promoting exports. Asia's first EPZ was set up
in Kandla in 1965. Many Policies were announced at different point of time to
overcome various shortcomings of trade and finances. They also look to forward
to attract larger foreign investments in India.
The
SEZ Act aims to generate additional economic activity, promote exports of goods
and services, promote investment from domestic and foreign sources, generate
employment opportunities and developing infrastructure facilities. In addition
developing Special Economic Zones would in turn attract domestic and foreign
investment, increase the employment opportunity, exports and infrastructural
developments.
Activity
in SEZ
Manufacturing
/ Trading related activities of SEZ include manufacture and trade of Apparel,
Garments & Leather, Automobile and Auto Components, Engineering - Light,
Heavy & Application, Pharmaceuticals, Food Processing, Telecom Equipment,
Computer Hardware & micro- electronics, Consumer Electronics &
Appliances, Gems, Jewellery & Diamonds, Wood, Rubber, Plastic & Leather
Products & Handicrafts.
SEZ
is a home to many service related to IT, Biotechnology, Research &
Development, Health Care, Finance, Education, Entertainment, Leisure &
Recreation, Sports & Related Activities, Retail, Business Solutions and
Warehousing & Trade.
Type of SEZ
·
Special Economic Zone are
classified into four specialized zones, namely,
·
Free trading and warehousing
zone facilitate import of goods and services freely to carry out trade
transactions in free currency.
·
Special Economic Zone for
multi-product is the zone where the units are set up for manufacturing or
trading and warehousing or rendering of two or more goods in a sector.
·
Special Economic Zone for
specific sector is meant exclusively for one or more products or services in a
particular sector.
·
Special Economic Zone in a
port or airport means a Special Economic Zone in an existing port or airport
for Special Economic Zone.
·
Administrative set up
Structurally
SEZ has three tier administrative set up. The central apex body is called “The
Board of Approval” and is headed by the Secretary, Department of Commerce. The
Approval Committee is further divided into different Zones headed by a
Development Commissioner, who should be an ex-officio chairperson of the
Approval Committee.
Units
are set up in the SEZ once it gets an approval from the Board of Approval and
the area for establishing SEZ has been defined. The Zonal Approval Committee
consists of Development Commissioner, Customs Authorities and representatives
of State Government.
Incentives and facilities
offered to the SEZs
The
units in SEZs are given many incentives and facilities to attract domestic as
well as foreign investment.
They
can be summed up as:-
·
Goods are imported without
levying any duty and domestic procurement of goods for development, operation
and maintenance of SEZ units
·
100% Income Tax exemption on
export income for SEZ units under Section 10AA of the Income Tax Act for first
5 years, 50% for next 5 years thereafter and 50% of the ploughed back export
profit for next 5 years.
·
Exemption from minimum
alternate tax under section 115JB of the Income Tax Act.
·
External commercial
borrowing by SEZ units upto US $ 500 million in a year without any maturity
restriction 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 as extended by the respective State Governments.
The
major incentives and facilities available to SEZ developers include:-
·
Exemption from
customs/excise duties for development of SEZs for authorized operations
approved by the BoA.
·
Income Tax exemption on
income derived from the business of development of the SEZ in a block of 10
years in 15 years under Section 80-IAB of the Income Tax Act.
·
Exemption from minimum
alternate tax under Section 115 JB of the Income Tax Act.
·
Exemption from dividend
distribution tax under Section 115O of the Income Tax Act.
·
Exemption from Central Sales
Tax (CST).
·
Exemption from Service Tax
(Section 7, 26 and Second Schedule of the SEZ Act).
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