presentation of rupa

8/8/2019 Presentation of Rupa

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SEZsSEZs

YesterYester yearsyears EPZsEPZs (Export(Export ProcessingProcessing Zones)Zones)areare todaystodays SEZsSEZs

OneOne ofof thethe earliestearliest && mostmost famousfamous SEZsSEZs werewerefoundedfounded byby ChinaChina underunder DenDen XiaopingXiaoping inin thetheearlyearly19801980ss

TodayToday thethe mostmost prominent prominent SEZsSEZs inin ChinaChina areare

ShenzhenShenzhen && Pudong,Pudong, aa districtdistrict ofof ShanghaiShanghai However,However, IndiasIndias firstfirst EPZEPZ waswas setset upup inin

KandlaKandla (Gujarat)(Gujarat) inin 19651965 followedfollowed bybySantacruzSantacruz (Mumbai)(Mumbai) inin 19731973


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Experience with EPZsExperience with EPZs StartingStarting withwith KandlaKandla inin 19651965;; SEEPZSEEPZ inin 19721972,, BasedBased

onon reviewsreviews ofof working,working, Cochin,Cochin, Falta,Falta, MadrasMadras

(Chennai)(Chennai) andand NOIDANOIDA inin 19841984 andand VizagVizag inin 19891989 VeryVery limitedlimited impactimpact

LessLess thanthan 4040%% ofof approvalsapprovals fructified,fructified, restrest cancelledcancelledoror lapsedlapsed

EmployedEmployed onlyonly 00..0101%% ofof labourlabour forceforce FDIFDI waswas lessless thanthan 2020%% ofof totaltotal investmentinvestment

AccountedAccounted forfor lessless thanthan 44%% ofof exportsexports.. Net Net exportexportmuchmuch lowerlower asas importsimports werewere overover 6060%% ofof exportsexports


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DeficienciesDeficiencies inin EPZEPZ policypolicy werewere ::

LimitedLimited powerpower ofof ZonalZonal authoritiesauthorities

AbsenceAbsence ofof singlesingle windowwindow facilityfacility withinwithin thethe ZoneZone

RigidRigid customcustom procedureprocedure forfor bondingsbondings && bankbank guaranteesguarantees

RestrictiveRestrictive FDIFDI policypolicy

ProceduralProcedural constraintsconstraints && severesevere infrastructuralinfrastructural

deficienciesdeficiencies

DuringDuring 19911991--20002000,, widewide--rangingranging measuresmeasures werewere

initiatedinitiated byby thethe GoIGoI forfor revampingrevamping andand restructuringrestructuring

EPZsEPZs..

ThisThis phasephase waswas thusthus markedmarked byby progressiveprogressiveliberalisationliberalisation ofof policypolicy provisionsprovisions andand relaxationrelaxation inin thethe

severityseverity ofof controlscontrols andand simplificationsimplification ofof proceduresprocedures..


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Evolution : from EPZs to SEZs Focus had been on delegating powers to zone authorities,

providing additional fiscal incentives, simplifying policyprovisions and providing greater facilities.

The EXIM Policy (1997-2002) introduced a new scheme from

April 1, 2000 for establishment of the Special Economic Zones

(SEZs) in different parts of the country.

From November 1, 2000 the EPZs at Kandla, Santa Cruz

(Mumbai), Cochin and Surat have been converted into SEZs.

In 2003, other existing EPZs namely, Noida, Falta, Chennai,

Vizag were also converted into SEZs.As on June 2005, 53 SEZs have been approved by the

Government of India out of which 11 SEZs are functional and

the rest 42 SEZs are under establishment.


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Functional SEZs at present

At present there are eight functional SEZs locatedat:

SantaCruz (Maharashtra), Cochin (Kerala), Kandla and Surat (Gujarat), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh),

Falta (West Bengal) & Nodia (Uttar Pradesh) in India. Further a SEZ at Indore (Madhya Pradesh ) is now

ready for operation.


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In addition 18 approvals have been given forsetting 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) on the basis of proposals received from the State

Governments.


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What is a SEZ ?What is a SEZ ?

SpecialSpecial EconomicEconomic ZoneZone (SEZ)(SEZ) isis defineddefined asas "a"a specificallyspecificallydelineateddelineated dutyduty freefree enclaveenclave andand shallshall bebe deemeddeemed toto bebe foreignforeignterritoryterritory forfor thethe purposes purposes ofof tradetrade operationsoperations andand dutiesduties andandtariffs"tariffs"..

SpecialSpecial EconomicEconomic ZoneZone isis oneone oror moremore areasareas ofof aa countrycountrywherewhere thethe tariffstariffs andand quotasquotas areare eliminatedeliminated andand bureaucraticbureaucraticrequirementsrequirements areare loweredlowered soso thatthat moremore companiescompanies areare attractedattracted

toto thethe areaarea.. TheThe companiescompanies establishingestablishing inin thethe areaarea alsoalso getgetextraextra incentivesincentives forfor doingdoing businessbusiness..

SEZsSEZs areare anan acknowledgementacknowledgement ofof thethe potential potential ofof exportexport--ledleddevelopmentdevelopment strategystrategy inin acceleratingaccelerating economiceconomic growthgrowth..

GovernmentGovernment ofof IndiaIndia havehave notifiednotified SpecialSpecial EconomicEconomic ZonesZones

(SEZs)(SEZs) ActAct 20052005 andand notifiednotified SpecialSpecial EconomicEconomic ZoneZone RulesRules20062006 withwith aa viewview toto augmentingaugmenting infrastructureinfrastructure facilitiesfacilities forforexportexport productionproduction..

SettingSetting upup ofof SpecialSpecial EconomicEconomic ZonesZones areare permitted permitted inin thethepublic,public, private,private, jointjoint sectorsector oror byby thethe StateState GovernmentsGovernments..


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Incentives and facilities offered to the SEZsIncentives and facilities offered to the SEZs

The incentives and facilities offered to the units in SEZs for attractinginvestments into the SEZs, including foreign investment include:- Duty free import/domestic procurement of goods for development, operationand maintenance of SEZ units 100% Income Tax exemption on export income for SEZ units under Section10AA 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 TaxAct. External commercial borrowing by SEZ units upto US $ 500 million in a yearwithout 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 respectiveState Governments.


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SEZApprovalSEZApproval

ConsequentConsequent uponupon thethe SEZSEZ RulesRules comingcoming intointo effecteffect ww..ee..ff.. 1010ththFebruary,February, 20062006,, TwentyTwenty--fivefive meetingsmeetings ofof thethe BoardBoard ofofApprovalsApprovals havehave sincesince beenbeen heldheld.. DuringDuring thesethese meetings,meetings,formalformal approvalapproval hashas beenbeen grantedgranted toto 462462 SEZSEZproposalsproposals.. ThereThere areare 135135 validvalid inin--principleprinciple approvalsapprovals.. OutOutofof thethe 462462 formalformal approvals,approvals, 222222 SEZsSEZs havehave beenbeen notifiednotified..

Benefits derived from SEZsBenefits derived from SEZs

BenefitBenefit derivedderived fromfrom SEZsSEZs isis evidentevident fromfrom thethe investment,investment,employment,employment, exportsexports andand infrastructuralinfrastructural developmentsdevelopmentsadditionallyadditionally generatedgenerated.. TheThe benefitsbenefits derivedderived fromfrom multipliermultipliereffecteffect ofof thethe investmentsinvestments andand additionaladditional economiceconomic activityactivityinin thethe SEZsSEZs andand thethe employmentemployment generatedgenerated thusthus willwill farfaroutweighoutweigh thethe taxtax exemptionsexemptions andand thethe losseslosses onon accountaccount ofoflandland acquisitionacquisition.. StabilityStability inin fiscalfiscal concessionconcession isis absolutelyabsolutely

essentialessentialtoto ensureensure credibilitycredibility ofof GovernmentGovernment intensionsintensions..


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Exports from the functioningExports from the functioningSEZs during the last five yearsSEZs during the last five years

YearYear Value (Rs. Crore)Value (Rs. Crore) Growth RateGrowth Rate

( over previous year )( over previous year )

20032003--20042004 13,85413,854 39%39%

20042004--20052005 18,31418,314 32%32%

20052005--20062006 22 84022 840 25%25%

20062006--20072007 34,61534,615 52%52%

20072007--20082008 66,63866,638 92%92%


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New Policy in April 2000. SEZs permitted to be set up in theNew Policy in April 2000. SEZs permitted to be set up in thepublic, private, joint sector or by the State Governmentspublic, private, joint sector or by the State Governments

Minimum size of 1000 hectares (4 sq. miles)Minimum size of 1000 hectares (4 sq. miles) Simplified procedures and more incentivesSimplified procedures and more incentives Main measures were:Main measures were:

Conditions for automatic approval relaxed considerablyConditions for automatic approval relaxed considerably Customs procedures simplifiedCustoms procedures simplified Units could produce items reserved for SSI units inUnits could produce items reserved for SSI units in

domestic marketdomestic market 100% FDI investment for manufacturing100% FDI investment for manufacturing Profits could be repatriated fullyProfits could be repatriated fully Freedom for subFreedom for sub--contractingcontracting 100% I.T. exemption for five years100% I.T. exemption for five years Exemption from Central Excise Duty on capital goods, rawExemption from Central Excise Duty on capital goods, raw

materials, consumable spares from domestic marketmaterials, consumable spares from domestic market Reimbursement of CST paid on domestic purchasesReimbursement of CST paid on domestic purchases

SEZ Policy of 2000SEZ Policy of 2000


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Positive ImpactsPositive Impacts

To NationTo Nation World class business environmentWorld class business environment

Increased FDIIncreased FDI Higher economic growthHigher economic growth

Infrastructural developmentInfrastructural development

Export growthExport growth Employment OpportunitiesEmployment Opportunities

Exposure to technology and global marketsExposure to technology and global markets


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TO Business housesTO Business houses Hassle free operating environmentHassle free operating environment

Single window clearanceSingle window clearance Simplified procedure for setting up business,Simplified procedure for setting up business,

compliance proc with with self certificationcompliance proc with with self certification

Duty free importDuty free import

Tax exemptionTax exemption-- VAT, CST, ST, other leviesVAT, CST, ST, other levies

External commercial borrowingsExternal commercial borrowings

100% profit reptriation from export earnings100% profit reptriation from export earnings



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To PeopleTo People

Employement opportunitiesEmployement opportunities

Impact on lifestyle and standard of livingImpact on lifestyle and standard of living

Business infrastructure combined with socialBusiness infrastructure combined with socialfacilitiesfacilities

Better work culture , good education,Better work culture , good education,leadership visionleadership vision



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HurdlesHurdles

To NationTo Nation

Loss of revenueLoss of revenue

To BusinessTo Business

Land acquisitionLand acquisition

Single window actually is notSingle window actually is not

No strategic planning for electicity, waterNo strategic planning for electicity, water


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To PeopleTo People

Grabbing of fertile landGrabbing of fertile land Water scarcityWater scarcity-- Threat to accessThreat to access

Food scarcityFood scarcity

Exploitation of laborExploitation of labor

Landless farmersLandless farmers To EnvironmentTo Environment

Mangrove destructionMangrove destruction Destruction of ground water recharge systemDestruction of ground water recharge system

PollutionPollution

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