sol eidp assign 073

7/29/2019 Sol EIDP Assign 073

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INTERNAL ASSIGNMENT

Name of the Candidate: Rajesh Kumar

Enrollment no. : 07315903911

Course: MBA

Semester: III

Section: A

Batch: 2011-2013

Subject: Export Import procedures and documentation

Subject code: MS - 243

Topic of assignment: Special Economic Zones

Subject Teachers name: Dr. Lenin A Jothi


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CERTIFICATE OF MERIT

This is to certify that Export Import procedures and documentation ResearchAssignment entitled Special Economic Zones submitted to Rukmini Devi Institute of

Advanced Studies. It is original work carried out by Mr. Rajesh Kumar enrollment under the

guidance ofDr. Lenin A Jothi. .

Signature of Guide Student name: Rajesh Kumar

Dr. Lenin A Jothi Enrollment no-07315903911

(Guide) MBA-III Sec-A (RDIAS)


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TABLE OF CONTENTS

S.No. Contents Page

No.

1 Article Name 4

2 Introduction 5

3 Abstract 6

4 Analysis/Interpretation 7

5 Benefits/Scope 10

6 Findings & Suggestions 12

7 Conclusion 13

8 Bibliography 14

9 Plagiarism Report 15


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SPECIAL ECONOMICZONES


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INTRODUCTION

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

order words, SEZ is a geographical region that has economic laws different from a country's

typical economic laws. Usually the goal is to increase foreign investments. The SEZ was first

established by the China for increase in investment and increase job opportunities and

technical knowledge and bring about certain tax reforms. SEZs have been established in

several countries, including China, India, Jordan, Poland, Kazakhstan, Philippines and

Russia. North Korea has also attempted this to a degree.

The Special Economic Zone (SEZ) policy in India first came in existence on April 1, 2000.

The prime objective was to enhance foreign investment and provide an internationally

competitive and hassle free environment for exports. The idea was to promote exports from

the country and realizing the need that level playing field must be made available to the

domestic enterprises and manufacturers to be competitive globally. Foreign direct investment

(FDI) has played the major role in uplifting the status of SEZ. The policy provides setting

up the SEZ in the public sector or private sector or by joint sector or even by the state

government.

SEZ LOCATIONS IN INDIA

At present there eight functional Special Economic Zones 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.

Further a Special Economic Zone at Indore ( Madhya Pradesh ) os now ready for operation.

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) on the basis of proposals received from

the State Governments.


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ABSTRACT

SEZ is the major component of economic growth. This is a center of attraction for all global

and private players. It increases the potential of industries. I try to study the origin of SEZ

and arrival in India. I try to introduce the SEZ and its major components. I try to differentiate

its characteristics with other past activities of government for business development. I have

analyzed the incentives and facilities in SEZ. I have found no. of benefits that gained through

the SEZ to nation, business and people. I have also studied few drawbacks of SEZ through

unsatisfied classes. I have given some suggestions that really enhance the potential of SEZ

without raising any social issue. Overall I found that SEZ is giving benefits to all segments

directly or indirectly. It is essential for dynamic growth of nation, society and industries.


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ANALYSIS/INTERPRETATION

Any private/public/joint sector or State Government or its agencies can set up Special

Economic Zone (SEZ). For setting up a manufacturing, trading or service units in SEZ, 3

copies of project proposal in the format prescribed at Appendix 14-IA of the Handbook of

Procedures, Vol.1 to be submitted to the Development Commissioner of the SEZ.

Performance of the SEZ units monitored by a Unit Approval Committee consisting of

Development Commissioner, Custom and representative of State Govt. on annual basis. In all

SEZ's , the statutory functions are controlled by the Government. Government also controls

the operation and maintenance function in the 7 Central Government controlled SEZs. In rest

of the operation and maintenance are privatised.

Following Incentive/ facilities to SEZ enterprises:

Customs and Excise :SEZ units may import or procure from the domestic sources, duty free, all their

requirements of capital goods, raw materials, consumables, spares, packing materials,

office equipment, DG sets etc. for implementation of their project in the Zone without

any licence or specific approval.

Duty free import/domestic procurement of goods for setting up of SEZ units.

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 Custom

duty.

Domestic sale rejects and waste and scrap on payment of applicable Custom duty onthe transaction value.

Income tax :

Physical export benefit

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


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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 substitutes.

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.

Freedom to bring in export proceeds without any time limit.

Flexibility to keep 100% of export proceeds in EEFC account. Freedom to make

overseas investment from it.

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.

Income Tax Act:

Service Tax:

Exemption from Service Tax to SEZ units


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Environment :

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 port restriction under Drugs & Cosmetics Rules.

Sub-Contracting/Contract Farming :

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.

Agriculture/Horticulture processing SEZ units allowed to provide inputs and

equipments to contract farmers in DTA to promote production of goods as per the

requirement of importing countries.


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BENEFITS/SCOPE OF SEZ

SEZ Attracts FDI and exchange earnings. FDI spells long term capital that can

help sustain solvency. Also FDI will ensure meaningful ownership.

SEZ is also creating a lot of job opportunities and main element of employment

generation in India.

SEZs become a success it increases the GDP, and acts as a good economic model

for the policy makers to mimic.

100 % Foreign Direct Investment allowed for setting up units in SEZ except for a few

prohibited lists of industries e.g. armaments, drugs and such sensitive items

Latest technology or innovations have been boosted in SEZ.

Increased exports from the country bring in more revenue for the country which

improves the economic growth.

15 year corporate tax holiday on export profit100% for initial 5 years, 50% for the

next 5 years and up to 50% for the balance 5 years equivalent to profits ploughed back

for investment.

Allowed to carry forward losses.

No licence required for import made under SEZ units.

Duty free import or domestic procurement of goods for setting up of the SEZ units.

Goods imported/procured locally are duty free and could be utilized over the approval

period of 5 years.

Exemption from customs duty on import of capital goods, raw materials,

consumables, spares, etc.

Exemption from Central Excise duty on the procurement of capital goods, raw

materials, and consumable spares, etc. from the domestic market.

Exemption from payment of Central Sales Tax on the sale or purchase of goods,

provided that, the goods are meant for undertaking authorized operations.

Exemption from payment of Service Tax.

The sale of goods or merchandise that is manufactured outside the SEZ (i.e, in DTA)

and which is purchased by the Unit (situated in the SEZ) is eligible for deduction and

such sale would be deemed to be exports.

The SEZ unit is permitted to realize and repatriate to India the full export value of

goods or software within a period of twelve months from the date of export.


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Write-off of unrealized export bills is permitted up to an annual limit of 5% of their

average annual realization.

No routine examination by Customs officials of export and import cargo.

Setting up Off-shore Banking Units (OBU) allowed in SEZs.

OBU's allowed 100% income tax exemption on profit earned for three years and 50 %

for next two years.

Exemption from requirement of domicile in India for 12 months prior to appointment

as Director.

Since SEZ units are considered as public utility services, no strikes would be

allowed in such companies without giving the employer 6 weeks prior notice in

addition to the other conditions mentioned in the Industrial Disputes Act, 1947.

The Government has exempted SEZ Units from the payment of stamp duty and

registration fees on the lease/license of plots.

External Commercial Borrowings up to $ 500 million a year allowed without any

maturity restrictions.

Enhanced limit of Rs. 2.40 crores per annum allowed for managerial remuneration.


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FINDINGS

For surviving in the global competition, SEZ is working as a panacea that boosts the domestic

industries through FDI and private players. All the time in industrial sector, for setting up a

new business capital & final investment is the major problem but due to emergence of SEZ,

Private & foreign investors have come in the mass level for investment in these SEZ.

Domestic industries have achieved the opportunities to enhance its caliber through the help of

private &foreign investors to uplift the status of India Industries. Investors felt that India has

broad markets that not only enhance their global production and expansion but also it

provides the large segment of customers and market for their products. Investors have also

gained huge benefits by duty free allowance. Due to development of these areas economic

growth have been gained through the balanced regional development. Highest no. of benefits

have reaped by small scale industries that have capital problems to fulfill their objectives of

marketing operations and business activities. SEZ worked as patron for these small scale

industries. Major problem of India is unemployment but that has been reduced due to arrival

of new industries in SEZ. High technological development have achieved that are visible in

Product changing features, qualities and design.

But some drawbacks are also found like taking away of agricultural land from the farmers for

setting SEZ. The farmers are being paid disproportionate money which is not in lieu of the

current land prices. Arable land is being used for non-agricultural purpose which could lead

to food crisis and loss of self-sustenance in future. That is harmful for agricultural growth.

Revenue losses to nation because of the various tax exemptions and incentives in SEZ.

SUGGESTIONS

SEZs should be carefully planned not to affect the natural habitat and surrounding

environment.

Arable land should not be used for industrial set up in SEZ.

Govt. should also avail the required facility for industries like good transport, roads,

electricity, etc.

Hire and fire policy should not be used in these industries of SEZ.

Give reasonable amount to land owners.


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CONCLUSION

SEZ role is so important in dynamic business environment. This is a required for Indias

balanced economic growth. Domestic industries are now able to provide the global standard

products due to the help of other private or foreign partners. It increases technological

innovations that give high quality of products at low price that increase brand value and

customer satisfaction. Government policies of liberalization and Tax free zones of SEZ

attract foreign investors. SEZs improve the countrys foreign export. Thats why our country

becomes no. 2 in world economy. That is the reason in the time of global recession our

country is not as much affected as other countries of world have been affected. SEZs create

immense employment opportunities.Economic development in that area also possible due to

building townships, shopping malls, restaurants, amusement parks setup around to attract

people. Thus by fulfilling the economic & professional needs, it enhances the purchasing

power of persons. So they also become customers of organizations product. It reduces

ultimately economic disparity and enhances the standard of living of persons.

Government requires huge amount of funds for undertaking any kind of mass & social

development program. Now government may tie up with private partners whore willing to

invest in that area. As in the government gets the capital needed to establish the required

infrastructure and also the expertise. The private player on the other hand gets the right to

market and use the SEZs with relaxed tax laws, thereby increasing its revenue generating

capacity and also carrying out the economic growth of the company in a more efficient way

with the better tax policies.

SEZ is a win-win situation for all business components


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BIBLIOGRAPHY

Export Import procedures and documentation Khushpat S Jain

Ministry of Commerce & Industry, Department of commerce, SEZ

documents

India in Business Reports


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PLAGIARISM REPORT

sol eidp assign 073

Documents