DOCSLIB.ORG

Establishment and Privileges Available to Special Economic Zones

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text

Load more

SEZ

ESTABLISHMENT AND
PRIVILEGES AVAILABLE TO SPECIAL ECONOMIC ZONES

Copyright Gopal Chopra & Associates

1

SEZ

Contents

1.0

INTRODUCTION...................................................................................................................................................... 3
2.0 SPECIAL ECONOMIC ZONES (SEZ)........................................................................................................................ 3 3.0 FREE TRADE AND WAREHOUSING ZONES (FTWZ).......................................................................................... 4 4.0 ADMINISTRATION FRAMEWORK OF SEZ............................................................................................................. 4 5.0 SETTING UP A SEZ ..................................................................................................................................................... 4 6.0 MINIMUM AREA REQUIREMENTS FOR SETTING UP A SEZ............................................................................6 7.0 EXIT POLICY OF SEZ.................................................................................................................................................. 7 8.0 TAX AND DUTY EXEMPTIONS TO SEZ UNITS..................................................................................................... 8 9.0 FOREIGN DIRECT INVESTMENTS IN SEZ ..........................................................................................................10

Copyright Gopal Chopra & Associates

2

SEZ

1.0 INTRODUCTION

India’s Foreign Trade Policy 2015-2020, which is currently in force, aims at boosting India’s exports. The Government has given in the past and is still providing various export promotion measures, and the schemes and initiatives related to various centers of export-oriented production are one of them.

Units undertaking to export their entire production of goods and services (except permissible sales in Domestic Tariff Area), may be set up under the Export Oriented Unit (EOU) scheme, Electronic Hardware Technology Parks (EHTP), Software Technology Parks (STP) or Bio-Technology Parks (BTP) Scheme for manufacture of goods, including repair, re-making, reconditioning, re-engineering and rendering of services, development of software, agriculture including agro-processing, aquaculture, animal husbandry, bio-technology, floriculture, horticulture, pisciculture, viticulture, poultry and sericulture. Trading units are not covered under these schemes. These units are entitled to certain privileges and exemptions.

Similarly, the Special Economic Zone (SEZ) - specifically delineated duty-free enclaves – and policy related to them first came into inception in the year 2000. The prime objective was to enhance foreign investment and provide an internationally competitive and hassle free environment for exports. The idea behind the SEZ scheme was to promote exports from the country and create equal opportunities for the domestic enterprises and manufacturers to be competitive globally.

2.0 SPECIAL ECONOMIC ZONES (SEZ)

A SEZ is a region that has economic laws that are more liberal than the country’s typical economic laws and where all the units therein have specific privileges. SEZs are specific enclaves and are exempt from most restrictive laws regarding taxes, quotas, FDI-bans, labour laws etc to make them globally competitive.

SEZ is a special demarcated area in a State and the rest of the state where the SEZ is located is legally referred to as the Domestic Tariff Area (DTA). Through setting up a SEZ in any state, the state can earn increased export earnings, benefit from increased employment opportunities etc. To enable this, foreign investors are offered incentives such as tax exemptions, duty free imports, exemptions from import quotas, capital mobility to remit profits, export allowances and subsidised interest rates within the SEZ.

The SEZ Policy was announced in April 2000 with the purpose of making the Special Economic Zones an engine for economic growth which would give a boost to exports, employment and investment generation, and would be supported by quality infrastructure and an attractive fiscal package both at the Central and State level with a single window clearance.

Copyright Gopal Chopra & Associates

3

SEZ

With effect from 10th February, 2006 the activities relating to Special Economic Zones are guided by the provisions contained in the Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006.

Before the enactment of the SEZ Act, the SEZs in India were governed by Chapter 7 and 7A of Foreign Trade Policy.

3.0 FREE TRADE AND WAREHOUSING ZONES (FTWZ)

The FTWZ is a special category of SEZ wherein mainly trading and warehousing and other activities related thereto are carried on. The policy relating to Free Trade and Warehousing Zones is governed by SEZ Act 2005, and the Rules framed thereunder, however before the Act came into force it was covered under Chapter 7A of the Foreign Trade Policy (2004-2009).

4.0 ADMINISTRATION FRAMEWORK OF SEZ

The Government of India has delegated control of different aspects of the SEZ to three different Ministries. The Ministry of Commerce and Industry formulates the regulatory provisions pertaining to the Special Economic Zones and EXIM Policy in India. The Ministry of Environment & Forests is concerned with the environmental clearances for the SEZ units. The Ministry of Finance is concerned with the financial and taxation aspects of the SEZ.

Since the Special Economic Zones Act, 2005 is the governing legislation for SEZ in India, the functioning of the SEZ is administered by the Board of Approval (BOA) set up under the Act as the apex body to administer SEZ and is headed by the Secretary, Department of Commerce. The Approval Committee at the Zone level deals with approval of units in the SEZs and other related issues. Each Zone is headed by a Development Commissioner, who is ex-officio chairperson of the Approval Committee.

5.0 SETTING UP A SEZ

A SEZ may be first established as any business entity viz. Public Limited Company, Private Limited Company, Proprietorship, Partnership or any other form of business organization permissible as per the law.

Thereafter it can seek to be established as a SEZ by submitting the application form, the relevant documents and following the prescribed procedure. It could be set up as SEZ for a Specific Sector, a Multi Product SEZ or a Free Trade and Warehousing Zone (FTWZ). In case the applicant is a company or partnership firm, the Copy of certificate of incorporation alongwith Article of Association and Memorandum in case of companies and partnership deed in case of partnership firms have to be attached with the application form.

Copyright Gopal Chopra & Associates

4

SEZ

An application in Form A under Rule 3 of the SEZ Rules 2006 has to made to the concerned Development Commissioner of the State where the SEZ is proposed to be set up, who, within a period of 15 days, shall forward it to the Board of Approval (BOA) with his inspection report, State Government’s recommendation and other details to be furnished for issue of notification for declaration of an area as Special Economic Zone.

However the application would be considered by the BOA only when the State Government recommendation is received. The developer submits the proposal for establishment of SEZ to the concerned State Government. The State Government has to forward the proposal along with its recommendation within 45 days from the date of receipt of such proposal to the Board of Approval. The applicant also has the option to submit the proposal directly to the Board of Approval. However, in such case after that he has to obtain the concurrence of Sate Government with in six months.

Checklist for Application for SEZ

1. Name of the Developer. 2. Proposed area of the location of the SEZ. 3. Status of recommendation of the proposal by the State Government (if available). 4. Whether proposal is for formal or in-principle approval? (In case land is in possession of the promoter, it is considered for formal approval) 5. Is it a multi-product SEZ? 6. If it is a sector specific SEZ, the sector is. 7. Whether it meets the area requirements. 8. Area of the SEZ (in hectares) 9. Whether Form- A has been filed? 10. Whether undertaking and affidavit has been submitted? 11. Whether project report has been submitted? 12. Whether land is owned/leased and is in possession of the Developer? 13. Does the proposal meet the area requirements of the Rules? 14. Whether the land has existing structures or is vacant? 15. Whether the land is contiguous? 16. Projected investment in the project. 17. Projected exports from the project. 18. Projected employment from the project. 19. Share capital and Reserves of the Developer Company. 20. Source of funds for the project. 21. Net worth of the Applicant (including Group companies) duly supported by Audited Accounts of the Developer for last 3 Years (for all the constituents in case the Developer is a SPV). If the company is a new company, audited accounts of Flagship Company/promoters may be provided. 22. Extent of FDI (if any) in million U.S. Dollars 23. Source of FDI (Country and Company details may be provided) 24. Whether provisions contained in the Press Note No. 5 (2005 Series), issued by the Ministry of Commerce and Industry have been followed in respect of Telecom/IT SEZ development?

Copyright Gopal Chopra & Associates

5

SEZ

Once the BOA gives formal approval and the concerned Development Commissioner gives an inspection report certifying the contiguity and vacancy of the area, the area is notified as SEZ.

All post approval clearances including grant of importer-exporter code number, change in the name of the company or implementing agency, broad banding diversification, etc. are given at the Zone level by the Development Commissioner.

The performance of the SEZ units are periodically monitored by the Approval Committee and units are liable for penal action under the provision of Foreign Trade (Development and Regulation) Act, 1976 in case of violation of the conditions of the approval.

6.0 MINIMUM AREA REQUIREMENTS FOR SETTING UP A SEZ

Rule 5(2) of the SEZ Rules, 2006 lays down the minimum area requirement for development of SEZ. However, as per the Ministry of Commerce and Industry notification dated 12th August 2013, the Government made the SEZ (Amendment) Rules 2013 which introduced a reduction in the minimum land area requirements for multiproduct and sector-specific SEZs and removed the minimum area requirement for Information Technology/Information Technology Enabled Services SEZs (IT/ITeS SEZs) and also grades the scale for minimum land area criteria.

Minimum Land Area Requirements for SEZs is as follows:

Type of SEZ

1. Multi-Product SEZ

Minimum Land Area Requirement

 Multi-product SEZ should have a contiguous area of 500 hectares or more but not exceeding 5000 hectares
 atleast 50% of the area should be built-up area
 for multi-product SEZ proposed to be set up in Assam, Meghalaya, Nagaland, Arunachal Pradesh, Mizoram, Manipur, Tripura, Himachal Pradesh, Uttaranchal, Sikkim, Jammu and Kashmir, Goa or in a Union Territory, the area shall be 100 hectares or more
 Should have a contiguous area of
50 hectares or more
2. SEZ for a Specific Sector or for one or more services or in a port or airport
 For each contiguous 50 hectare land in a SEZ or which is added to the

Copyright Gopal Chopra & Associates

6

SEZ

SEZ – an additional sector may be allowed
 With respect to these types of SEZ operating in specified States and UTs – the land area requirement is 25 hectares

  • 3. IT/ITeS SEZs
  •  No minimum land area requirement

 However, Minimum Built-up processing area requirement shall be applicable based on the category of cities as listed in Annexure IVA to the SEZ Rules 2006
4. SEZ exclusively for Electronics Hardware and Software (Including ITeS)
 Area requirement is 10 hectares or more
 Minimum Built-up processing area requirement shall be applicable based on the category of cities as listed in Annexure IVA to the SEZ Rules 2006

  • 5. SEZ exclusively for Handicrafts
  •  Area requirement is 10 hectares or

more
6. SEZ exclusively for bio-technology, non-conventional energy, including solar energy equipments or cell, or gems and jewellery sectors, agro-based food processing
 Area shall be 10 hectares or more  Certain specifications are there for the minimum built-up area

7.0 EXIT POLICY OF SEZ

Vide the Ministry of Commerce and Industry notification dated 12th August 2013, the Government made the SEZ (Amendment) Rules 2013 wherein an option has been introduced for the SEZ whereby the unit can exit from the SEZ by transferring its assets and liabilities to another person by way of transfer of ownership including sale of SEZ units subject to the following conditions:

 The SEZ unit has held a valid Letter of Approval as well as lease of land for not less than a period of 5 years on the date of transfer
 The SEZ unit has been operational for a minimum period of 2 years after the commencement of production as on the date of transfer
 The sale of such SEZ unit / transfer of SEZ unit shall be subject to the prior approval of the Approval
Committee
 The transferee fulfills all eligibility criteria applicable to a SEZ unit .  The applicable duties and liabilities if any and any export obligations of the transferor unit shall stand transferred to the transferee unit which shall be under obligation to discharge the same on the same terms and conditions as the transferor unit

Copyright Gopal Chopra & Associates

7

SEZ

8.0 TAX AND DUTY EXEMPTIONS TO SEZ UNITS

As specified under section 7 of the Special Economic Zones Act, 2005, Any goods or services exported out of, or imported into, or procured from the Domestic Tariff Area by, -

(i) A Unit in a Special Economic Zone; or (ii) A Developer; shall, subject to such terms, conditions and limitations, as may be prescribed, be exempt from the payment of taxes, duties or cess under all enactments specified in the First Schedule to the Special Economic Zones Act, 2005. The provisions of the Income-tax Act, 1961, shall apply to, or in relation to, the Developer or entrepreneur for carrying on the authorised operations in a Special Economic Zone or SEZ Unit subject to the modifications specified in the Second Schedule to the Special Economic Zones Act, 2005.

Privileges for Units operating from SEZ and SEZ Developers are as follows:
 Single window clearance for central and state level approvals  Exemption from any duty of customs on goods imported into, or service provided in a Special Economic
Zone.
 Exemption from any duty of customs on goods exported from, or services provided, from a Special
Economic Zone to any place outside India.
 Exemption from any duty of excise on goods brought from Domestic Tariff Area to a special Economic
Zone.
 Drawback on goods brought or services provided from the Domestic Tariff Area into a SEZ or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur;
 Exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2) Act, 2004 in case the taxable securities transactions are entered into by a non-resident through the international financial services centre
 Exemption from the levy of taxes on the sale or purchase of goods other than newspapers under the
Central Sales Tax Act, 1956 if such goods are meant to carry on the authorized operations by the Developer or Entrepreneur
 Exemption from the State Sales tax and other state levies  Income tax exemption for a block of 10 years in 15 years under section 80-I AB of the Income Tax Act
1961 if the specified activity started upto 31st March, 2017.

 Exemption from minimum alternate tax under section 115 JB of the Income tax Act 1961  Exemption from dividend distribution tax under section 115 O of the Income Tax Act 1961

Copyright Gopal Chopra & Associates

8

SEZ

 Deduction in respect of certain incomes allowed under section 80LA of Income Tax Act 1961, to scheduled banks or foreign banks having an Offshore Banking unit in SEZ or to a unit of International Financial Services Centre (IFSC).
 Capital gains arising on transfer of assets (machinery, plant, building, land or any rights in buildings or land) on shifting of the industrial undertaking from an urban area to any SEZ would be exempt from capital gains tax, subject to certain conditions.
 Exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a
Developer or Unit to carry on the authorised operations in a Special Economic Zone

Vide Service Tax Notification 7/2014 dated July 11, 2014 – the Central Government has expanded the scope of available exemption as well as refund eligible to SEZ Developers and SEZ Units.

The SEZ Developers and SEZ Units are entitled to a refund of service tax in general and upfront exemption under specified circumstances.

The New Notification envisages the following benefits to SEZ Developers and SEZ Units, in respect of service tax leviable on taxable services received and used for authorized operations:

i. Refund of service tax paid on specified services received by the SEZ Developer/ SEZ Unit and used for authorized operations; and

ii. Option of upfront or ab initio exemption where specified services are received by the SEZ Developer/ SEZ Unit and used exclusively for authorized operations.

The ab-initio exemption on the specified services received by the SEZ Unit or the Developer and used exclusively for the authorised operation shall be allowed subject to the following procedure and conditions, namely:-

(a) the SEZ Unit or the Developer shall furnish a declaration in Form A-1, verified by the Specified Officer of the SEZ, along with the list of specified services as are required for the authorised operations

(b) on the basis of declaration made in Form A-1, an authorisation shall be issued by the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be to the SEZ Unit or the Developer, in Form A-2 within fifteen working days from the date of submission of Form A-1 The authorisation referred above shall be valid from the date of verification of Form A-1 by the Specified Officer of the SEZ. Provided that if the Form A-1 is not submitted by the SEZ Unit or the Developer to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise having jurisdiction, as the case may be, within fifteen days of its verification by the Specified Officer of the SEZ, the authorisation shall be valid from the date on which it is submitted

(c) the SEZ Unit or the Developer shall provide a copy of the said authorisation to the provider of specified services, where such provider is the person liable to pay service tax and on the basis of the said authorisation, the service provider may provide specified services to the SEZ Unit or the Developer without payment of service tax. Provided that pending issuance of said authorisation, the provider of specified services may, on the basis of Form A-1, provide such specified services, without payment of service tax, and the SEZ Unit or the Developer shall provide a copy of authorisation to the service provider immediately on receipt of such authorization. Provided further that if the SEZ Unit or the Developer does not provide a copy of the said authorisation to the

Copyright Gopal Chopra & Associates

9

SEZ

provider of specified services within a period of three months from the date when such specified services were deemed to have been provided in terms of the Point of Taxation Rules, 2011, the service provider shall pay service tax on specified services so provided in terms of the first proviso

(d) the SEZ Unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement, in Form A-3, furnishing the details of specified services received by it without payment of service tax;

(e) the SEZ Unit or the Developer shall furnish an undertaking, in Form A-1, that in case the specified services on which exemption has been claimed are not exclusively used for authorised operation or were found not to have been used exclusively for authorised operation, it shall pay to the government an amount that is claimed by way of exemption from service tax and cesses along with interest as applicable on delayed payment of service tax under the provisions of the said Act read with the rules made thereunder. For the purposes of this notification, a service shall be treated as used exclusively for the authorised operations if the service is received by the SEZ Unit or the Developer under an invoice in the name of such Unit or the Developer and the service is used only for furtherance of authorised operations in the SEZ The SEZ Unit or Developer, who intends to avail exemption or refund under this notification, shall maintain proper account of receipt and use of the specified services, on which exemption or refund is claimed, for authorised operations in the SEZ.

9.0 FOREIGN DIRECT INVESTMENTS IN SEZ

100% FDI is allowed in manufacturing sector in SEZ units under automatic route, except arms and ammunition, explosive, atomic substance, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes, cigars and manufactured tobacco substitutes. There is also no cap of foreign investments for SSI reserved items.

Also since FDI is prohibited under the Government Route as well as the Automatic Route in the following sectors, the same applies for units in SEZ:

i) Atomic Energy ii) Lottery Business iii) Gambling and Betting iv) Business of Chit Fund v) Nidhi Company vi) Agricultural (excluding Floriculture, Horticulture, Apiculture, Development of seeds and planting material, Animal Husbandry, Pisciculture, Aquaculture and cultivation of vegetables, mushrooms, etc. under controlled

Copyright Gopal Chopra & Associates

10

SEZ

conditions and services related to agro and allied sectors) and Plantations activities (other than Tea Plantations) (Notification No. FEMA 94/2003-RB dated June 18, 2003).

vii) Housing and Real Estate business (except development of townships, construction of residen-tial/commercial premises, roads or bridges to the extent specified in Notification No. FEMA 136/2005- RB dated July 19, 2005).

viii) Trading in Transferable Development Rights (TDRs). ix) Manufacture of cigars , cheroots, cigarillos and cigarettes , of tobacco or of tobacco substitutes.

Recommended publications
  • Form - H BOND-CUM-LEGAL UNDERTAKING for SPECIAL ECONOMIC ZONE UNIT

    Form - H BOND-CUM-LEGAL UNDERTAKING for SPECIAL ECONOMIC ZONE UNIT

    Form - H BOND-CUM-LEGAL UNDERTAKING FOR SPECIAL ECONOMIC ZONE UNIT. (See rule 22) A bond-cum-legal undertaking made this _____________day of ___________ 20__ between M/s. _________________________________(legal status i.e. a company or firm), a unit in a Special Economic Zone (SEZ) having its registered office at ___________________ and factory/service unit at ___________ (hereinafter referred to as “the obligors” which expression shall, unless repugnant to the context or meaning thereof, include its heirs, successors, executors, administrators, liquidators, legal representatives and assignees) hereby hold and firmly bind ourselves jointly and severally unto the President of India acting through the Development Commissioner of ……………..Special Economic Zone and the Specified Officer (hereinafter jointly referred to as “Government”) in the sum of Rs. --------- (Rupees------------- only) for which payment to be well and truly made, we, the obligors, bind ourselves by these presents. Whereas the Development Commissioner has issued Letter of Approval No. ___________ dated _________ to the obligors, containing the terms and conditions for setting up and operating the unit in the Special Economic Zone, including the requirement of achieving positive Net Foreign Exchange Earning as provided under the Special Economic Zone Rules, 2006 and orders made there-under, hereinafter referred to as the rules, and the obligors have duly accepted the terms and conditions of the said Letter of Approval, vide their letter No.__________ dated __________. And
  • Chapter 25 Export Oriented Units

    Chapter 25 Export Oriented Units

    Chapter 25 Export Oriented Units 1. Introduction: 1.1 EOU scheme was introduced in the year 1980 vide Ministry of Commerce resolution dated 31st December 1980. The purpose of the scheme was basically to boost exports by creating additional production capacity. It was introduced as a complementary scheme to the Free Trade Zones/ Export Processing Zone (EPZ) Scheme introduced in the sixties, which had not attracted many units due to locational restrictions. The exporters showed willingness to set up units with long term commitment to exports under Customs bond operations provided they had the freedom to locate them in places of their choice and given most of the benefits as provided to units set up in the Zones. 1.2 The Export Oriented Units (EOUs) are governed by the provisions of Chapter 6 of the Foreign Trade Policy (FTP) and its procedures, as contained in the Handbook of Procedure (HBP). Provisions of the said Chapter 6 and its procedures have also been made applicable to the Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs). Hence the scheme is for EOU/STP/EHTP/BTP and is referred in common parlance as EOU scheme. 1.3 Over the years, the EOU Scheme has undergone various changes and its scope has also expanded substantially as compared to the initial Scheme, which was basically for manufacturing sector with certain minimum value addition in terms of export earnings. Presently, the units undertaking to export their entire production of goods are allowed to be set up as an EOU. These units may be engaged in the manufacture, services, development of software, repair, remaking, reconditioning, re- engineering including making of gold/silver/platinum jewellery and articles thereof, agriculture including agro-processing, aquaculture, animal husbandry, bio- technology, floriculture, horticulture, pisiculture, viticulture, poultry, sericulture and granites.
  • Instead for Special Economic Zones in India Sumeet Jain

    Instead for Special Economic Zones in India Sumeet Jain

    Northwestern Journal of International Law & Business Volume 32 | Issue 1 Fall 2011 "You Say Nano, We Say No-No:" Getting a "Yes" Instead for Special Economic Zones in India Sumeet Jain Follow this and additional works at: http://scholarlycommons.law.northwestern.edu/njilb Part of the International Law Commons Recommended Citation Sumeet Jain, "You Say Nano, We Say No-No:" Getting a "Yes" Instead for Special Economic Zones in India, 32 Nw. J. Int'l L. & Bus. 1 (2011). http://scholarlycommons.law.northwestern.edu/njilb/vol32/iss1/1 This Article is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Northwestern Journal of International Law & Business by an authorized administrator of Northwestern University School of Law Scholarly Commons. “You Say Nano, We Say No-No:” Getting a “Yes” Instead for Special Economic Zones in India Sumeet Jain* Abstract: Special Economic Zones (SEZs) have the potential to be valuable in- struments of economic growth and development in India. Yet, as a result of the resistance facing them, SEZs in India have not delivered economic benefits to their fullest potential. For this reason, reducing the resistance facing SEZs is critical to their success. This article seeks to reduce this resistance by devising a consensus-building plan based on a regulatory negotiation approach. The ar- ticle first shows that the past and present resistance facing India’s economic zones is a product of the lack of public input in the design of their policy. It then presents a platform for understanding the proponents’ and opponents’ argu- ments by distilling the current legislation and regulation governing India’s SEZ policy into a cohesive operational framework.
  • Diversifying India's Services Exports Through Sezs

    Diversifying India's Services Exports Through Sezs

    Working Paper 312 Diversifying India’s Services Exports through SEZs: Status, Issues and the Way Forward Arpita Mukherjee Saubhik Deb Shreya Deora Tanu M. Goyal Bhavook Bhardwaj December 2015 INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ECONOMIC RELATIONS i Table of Contents Abbreviations ........................................................................................................................... ii Acknowledgements ................................................................................................................. iv Abstract ..................................................................................................................................... v 1. Introduction ........................................................................................................................ 1 2. Free Trade Warehousing Zones ....................................................................................... 3 3. Finance SEZs .................................................................................................................... 12 4. Power SEZs....................................................................................................................... 18 5. Aviation SEZs ................................................................................................................... 22 6. Potential Services SEZs ................................................................................................... 29 6.1 Audio-visual Services SEZs...................................................................................
  • Export Oriented Units and Export Processing Zones

    Export Oriented Units and Export Processing Zones

    Prepared by: Prof. Bimal Jaiswal, Dept. of Applied Economics For the students of B.Com. IV Semester Paper: Export Import Procedure & Documentation Export Oriented Units and Export Processing Zones Export Oriented Units (EOUs) The need for a higher level of technological and industrial progress has made the Government devise a series of export promotion schemes. The Export Oriented Unit Scheme is one of the oldest export promotion schemes of Government of India. This Scheme was introduced on 31st December 1980. The EOU Scheme is often referred to as ‘100% EOU Scheme’ and the Units operating under this Scheme are called ‘100% EOUs’. During the initial years of the introduction of this Scheme the Units operating under EOU Scheme were required to export 100% of their production. But, nowadays EOUs are permitted to do Domestic Tariff Area sales up to 50% of FOB value of previous year’s export after fulfilling certain conditions. During the past 36 years the Government has made many changes in the EOU Scheme to meet the requirements of the ever-changing international scenario. As per this Scheme the EOUs are provided with certain concessions to equip them to meet the requirements of international market. The EOU Scheme is complementary to the Special Economic Zone Scheme, except that it is widely dispersed in location, unlike Special Economic Zones, which are set up at specific geographic locations. The aim of this Scheme is to encourage exports by creating additional production capacity. Under the EOU Scheme India offers bonded manufacturing facilities for Units doing export-oriented activities. An Export Oriented Unit can get a location of its choice for undertaking export-oriented activity.
  • Strategising of Sezs: China Vis-À-Vis India

    Strategising of Sezs: China Vis-À-Vis India

    Strategising of SEZs: China vis-à-vis India Aradhna AGGARWAL 1. Introduction A growing number of countries are increasingly focusing upon special economic zones (SEZs) as engines of industrialization. According to ILO (2007), the number of SEZs increased from a mere 79 across 29 countries in 1975 to 3500 across 130 countries in 2006. Not only has the number of SEZs increased recently, but so have the varieties of SEZs. New varieties of zones have evolved and are subsumed within the category of SEZs. Several countries are upgrading their SEZs into mega-industrial clusters and commercial hubs with generous incentives to take advantage of their potential (Aggarwal, 2012). The usefulness of SEZs for the domestic economy however remains highly controversial. Evidence suggests that while SEZs may bring signifi cant benefi ts, they can also have negative welfare effects on the nation due to government revenue loss and distortions in the growth process. It has been argued that the zones have high maintenance costs; employ low-wage, unskilled female labor; offer an unstable employment base; generate little domestic added value; develop few labor or managerial skills; transfer little modern technology or know-how; have weak links to domestic manufacturers; and hence generate little net benefi ts. The net results can be signifi cantly negative with losses outweighing the positive effects. The SEZ literature is replete with studies on the factors crucial for the success of zones as engines of industrialization and growth (Madani, 1999; Kusago and Tzannatos, 1998; Aggarwal, 2012). A variety of micro, meso and macro climatic factors are believed to determine the success of SEZs.
  • Unit Into Export Oriented Unit (Eou)/ Electronic Hardware Technology Park (Ehtp)/ Software Technology Park (Stp)/ Bio-Technology Park (Btp) Unit

    Unit Into Export Oriented Unit (Eou)/ Electronic Hardware Technology Park (Ehtp)/ Software Technology Park (Stp)/ Bio-Technology Park (Btp) Unit

    APPENDIX 14 I-O GUIDELINES FOR CONVERSION OF DOMESTIC TARIFF AREA (DTA) UNIT INTO EXPORT ORIENTED UNIT (EOU)/ ELECTRONIC HARDWARE TECHNOLOGY PARK (EHTP)/ SOFTWARE TECHNOLOGY PARK (STP)/ BIO-TECHNOLOGY PARK (BTP) UNIT (Please see Para 6.36.1 of HBP Vol. 1) Note: Please see paragraph 6.37.1 of the Handbook of Procedures DTA units intending to get converted into EOU/EHTP/STP/BTP unit will follow the procedure as below for such conversion:- (1) Apply to concerned Development Commissioner (DC) in a manner as applicable to new units. (2) After getting approval of the project and obtaining Letter of Permission (LOP) from DC, execute Legal Undertaking (LUT) in prescribed format with DC. (3) Thereafter, apply for private bonded licence to concerned Customs/ Central Excise authority with execution of B-17 Bond. WHERE ADVANCE AUTHORISATION IS PENDING REDEMPTION (3.1) If the unit is having outstanding export commitment under advance authorization scheme, following procedure before execution of Bond with customs and Central Excise Authority need to be adopted : (i) Approach concerned Customs & Central Excise Authority and obtain certificate showing physical verification of unutilized material held in stock against all advance authorizations (not yet redeemed) and such raw material as intended to be carried forward to EOU; (ii) Approach Regional Authority along with a copy of the following documents: (a) LOP/LUT executed with DC, (b) Certificate of stock verification obtained from Customs/Central Excise (c) LUT with RA as annexed. (d) Details of imports/exports against all advance authorizations and utilized/ balance materials as per prescribed consumption register. The firm must submit original authorizations and connected documents of exports to concerned R.A.
  • Dta) by Eou/Ehtp/Stp/Btp Units

    Dta) by Eou/Ehtp/Stp/Btp Units

    APPENDIX- 14-I-H GUIDELINES FOR SALE OF GOODS IN THE DOMESTIC TARIFF AREA (DTA) BY EOU/EHTP/STP/BTP UNITS (Please see Para 6.8 and 6.9 of FTP) NOTE: Please see Paragraphs 6.8 and 6.9 of the Chapter 6 of the Foreign Trade Policy. I. DTA SALE ENTITLEMENT FOR EOU UNITS: Paragraph 6.8 of the Chapter 6 of the Foreign Trade Policy provide for sale in DTA by EOU/EHTP/STP units. Such sales in the DTA will be governed by the following guidelines: - a) The sale of goods in DTA will be subject to the payment of applicable duties as notified from time to time by the Department of Revenue, Ministry of Finance, Government of India. DTA sale includes clearance to any other unit within India under para 6.8. b) DTA sale entitlement will be applicable only to those goods and services, which are permissible as per EOU Scheme. No DTA sale will be permissible if such sale is specifically prohibited in the EOU Scheme or the Letter of Permission/Letter of Intent. c) Units may opt for DTA sales on a quarterly, half-yearly or annual basis by intimation to the concerned Development Commissioner of SEZ. However, Premier Trading House (PTH) as defined in para 3.5.2 of Foreign Trade Policy (FTP) shall have the option to undertake DTA sales on monthly basis, as well. d) The DTA sales entitlement shall be availed of within three years of the accrual of entitlement. e) An application for sale of goods in DTA (as per EOU Scheme) by the EOUs shall be submitted to the Development Commissioner concerned in the form given at Annexure-A.
  • How Can Special Economic Zones Catalyze Economic Development? 2

    How Can Special Economic Zones Catalyze Economic Development? 2

    SPECIAL CHAPTER: HOW CAN SPECIAL ECONOMIC ZONES CATALYZE ECONOMIC DEVELOPMENT? 2 The Rise of the Zones: Origin, Objectives, and Diffusion Varieties of Zones: Modalities, Ownership and Evolution Success Outcomes and Drivers of SEZ Performance Development Strategy and Institutions Economic Impact of SEZs Learning from Experience: Preconditions and Policies The Future of Zones Annex A: Methodology for Coding Data for Regressions Annex B: Country Case Studies References Special Chapter: How Can Special Economic Zones Catalyze Economic Development? | 63 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Special Chapter: How Can Special Economic Zones Catalyze Economic Development? n Asia, economies just starting to industrialize have used special economic zones (SEZs) as a way to initiate or expand export- oriented manufacturing—and to promote structural change more broadly through linkages and demonstration effects. They take their Icues mainly from successful East Asian economies that began virtuous growth spirals in the late 1960s and early 1970s. Within 3 decades, they had become upper middle or high-income economies. Although a host of developing economies pursued industrialization in parallel with East Asia, in most cases their objective was to manufacture home grown substitutes for imported products. Tariff barriers sheltered their industries, which serviced small domestic markets. Protection and small scale left productivity low, with high unit costs and no pressure to upgrade technology or innovate. East Asia also began with import substitution, but quickly saw the advantage exports held as a means of accelerating growth while bringing in foreign exchange revenues. However, they approached trade liberalization cautiously and tried to separate the domestic market from the traded goods sector. SEZs—insulated from the rest of the economy—offered a convenient vehicle for testing export-led strategies and incentives to produce for the global market.
  • Special Economic Zone and Export Oriented Units in India

    Special Economic Zone and Export Oriented Units in India

    HANDBOOK ON SPECIAL ECONOMIC ZONE AND EXPORT ORIENTED UNITS IN INDIA HANDBOOK ON SpeciAl ecONOmic ZONeS AND expOrt OrieNteD UNitS, iN iNDiA THE INSTITUTE OF COST ACCOUNTANTS OF INDIA (Statutory Body under an Act of Parliament) www.icmai.in Introductory Edition - June 2020 First Revised Edition -July 2021 Published by The President The Institute of Cost Accountants of India CMA Bhawan 12, Sudder Street, Kolkata - 700016 Delhi Office CMA Bhawan 3, Institutional Area, Lodhi Road, New Delhi – 110003 The Institute of Cost Accountants of India (Statutory body under an Act of Parliament) © All rights reserved Disclaimer: This Publication does not constitute professional advice. The information in this publication has been obtained or derived from sources believed by the Institute of Cost Accountants of India (ICAI) to be reliable. Any opinions or estimates contained in this publication represent the judgment of ICAI at this time. Readers of his publication are advised to seek their own professional advice before taking any course of action or decision, for which they are entirely responsible, based on the contents of this publication. ICAI neither accepts nor assumes any responsibility or liability to any reader for this publication in respect of the information contained within it or for any decisions reader may take or decide not to or fail to take. President’s Message It makes me immensely happy that the Tax Research Department has come up with this revised publication on “Special Economic Zone and Export Oriented Units in India”. I am sure that this handbook would be appreciated as its previous version and would serve as a ready knowledge resource and would be benefi cial for the professionals, industry and stakeholders in dealing with provisions under SEZ and EOUs.
  • Myanmar Special Economic Zone Rules, 2016

    Myanmar Special Economic Zone Rules, 2016

    The Government of the Republic of the Union of Myanmar The Ministry of National Planning and Economic Development Notification No. (1 / 2015) th The 12 Waxing of Wagaung, 1377 M.E. th (27 August, 2015) In exercise of the power conferred under sub-section (a) of section 95 of the Myanmar Special Economic Zone Law, the Ministry of National Planning and Economic Development hereby issues these rules with the approval of the Union Government: Chapter I Title and Definition 1. These rules shall be called the Myanmar Special Economic Zone Rules. 2. The expressions contained in these rules shall have the same meaning as prescribed in the Myanmar Special Economic Zone Law. Moreover, the following expressions shall have the meanings given hereunder: (a) Law means the Myanmar Special Economic Zone Law, 2014; (b) Authorized Operations means operations relating to businesses for the establishment of the Special Economic Zone, construction business for the development of infrastructure within the Special Economic Zone and operations of their businesses or businesses relating to the repair and maintenance works within the Special Economic Zone permitted by the Management Committee; (c) Business means the investment business operated in the Special Economic Zone with permission of the Management Committee; (d) Capital Goods means any plant, machinery, equipment or accessories required for manufacturing or production of goods, either directly or indirectly, in which either goods or services are included, such as, construction works for the development
  • FORM B-17 (GENERAL SURETY/SECURITY) General Bond (With Surety/Security) to Be Executed by the 100% Eous/Units in the EHTP/STP/FTZ (Rules 9-B, 13,14 and 192) We

    FORM B-17 (GENERAL SURETY/SECURITY) General Bond (With Surety/Security) to Be Executed by the 100% Eous/Units in the EHTP/STP/FTZ (Rules 9-B, 13,14 and 192) We

    Form-B-17 FORM B-17 (GENERAL SURETY/SECURITY) General Bond (with Surety/Security) to be executed by the 100% EOUs/Units in the EHTP/STP/FTZ (Rules 9-B, 13,14 and 192) We/................................. having our registered office at ......................................... hereinafter referred to as the Obligors and .......................... called the surety(ies) (which expression shall, unless repugnant to the context or meaning thereof/ include our heirs, successors, executors, administrators, liquidators, legal representatives and assignees) hereby hold and firmly bind ourselves jointly and severally unto the President of India, hereinafter referred to as the Government in the sum of Rs. ....................... Rupees ............................. only) for which payment to be well and truly made, we, the obligors, bind ourselves by these presents. WHEREAS we the obligors have been granted by the Government an Industrial licence for setting up a Hundred Percent Export Oriented Undertaking for the manufacture of goods for export out of India on the terms and conditions stipulated in the letter of intent No.......................................... dated ................. and we the obligors have duly accepted the said terms and conditions. AND WHEREAS the Assistant Commissioner of Customs/Central Excise at .................................. has licensed/authorised the premises at................. as a private warehouse/unit wherein the dutiable goods, imported/ sourced mdigenously by us from time to time for manufacture of goods