What is SEZ ?
What is so “Special” about Special
Economic Zone (SEZ) ?
1.
Special
Economic Zone (SEZ) is a special duty-free enclave designed to promote foreign
investments in a comprehensive range of economic activities from manufacturing
at one end to trading and financial services on the other in an unfettered
business environment. It is special because:
a.
Under
a special policy dispensation promulgated by the Central Government as recently
as in April 2000, businesses will operate under high quality policy and
business like and friendly regulatory environment free of hassles and rend
tapism. In other words, the operation of the normative and restrictive
business/commercial laws will be suspended. Operating entities will be free to
pursue their business interests free of Government intervention.
b.
The
SEZ will provide high quality and world-class infrastructure designed to render
costs of products, delivery, logistics and transactions competitive on global
basis.
c.
While
SEZ will be insulated from the domestic tariff are in so far as the negative
influences are concerned, it will non the less provide the much sought and
“privileged” access to the domestic markets.
Special Economic Zone
Salient Features
·
A
Designated duty free enclave and to be treated as foreign territory for trade
operations and duties and tariffs.
·
Units
are free from plethora of rules and regulations governing import and export.
·
Units
are able to import capital goods and raw materials duty free from abroad. And
also from DTA without payment of terminal excise duty.
·
No
wastage norms or input-output norms.
·
SEZ
units would be able to undertake job work from the DTA units and also to get
their goods processed in the DTA.
·
Sales
within DTA area permitted only on payment of applicable customs duties.
·
No
routine examination by customs of export and import cargo.
·
No
separate documentation required for customs and exim policy.
·
Corporate
tax holiday upto 2010 U/S. 10-A of the Income Tax Act.
·
No
licence required for imports.
·
Supplies
from DTA to SEZ units treated as deemed exports.
·
Reimbursement
of central sales tax paid on domestic purchases.
·
SEZ
units may be for manufacturing, trading or service activity.
·
100%
Foreign direct investment in manufacturing sector allowed through automatic
route.
·
Profits
allowed to be repatriated freely without any dividend balancing requirements.
·
No
industrial licensing restrictions on products reserved for Small Scale Sector.
Uniqueness of SEZ in India
Distinctive underpinnings
1.
The
SEZ policy framework is the most visionary, ambitious and far-reaching
initiative of the Government of India (GOI) so far designed to transform
fundamentally the “Foreign Direct Investment (FDI) Landscape” for all times to
come. It is designed to provide complete business freedom to large
multinational companies which are seeking to globalize their production bases.
2.
The
central and distinctive anchors of the SEZ policy framework in India cover the following themes :
i. 100% tax break/holiday for
ten years upto 2010 (in other countries, tax reliefs are regulated).
ii.
Unrestricted
access to domestic markets (with payment of applicable duties/taxes)
iii.
The
permissible economic activity in SEZ is vast and it covers trading, servicing,
iv.
100%
foreign ownership automatically cleared in the manufacturing sector. The
Chinese SEZs for long have insisted on the joint venture with local partners.
v.
100%
foreign investments automatically cleared in the manufacturing sector.
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