SPECIAL ECONOMIC ZONE

INTRODUCTION: A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. " ationwide" laws may !e suspended inside a special economic "one. #he category 'SEZ' co$ers a !road range of more specific "one types% including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct in est!ent by foreign in estors, typically an international business or a !ultinational corporation ("#$). HISTORY: &ndia was one of the first in Asia to recogni"e the effecti$eness of the E'port (rocessing Zone (E(Z) model in promoting e'ports% with Asia's first E(Z set up in )andla in *+,-. .ith a $iew to o$ercome the shortcomings e'perienced on account of the multiplicity of controls and clearances/ a!sence of world-class infrastructure% and an unsta!le fiscal regime and with a $iew to attract larger foreign in$estments in &ndia% the Special Economic Zones (SEZs) (olicy was announced in April 0111. After e'tensi$e consultations% the SEZ Act% 011-% supported !y SEZ 2ules% came into effect on *1th 3e!ruary% 011,% pro$iding for drastic simplification of procedures and for single window clearance on matters relating to central as well as state go$ernments. OBJECTIVES: (a) generation of additional economic acti$ity (!) promotion of e'ports of goods and ser$ices (c) promotion of in$estment from domestic and foreign sources (d) creation of employment opportunities (e) de$elopment of infrastructure facilities BENEFITS: 3or the units in SEZs 4

5uty free import6domestic procurement of goods for de$elopment% operation and maintenance of SEZ units *117 &ncome #a' e'emption on e'port income for SEZ units under Section *1AA of the &ncome #a' Act for first - years% -17 for ne't - years thereafter and -17 of the ploughed !ack e'port profit for ne't - years. E'emption from minimum alternate ta' under section **-89 of the &ncome #a' Act. E'ternal :ommercial 9orrowing !y SEZ units up to ;S < *0-11 !illion in a year without any maturity restriction through recogni"ed !anking channels.

E'emption from :entral Sales #a'. E'emption from Ser$ice #a'. Single window clearance for :entral and State le$el appro$als. E'emption from State sales ta' and other le$ies as e'tended !y the respecti$e State =o$ernments.

3or SEZs de$elopers

E'emption from customs6e'cise duties for de$elopment of SEZs for authori"ed operations appro$ed !y the 9>A. &ncome #a' e'emption on income deri$ed from the !usiness of de$elopment of the SEZ in a !lock of *1 years in *- years under Section ?1-&A9 of the &ncome #a' Act. E'emption from minimum alternate ta' under Section **- 89 of the &ncome #a' Act. E'emption from di$idend distri!ution ta' under Section **-> of the &ncome #a' Act. E'emption from :entral Sales #a' (:S#). E'emption from Ser$ice #a' (Section @% 0, and Second Schedule of the SEZ Act).

Feasibility st !y:
A) .hy the SEZ is needed in the actual !usiness senseA BEA2 011F-1G 011G-1011--1, 011,-1@ 011@-1? CAD;E (&n :rore) *F%?-G *?%F*G 00%?G1 FG%,*,,%,F? =2>.#E 2A#E (o$er pre$ious year) F+7 F07 0-7 -07 +07

&n 011+ state run SEZs account for --.?7 of e'port earnings. 3inancing proHectI Since !anks ha$e a ceiling on real estate e'posure and SEZs too will !e treated as real estate for lending purposes% !oth will compete for the limited resources A higher pro$isioning and risk weightage will reJuire !anks to allocate more capital towards ad$ances to SEZs and compel them to increase lending rates SEZ de$elopers are looking more at 35&

an o$erseas partner can help in !ring in in$estment and marketing the proHects to 3&&s

9) 2isk analyses ;ncertainty o$er the future ta' regime (5irect #a'es :ode (5#:) and a goods K ser$ices ta' (=S#))

P"#$e%t &la''i'(: A) >!Hecti$esI Sur$eys 6 :ontouring K &n$estigation of Site% Economic Zone and (roHect influence areas (repare :onceptual (lans for de$elopment Laster (lan and (roHect 5esign 5etailed Engineering Architectures Structural ;tilities 5etailed :ost Estimates >!Hecti$es of the (roposed :onsultancies Ser$ices

9) ScopeI #opographical Sur$ey Sur$ey of Dand 9oundary and physical structure at the site :ounter sur$ey of the entire area Soil Sur$ey% soil testing and resisti$ity sur$ey 9ase Dine 5ata :ollection S.># Analysis Assessment of facilities reJuired

2e$iew of current infrastructure Cision Statement and :oncept (lan 5etailed (roHect Engineering (5(E) 9illing of Juantities and detailed cost estimates Social and En$ironmental &mpact Analysis and 2eha!ilitation plans

:) Laster planI Dayout :reation of Zone of e'cellence Ensure the Muality of SEZ - &nternationally Attract &nternational manufacturers and Laster planning for acJuired area Ser$ice Sector