EXPORT PROCESSING ZONES

PLANT LAYOUT SUBMISSION

SUBMITTED BY:
AYUSHRI SINGH
PUSHNEET SAHDRA
SUSHANT ARORA
TUSHAR KUMAR GUPTA
1

INTRODUCTION


Export processing zones are typically an enclave of units operating in a well -defined area within
the geographical boundary of a country where certain economic activities are promoted by a
set of policy measures that are not generally applicable to the rest of the country.

These zones are known by different names such as Free Trade Zones (FTZ), Industrial Free Zone,
Export Processing Zones (EPZ), Bonded Free Zones, Maquiladoras (Mexico) and Special
Economic Zones (China). The concept of export processing zones is not a new one. An
International Labor Organization (ILO) report, states that some of the earliest references of
export processing zones date back to thirteen century in Spain. As per the report, The Free
Zone Consortium of Cadiz was founded in 1929.In Spain a free zone was set up before the First
World War, but it took off only after the Second World War 3.

In recent times, the first Export Processing Zone (EPZ) was set up in 1959 at Shannon, in Ireland
and in 1962 Puerto Rico established an EPZ in the island.
India is one of the first countries in Asia to recognize the effectiveness of the Export Processing
Zone (EPZ) model in promoting exports. Asia’s first EPZ was set up in Kandla in 1965. The
proposal for setting up the Kandla Free Trade Zone (KAFTZ) was mooted in 1961, for the
following reasons:

a) To facilitate the development of the Kutch region,
b) to ensure greater utilization of Kandla Port and
c) To create employment opportunities in the Kandla- Gandhidham area.

These zones offer the following facilities:
 Financial incentives like tax holidays, duty free imports and exports;
 High quality infrastructure;
 Abundant and relatively cheap labor;
 Strategic location and market access.
`
However, the EPZ concept had some limitations like:
 Fixed geographical area,
 Non-suitability for medium and large industrial units
 Non-suitability for units which intended to set up units near the source of raw material or
specialized labor.






2

SPECIAL ECONOMIC ZONES IN INDIA
The concept of EPZ was later complemented by schemes like Export oriented scheme which
was introduced by the Ministry of Commerce in 1980 vide resolution dated 31st December
1980. The scheme is contained under Chapter 6 of Foreign Trade Policy as amended from time
to time.

Over the years the Scheme underwent various changes and its scope 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. Accordingly, The Government
of India first introduced the concept of SEZ in the Export -Import Policy 2000 with a view to
provide an internationally competitive and hassle free environment for exports. As the
performance of EPZs fell far short of expectations due to various reasons, the SEZs were
conceived as a much larger and more efficient form. The policy provides for setting up of SEZ’s
in the public, private, joint sector or by State Governments.

After the introduction of SEZ scheme in the EXIM Policy from 01.04.2000, all existing FTZ/EPZ
have been converted to SEZ.
What is Special?
The word "Special" mainly means special economic systems and policies. In other words, the
central government gives the special economic zones special policies and flexible measures,
allowing them to utilize a special economic management system.
 Special tax incentives for foreign investments in the special economic zones.
 Greater independence on international trade activities.
 Economic characteristics are represented as "4 primacies":
1) Constructions primarily rely on attracting and utilizing foreign capitals;
2) Primary economic forms are Sino-foreign joint ventures and partnerships as well as wholly
foreign-owned enterprises;
3) Products are primarily export-oriented;
4) Economic activities are primarily driven by market.
 Special economic Zones are listed separately in the national planning (including financial
planning) and have province-level authority on economic administration.
The main objectives of SEZ scheme can be briefly stated as:
1. Attract Foreign Direct Investment (FDI)
2. Earn foreign exchange and contribute to exchange rate stability
3. Boost the export sector, especially nontraditional exports
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4. Create employment opportunities
5. Introduce new technology
6. Develop backward regions
7. Stimulate sectors such as electronics, information technology, R & D, tourism, infrastructure
and human resource development that are regarded as strategically important to the economy.
8. Create backward & forward linkages to increase the output and raise the standard of local
enterprise that supply goods and services to the zone.
The Salient features of Special economic zones include:
1. No License required for import
2. Manufacturing, trading or services activities allowed
3. Full freedom of subcontracting
4. No routine examination of export import cargo by customs authorities
5. SEZ units to have positive net foreign exchange earner
6. Financial incentives like tax holidays, duty free imports and exports
7. Single window clearance
8. High quality infrastructure
9. Strategic location and market access











4

ORGANIZATION STRUCTURE

The various modes in which an enterprise can be started are as follows:
1) Proprietorship
2) Partnership
3) (a) Private limited companies
(b) Public limited companies
4) HUF
5) Trusts
6) Co-operative societies

Distinguishing characteristics of each of the above are given below:

1) Proprietorship
a) It is a single person operation. There is no difference between the owner and the company.
b) It is the easiest to establish
c) Profit of the company is the owner’s income.
d) Liability is Unlimited i.e. Losses may have to be made good out of the personal assets of the
proprietor
e) The greatest advantage of such an organization is that it requires minimal legal
documentation.

2) Partnership
a) Two or more persons can start a partnership
b) The maximum number of partners which are permissible in a firm is 20 and in the case of
banking firms it is 10
c) A Partnership deed in writing Paper must be made clearly specifying the name of the
partnership firm, the names of the partners, the capital to be contributed by each partner, the
profit or loss sharing ratio between partners, the business of the partnership, the duties, rights,
powers and obligations of each partner and other relevant details.
d) It must be signed by all partners and witnessed by independent persons.
e) The partnership deed must clearly specify the duties and authorities of all partners.
f) Details of salary and other payments to partners must also be clearly specified in the
partnership deed.
g) It is not compulsory for registration of partnership deeds; however, registration ensures
certain legal rights to the firm and its partners.
h) The advantages of this form of set-up are that two or more people can come together and
start a new business. The disadvantages of this set-up are more or less the same as that of a
sole proprietorship concern.
i) The liability of partners in Indian partnerships is joint and several.
j) There is no minimum capital to be subscribed for a partnership.
k) A partnership may be dissolved with the consent of all the partners or in accordance with the
provisions in the partnership agreement.
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3) Companies
a) Company as a legal person – can borrow, lend, enter into contracts, can sign, can sue and be
sued
b) Has a life beyond the life of the promoters
c) Can hold assets of its own
d) Company seal acts as its signature
e) Comes into existence through a formal and legal “incorporation” process.
f) Promoters, share holders are called “members”
g) The liability of shareholders of a limited company is limited to the extent of unpaid share or
to the tune of the unpaid amount guaranteed by the shareholder.
h) Memorandum and Articles of Association-The Memorandum of association is the charter of
the company and specifies the name of the company, the business and activities it can carry, its
address, the capital of the company and details of the persons who have formed the company.
i) The Articles of association of the company specify the rules and regulations of the company,
the rights, duties and liabilities of the members and directors
j) A memorandum of association and articles of association have to be filed with the
Registrar of Companies in order to incorporate a company
In India, companies are broadly classified as Public Sector (Government owned) and Private
Sector Companies. Private Sector companies may further be classified as Private Limited and
Public Limited Companies.

3) (a) Private Limited Companies
Private Limited Company means a company formed with the word ‘private’ in its name .A
private limited company can be formed with a minimum of 2 members.
The Articles of Association of such companies includes the following restrictions:-
i. Articles of association restricts the right to transfer its shares
ii. Limitation to the number of shareholders to 50 (excluding employees and former
employees)
iii. Prohibition towards invitation to the public to subscribe to shares and debentures
iv. Shares of private limited companies may not be quoted in the stock exchange
v. The minimum paid up capital for a private company would be Rs. 100,000.
vi. Following are some of the privileges and exemptions of a private limited company:
1) Minimum number of members required is 2 (7 in case of public companies)
2) The prohibition of allotment of the shares or debentures in certain cases unless statement
in lieu of prospectus has been delivered to the Registrar of Companies does not apply to a
private limited company.
3) Restriction contained in Section 81 related to the rights issues of share capital does not
apply. A special resolution to issue shares to non-members is not required in case of a private
company.
4) Restriction contained in Section 149 on commencement of business by a company does not
apply. A private company does not need a separate certificate of commencement of business.
5) Provisions of Section 165 relating to statutory meeting and submission of statutory report do
not apply.
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6) one (if 7 or fewer members are present) or two members (if more than 7 members are
present) present in person at a meeting of the company can demand a poll.
7) In case of a private company which is not a subsidiary of a public limited company or in the
case of a private company of which the entire paid up share capital is held by the one or more
body corporate incorporated outside India, no person other than the member of the company
concerned, shall be entitled to inspect or obtain the copies of profit and loss account of that
company.
8) Minimum number of directors is only two. (3 in case of a public company)

3) (b) Public Limited Companies

Public Limited Company means a company which is not a private limited company. It does not
carry the word ‘private’ in its name and also do not have the restrictions as carried out in the
private limited companies. Public limited companies are generally large companies with
widespread shareholding with shares being quoted in the stock exchange. The minimum paid
up capital for a public company would be Rs. 500,000.

Distinction between Company and Partnership

1. A Partnership firm is sum total of persons who have come together to share the profits of the
business carried on by them or any of them. It does not have a separate legal entity. A
Company is association of persons who have come together for a specific purpose. The
company has a separate legal entity as soon as it is incorporated under law.
2. Liability of the partners is unlimited. However, the liability of shareholders of a limited
company is limited to the extent of unpaid share or to the tune of the unpaid amount
guaranteed by the shareholder.
3. Property of the firm belongs to the partners and they are collectively entitled to it. In case of
a company, the property belongs to the company and not to its members.
4. A partner cannot transfer his shares in the partnership firm without the consent of all other
partners. In case of a company, shares may be transferred without the permission of the other
members, in absence of provision to contrary in articles of association of the company.
5. In case of partnership, the number of members must not exceed 20 in case of banking
business and 10 in other businesses. A Public company may have as many members as it desires
subject to a minimum of 7 members. A Private company cannot have more than 50 members.
6. There must be at least 2 members in order to form a partnership firm. The minimum number
of members necessary for a public limited company is seven and two for a private limited
company.
7. In case of a partnership, 100 % consensus is required for any decision. In case of a company,
decision of the majority prevails.
8. On the death of any partner, the partnership is dissolved unless there is provision to the
contrary. On the death of the shareholder the company’ existence does not get terminated.



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4) Hindu Undivided family- HUF
This form of organization exists under Hindu law and is governed by the law of succession. The
joint Hindu family form is a form of business organization in which the Family possesses some
inherited property. The inheritance of the property is among the male members. The share of
ancestral property is inherited by a member from his father, Grandfather and great
grandfather.

The important features of the joint Hindu family business are as follows:

(i) Membership by birth: Membership of the joint Hindu family business is automatic by birth
of a male child and is not created by an agreement between persons.
(ii) Management: The management vests in the Karta, the eldest member of the family.
However, the Karta may associate other members of the HUF to assist him.
(iii) Liability: The Karta has unlimited liability, i.e., even her/his personal assets can be used for
payment of business dues but every other coparcener has a limited liability up to his share in
the HUF property.
(iv) There is no restriction on the number of coparceners of the HUF business. However, the
membership is restricted to three successive generations. A male child at the time of birth
becomes a coparcener. Thus, an HUF does not restrict membership to minors.
(vi) Unaffected by death: The HUF business continues even after the death of a coparcener
including the Karta. The next senior most surviving male member of the HUF becomes the
Karta. However, it may come to an end if all the members notify that they are not members of
the joint Hindu family.

5) Trusts

A Trust is created when a donor attaches a legal obligation to the ownership of certain property
based on his confidence placed in and accepted by the donee or trustee, for the benefit of
another.

The person who intends to create the trust with regard to certain property for a specified
beneficiary and who places his confidence in another for this arrangement is called the Author
of the Trust; the person who accepts the confidence is called the Trustee; the person whose
benefit the confidence is accepted is called the Beneficiary; the subject matter of the trust is
called Trust Property.

The Trustees control the trust’s assets and decide how the income (and capital) of the trust is to
be distributed, and ensure that it is in line with the charitable purposes of the trust.

The author of the trust must indicate with reasonable certainty the following:
 Intention to create trust
 Purpose of the trust
 Beneficiaries of the trust, and
 The trust property
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A trust can be created-
a. By any person competent to contract
b. With the permission of a principal civil court of original jurisdiction by or on behalf of a minor
c. Any person or corporation capable of transferring property or interest in property can create
a Trust
d. A company can create a Trust provided it is intra vires the objects of the company and within
the powers mentioned in its Memorandum of Association.

Trust can be a public trust, set up for the benefit of the general public or a private family trust
that is restricted to specified individuals.
Trusts are governed by The Indian Trusts Act, 1982

6) Co-operative Societies
A cooperative form of business organization is different from other forms of organization. It is a
voluntary association of persons for mutual benefit and its aims are accomplished through self-
help and collective effort.
The main principle underlying a cooperative organization is mutual help, i.e., each for one and
all for each. A minimum of 10 people are required to form cooperative society. It must be
registered with the Registrar of Cooperative Societies under the Cooperative Societies Act.
The capital of a cooperative society is raised from its members by way of share capital. It can
also obtain additional resources by way of loans from the State and Central Cooperative Banks.

Although a cooperative society has much in common with partnership there are differences
between the two types of organization. In a partnership mutual benefit is restricted to partners
only, but in a cooperative society it extends to its member as also the public. For example, in a
consumer cooperative store or a cooperative credit society, the benefits are available to the
members as well as the general public. Besides, partnership requires the existence of some
business activity whereas a cooperative may be formed whenever individuals have common
needs which are difficult to fulfill single handed. Also, registration is optional in the case of
partnership but it is compulsory for a cooperative society.

The main advantages of a co-operative society are:
 Easy formation
 Open membership
 Democratic management
 Limited liability (to the extent of capital contributed by the members)
 Stability (as it enjoys separate legal existence)
 Economic operations
 Government patronage

Cooperative society are governed by the Co-operative Societies Act, 1912 and Multi-State Co- Operative
Societies Act, 1984


9

OVERVIEW OF THE SPECIAL ECONOMIC ZONES ACT, 2005

The Special Economic Zones Act, 2005 consists of 8 chapters, 58 sections and 3 schedules.

The provisions of this Act shall have effect notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or in any instrument having effect by
virtue of any law other than this Act (Section 51)

The following table provides an insight to the Special Economic Zones Act 2005:

CHAPTER SECTIONS TITLE
I 1-2 Preliminary
II 3-7 Establishment of SEZ
III 8-10 Constitution of Board of
Approval
IV 11-12 Development
Commissioner
V 13-15 Single Window Clearance
VI 26-30 Special Fiscal provisions
for SEZ
VII 31-41 Special Economic Zone
Authority
VIII 42-58 Miscellaneous
The First Schedule Enactments
The Second Schedule Modifications of the Income
Tax Act-1961
The third
schedule
Part I Amendments to certain
Enactments
Part II Amendments to the
Banking Regulation
Act,1949
Part III Amendments to the Indian
Stamp Act,1899

The Special Economic Zones Act 2005 provides for the following:

1) Procedure for making proposal to establish SEZ (Sec 3)
2) Establishment of SEZ with the approval from Board of Approvals (Sec 4)
3) Notifying an area as SEZ by Central Government (Sec 5)
4) Approval by Board of Approval for establishment of SEZ (Sec 8 to 10)
5) Development Commissioner as administrative Authority for the SEZ (Sec 11 and 12)
6) Approval Committee to approve setting up of a unit in SEZ (Sec 13 and 14)
10

7) Single window clearance by Approval Committee for setting up unit in SEZ, setting up an OBU
and setting up an IFSC (Sec 15 to 20)
8) Enforcement officer or agency for notified offences (Sec 21 and 22)
9) Special civil courts and criminal courts to try notified offences and appeal to High Court (Sec
23 and 24)
10) Special Fiscal provisions for special economic zones (Sec 26 to 30)
11) Establishment of SEZ Authority (Sec 31 to 41)
12) Reference of dispute to arbitration (Sec 42 and 43)
13) Exemptions and relaxations from provisions of some Central Acts (Sec 49 and 54)
14) Power of the Central Government to make rules and to remove difficulties (Sec 55 and 56)

Given below are a few important Definitions in the Act

“Developer” means a person who, or a State Government which, has been granted by the
Central Government a letter of approval and includes an Authority and a Co-Developer (Section
2(g))

“Domestic Tariff Area” means the whole of India (including the territorial waters and
continental shelf) but does not include the areas of the Special Economic Zones (Section 2(i))

“Export” means –
(i) Taking goods, or providing services, out of India, from a Special Economic Zone, by land, sea
or air or by any other mode, whether physical or otherwise; or
(ii) Supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer.
(iii) Supplying goods, or providing services, from one Unit to another Unit or Developer, in the
same or different Special Economic Zone (Section 2(m))

“Free Trade and Warehousing Zone” means a Special Economic Zone wherein mainly trading
and warehousing and other activities related thereto are carried on; (Section 2(n))

“Import” means
(i) Bringing goods or receiving services, in a Special Economic Zone, by a Unit or Developer from
a place outside India by land, sea or air or by any other mode, whether physical or otherwise; or
(ii) Receiving goods, or services by, Unit or Developer from another Unit or Developer of the
same Special Economic Zone or a different Special Economic Zone ( Section 2(o))

“Infrastructure facilities “means industrial, commercial or social infrastructure or other
facilities necessary for the development of a Special Economic Zone or such other facilities
which may be prescribed (Section 2(p))

“International Financial Services Centre” means an International Financial Services Centre
which has been approved by the Central Government under sub-section (1) of section 18;
(Section 2(q))

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“Manufacture” means to make, produce, fabricate, assemble, process or bring into existence,
by hand or by machine, a new product having a distinctive name, character or use and shall
include processes such as refrigeration, cutting, polishing, blending, repair, remaking, re-
engineering and includes agriculture, aquaculture, animal husbandry, floriculture, horticulture,
pisciculture, poultry, sericulture, viticulture and mining; (Section 2(r))

“Person” includes an individual, whether resident in India or outside India, a Hindu undivided
family, co-operative society, a company, whether incorporated in India or outside India, a firm,
proprietary concern, or an association of persons or body of individuals, whether incorporated
or not ,local authority and any agency, office or branch owned or controlled by such individual,
Hindu undivided family, co-operative, association, body, authority or company (Section 2(v))

“Services” means such tradable services which,-
(i) Are covered under the General Agreement on Trade in Services annexed as IB to the
Agreement establishing the World Trade Organization concluded at Marrakes on the 15th day
of
April, 1994;
(ii) May be prescribed by the Central Government for the purposes of this Act; and
(iii) Earn foreign exchange (Section 2(z))

“Unit” means a Unit set up by an entrepreneur in a Special Economic Zone and includes an
existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre,
whether established before or established after commencement of this Act (Section 2 (c))





















12

Overview of the Special Economic Zones Rules, 2006

The policy relating to special economic zones is contained in Special Economic Rules, 2006
notified in the Gazette of India, Extraordinary No. GSR 54 (E), dated 10.2.2006. The Rules
contain 8 chapters, 77 rules, 11 forms - A to K and 2 Annexures

The following table provides an insight to the Special Economic Zones Rules, 2006

CHAPTER RULES TITLES
I 1-2 Preliminary
II 3-16 Procedure for establishment
of SEZ
III 17-21 Procedure for establishment
of an unit
IV 22-46 Terms and conditions subject
to which entrepreneur and
developers shall be entitled to
exemptions, drawbacks and
concessions
V 47-52 Conditions subject to which
goods may be
removed from a SEZ to DTA
VI 53-54 Foreign Exchange earning
Requirements and Monitoring
VII 55-69 Appeal
VIII 70-77 Miscellaneous

The Special Economic Zones Rules, 2006 provides for the following:

1. Simplification of procedures for development, operation, and maintenance of the Special
Economic Zones and for setting up and conducting business in SEZs;
2. Single window clearance for setting up of an SEZ;
3. Single window clearance for setting up a unit in a Special Economic Zone;
4. Single Window clearance on matters relating to Central as well as State Governments;
5. Simplified compliance procedures and documentation with an emphasis on self-certification;
and
6. A wide range of services can be rendered from SEZs.

Other significant features of the Rules are:

1. Documentation for various activities of the units has been reduced to the barest minimum
with an emphasis on self-certification.
2. No requirement for providing bank guarantees, thereby reducing transaction costs;
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3. Contract manufacturing for foreign principals allowed;
4. Option to obtain sub-contracting permission at the initial approval stage;
5. Import-Export of all items, through personal baggage has been allowed.

Important definitions in the Rules include:

“Special Economic Zone for multi-product” means a Special Economic Zone where Units may
be set up for manufacture of two or more goods in a sector or goods falling in two or more
sectors or for trading and warehousing or rendering of two or more services in a sector or
rendering of services falling in two or more sectors (Rule 2(za))

“Special Economic Zone for specific sector” means a Special Economic Zone meant exclusively
for one or more products in a sector or one or more services in a sector (Rule 2(zb))

“Special Economic Zone in a port or airport” means a Special Economic Zone in an existing port
or airport for manufacture of goods in two or more goods in sector or goods falling in two or
more sectors or for trading and warehousing or rendering of services (Rule 2(zc))























14

DEVELOPMENTS ON SPECIAL ECONOMIC ZONES

A) Special Economic Zones (Amendment) Rules, 2006
B) Removal of caps on SEZ
C) List of authorized activities in non-processing area of SEZ’s to be notified
D) Criteria for approval of SEZ developers
E) No SEZ on prime agriculture Land

An amendment has been made in the Special Economic Zones Rules by way of -The Special
economic Zones (Amendment) Rules, 2006 which came into force on 10.08.2006.

The relevant notification is reproduced hereunder:

A) Special Economic Zones (Amendment) Rules, 2006

Special Economic Zones (Amendment) Rules, 2006 - Amendments in rules 5, 11, 18 and
76; insertion of rule 5A
Notification NO G.S.R. 470(E), dated 10-8-2006

In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 (28
of 2005), the Central Government hereby makes the following rules to amend the Special
Economic Zones Rules, 2006, namely:

1. (1)These rules may be called the Special Economic Zones (Amendment) Rules, 2006.
(2)They shall come into force on the date of their publication in the Official Gazette.

2. In the Special Economic Zones Rules, 2006 (hereinafter referred to as the principal rules), in
sub-rule (2) of rule 5,—
(1) In clause (a), for the third provision, the following proviso shall be substituted, namely:
Provided also that at least thirty-five per cent of the area shall be earmarked for developing the
processing area, which may be relaxed up to twenty-five per cent by the Central Government
on recommendations of the Board for the reasons to be recorded in writing;”;
(2) In clause (b) in the second proviso, for the words “the area shall be ten hectares or more”,
The following shall be substituted, namely:
“The area shall be ten hectares or more with a minimum built-up area as under:
(i) forty thousand square meters in case of a Special Economic Zone proposed to be set up
exclusively for bio-technology and non-conventional energy sectors including solar energy
equipments/cells but excluding a Special Economic Zone set up for non-conventional energy
production and manufacturing;
(ii) fifty thousand square meters in case of a Special Economic Zone proposed to be set up
exclusively for the gems and jewelry sector.”


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(3) In clause (c),—
(i) For the first provision, the following proviso shall be substituted, namely:—
“Provided that in a standalone Free Trade and Warehousing Zone at least fifty per cent of the
area shall be earmarked for developing processing area :
“Provided further that a Free Trade and Warehousing Zone may also be set up as part of a
Special Economic Zone for multi-product”
(ii) In the second proviso, for the words “provided further”, the words “provided also” shall be
substituted.

3. After rule 5 of the principal rules, the following rule shall be inserted, namely:—
“5A. Infrastructure requirements relating to information technology.—In case of a Special
Economic Zone relating to information technology, the following facilities shall be ensured,
namely:
(a) twenty-four hours uninterrupted power supply at stable frequency in the zone;
(b) Reliable connectivity for uninterrupted and secure data transmission;
(c) Provision for central air-conditioning system; and
(d) A ready to use, furnished plug and pay facility for end users.”.

4. For sub-rule (10) of rule 11 of the principal rules, the following sub-rule shall be substituted,
namely:—
“(10) No vacant land in the non-processing area shall be leased for business and social purposes
such as educational institutions, hospitals, hotels, recreation and entertainment facilities,
residential and business complexes, to any person except a co-developer approved by the
Board Provided that the developer or co-developer may lease the completed infrastructure
along with the vacant land appurtenant thereto for such purposes:
Provided further that infrastructure for business or social purposes in the Special Economic
Zone, as may be approved by the Board, shall be eligible for exemptions, concessions and
drawback.”

5. In sub-rule (4) of rule 18 of the principal rules, after clause (f), the following clause shall be
inserted, namely:—
“(g) the use of any plant or machinery previously used for any purpose in Domestic Tariff Area.”

6. In rule 76 of the principal rules,—
(i) For the words “sub-clause”, the word “clause” shall be substituted;
(ii) The following Explanation shall be inserted at the end, namely:—
“Explanation.—the expression “Trading”, for the purposes of the Second Schedule of the Act,
shall mean import for the purposes of re-export.”

The effect of this notification which is mainly on area requirements and processing area can
be summarized as following.
16

Area requirements for different SEZ can be summarized as under:
17


Besides the above, the other changes made are as follows:

a) Infrastructure requirements relating to information technology
A new rule – 5 A has been inserted detailing infrastructure facilities that a Developer of
Information Technology specific SEZ should provide. They include:

1) Twenty four hour uninterrupted power supply at stable frequency;
2) Reliable connectivity for uninterrupted and secure data transmission;
3) Central air-conditioning system;
4) Ready to use, furnished plug and pay facility for end users.

b) A Developer was earlier permitted to allot land in the non-processing area for business and
social purposes.
The SEZ Amendment Rules have amended the above condition to the effect that no vacant land
in the non-processing area shall be leased for business and social purposes to any person
except a Co-developer approved by the Board. Further, it has been provided that a Developer
or Co-developer may lease completed infrastructure along with vacant land appurtenant
thereto.

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c) Previously used Plant & Machinery
It has been provided that any proposal for setting up SEZ Unit by using plant and machinery
previously used for any purpose in the Domestic Tariff Area (“DTA”) shall not be considered.

d) Trading activity in the SEZ
The SEZ Rules have been amended to provide to the effect that for claiming Income-tax
benefits, the term trading shall mean import for the purpose of re-export. This means profits
from trading (exports) of locally procured goods shall not be eligible for Income-tax benefits.

B) Removal of caps on SEZ
The empowered Group of Ministers on Special Economic Zones, headed by the Defense
Minister, Mr Pranab Mukherjee, decided on 23.08.2006 to remove the existing cap of 150 for
the number of SEZs that can be established within the country.

C) List of authorised activities in non-processing area of SEZ’s to be notified and

D) Criteria for approval of SEZ developers

The Board of Approvals in its meeting held on 21st September, 2006 discussed and decided the
procedure to be adopted by the Board of Approval while approving infrastructure in the non-
processing area of the Special Economic Zones. In this regard, it was decided that the Central
Government will notify a list of authorized operations (Annex. I). This list would be used by the
Board of Approval for authorizing operations which only would qualify for exemptions,
concessions and drawback.
The Board of Approvals also agreed on certain criteria (Annex. II) to be followed by the
Board for approval of SEZ Developers

Annexure-I
List of authorized operations eligible for approval by the Board of Approval

(A) IT/ITES, Bio-technology & Gems & Jewelry SEZ:
i. Roads with Street lighting, Signals & Signage
ii. Water treatment plant, water supply lines (dedicated lines upto source), sewage lines, storm
water drains and water channels of appropriate capacity
iii. Sewage and garbage disposal plant, pipelines and other necessary infrastructure for sewage
and garbage disposal, Sewage treatment plants
iv. Electrical, Gas & PNG Distribution Network including necessary sub-stations of appropriate
capacity, pipeline network etc
v. Security offices, police posts, etc, at entry, exit and other points within and along the
periphery of the site.
vi. Effluent treatment plant and pipelines and other infrastructure for Effluent treatment
vii. Office space
viii. Parking including Multi-level car parking (automated / manual)
19

ix. Telecom and other communication facilities including internet connectivity
x. Rain water harvesting plant
xi. Power (including power back up facilities)
xii. Air conditioning
xiii. Swimming pool
xiv. Fire protection system with sprinklers, fire and smoke detectors
xv. Recreational facilities including club house, Indoor/Outdoor games, gymnasium
xvi. Employee welfare facilities like ATMs, Crèche, Medical center and other such facilities
xvii. Shopping arcade/Retail space
xviii. Business/Convention Centre
xix. Common Data Centre with inter-connectivity
xx. Housing/Service apartments
xxi. Play ground
xxii. Bus bay
xxiii. Food Services including Cafeteria, food court(s), Restaurants, coffee shops, canteens and
catering facilities
xxiv. Landscaping and water bodies
xxv. Clinic & Medical Centers
xxvi. Wi Fi/Wi Max Services
xxvii. Drip and Micro irrigation systems
xxviii. Any other operation ancillary or incidental to operations specified above from (i) to
(xxviii) which the Board of Approval may authorize from time to time.

(B) Sector Specific SEZs
i) Roads with Street lighting, Signals and Signage.
ii) Water treatment plant, water supply lines, sewage lines, storm water drains and water
channels of appropriate capacity
iii) Sewage and garbage disposal plant, pipelines and other necessary infrastructure for sewage
and garbage disposal and Sewage treatment plants
iv) Electrical, Gas & PNG Distribution Network including necessary sub-stations of appropriate
capacity, pipeline network etc.
v) Security offices and police posts at entry, exit and other points within and along the
periphery of the site.
vi) Effluent treatment plant and pipelines and other infrastructure for Effluent treatment
vii) Office space/Shopping arcade/Retail space/ Multiplex
viii) Housing
ix) Hotel/Service apartments
x) Clinic / Medical Centers/ Hospital
xi) School/Technical Institution/Educational Institution
xii) Parking including Multi-level car parking (automated / manual)
xiii) Telecom and other communication facilities including internet connectivity
xiv) Business/Convention Centre
xv) Common Data center with inter-connectivity
xvi) Rain water harvesting plant
20

xvii) Power (including power back up facilities)
xviii) Rail head
xix) Access control and Monitoring system
xx) Swimming pool
xxi) Fire Station, Fire protection system with sprinklers, fire and smoke detectors
xxii) Recreational facilities including club house, Indoor/Outdoor games and gymnasium
xxiii) Employee welfare facilities like ATMs, Crèche, Medical center and other such facilities
xxiv) Play grounds
xxv) Bus bays
xxvi) Food Services including Cafeteria, food court(s), Restaurants, coffee shops, canteens and
catering facilities
xxvii) Landscaping and water bodies
xxviii) Wi Fi/Wi Max Services
xxix) Drip and Micro irrigation systems
xxx) Any other operation ancillary or incidental to operations specified above from (i) to (xxix)
which the Board of Approval may authorize from time to time.

(C) Multi Product SEZs
i. Roads with Street lighting, Signals and Signage
ii. Water treatment plant, water supply lines, sewage lines, storm water drains and water
channels of appropriate capacity
iii. Sewage and garbage disposal plant, pipelines and other necessary infrastructure for sewage
and garbage disposal and Sewage treatment plants
iv. Electrical, Gas & PNG Distribution Network including necessary sub-stations of appropriate
capacity, pipeline network etc
v. Security offices and police posts at entry, exit and other points within and along
the periphery of the site.
vi. Effluent treatment plant and pipelines and other infrastructure for Effluent treatment
vii. Office space/Shopping arcade/Retail space/multiplexes
viii. Housing
ix. Hotel
x. Clinic /Medical Centers / Hospital
xi. School/Technical Institution/Educational Institution
xii. Parking including Multi-level car parking (automated / manual)
xiii. Access control and Monitoring system
xiv. Telecom and other communication facilities including internet connectivity.

xv. Rain water harvesting plant
xvi. Power (including power back up facilities)
xvii. Swimming pool
xviii. Fire Station, Fire protection system with sprinklers, fire and smoke detectors
xix. Rail head within the SEZ
xx. Port
xxi. Airport/Air Cargo Complex
21

xxii. ICD
xxiii. Banks
xxiv. Recreational facilities including club house, Indoor/outdoor games and gymnasium.
xxv. Employee welfare facilities like ATMs, Crèche, Medical center and other such facilities
xxvi. Play grounds
xxvii. Golf course
xxviii. Bus bays
xxix. Food Services including Cafeteria, food court(s), Restaurants, coffee shops, canteens and
catering facilities
xxx. Landscaping and water bodies
xxxi. Wi Fi/Wi Max Services
xxxii. Drip and Micro irrigation systems
xxxiii. Any other operation ancillary or incidental to operations specified above from (i) to (xxxii)
which the Board of Approval may authorize from time to time.

Annexure II

Criteria to be followed by the Board for approval of SEZ Developers
1. Minimum Investment or Net worth of the Promoter Company & all Group companies &
Flagship companies as follows
a) Sector specific SEZs:
Minimum investment of Rs.250 crores or net worth of Rs.50 crores
b) Multi product SEZs:
Minimum investment of Rs.1000 crores or net worth of Rs.250 crores

Proposals not meeting the above minimum investment or net worth criteria with enough
justification for the same, to be considered on merits by the Board of Approvals.

No SEZ on prime agriculture Land

Land being a state subject, the Centre has directed the states that mainly waste and barren land
and if necessary single crop agricultural land alone should be acquired for the SEZ.

It has been further clarified that if perforce a portion of double-cropped agricultural land has to
be acquired to meet the minimum area requirements, the same should not exceed 10% of the
total land required for the SEZs.







22

FLOWCHART FOR ESTABLISHMENT OF SEZ




23

GUIDELINES FOR NOTIFYING SEZ
The Central Government, while notifying any area as a Special Economic Zone or an additional
area to be included in the Special Economic Zone and discharging its functions under this Act,
shall be guided by the following, namely:-
a) Generation of additional economic activity
b) Promotion of exports of goods and services;
c) Promotion of investment from domestic and foreign sources;
d) Creation of employment opportunities;
e) Development of infrastructure facilities; and
f) Maintenance of sovereignty and integrity of India, the security of the State and friendly
relations with foreign States.

























24

FLOWCHART FOR SETTING UP A UNIT






















25

CHECKLIST FOR THE PROPOSALS TO BE TAKEN BY BOARD OF
APPROVAL
A checklist in the following format may be submitted by the applicant in respect of all the
proposals of SEZs, besides the existing requirement of submission of Form A and project
reports.
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.
26

21. 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
may be provided.
22. Extent of FDI
23. Source of FDI
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?

Proposals not to be considered- Rule 18(4)
(a) Recycling of plastic scrap or waste:
(b) Enhancement of the approved import quantum of plastic waste and scrap beyond the
average annual import quantum of the unit since its commencement of operation to the
existing Units;
(c) Reprocessing of garments or used clothing or secondary textiles materials and other
recyclable textile materials into clipping or rags or industrial wipers or shoddy wool or yarn or
blankets or shawls:
(d) Import of other used goods for recycling Reconditioning, repair and reengineering may be
permitted subject to the condition that exports shall have one to one correlation with imports
and all the reconditioned or repaired or re-engineered products and scrap or remnants or
waste shall be exported and none of these goods shall be allowed to be sold in the Domestic
Tariff Area or destroyed;
(e) Export of Special Chemicals, Organisms, Materials, Equipment and Technologies unless it
fulfills the conditions indicated in the Import Trade Control (Harmonized System)
Classifications of export and import items;
(f) If there is any instance of violation of law or public policy by the promoters, having a bearing
on the merits of the proposal.
(g) The use of any plant or machinery previously used for any purpose in Domestic Tariff Area.
(Inserted by Special Economic Zones (Amendment) Rules, 2006




27


POINTS TO BE NOTED AFTER NOTIFICATION OF SEZ
1) Grant of Approval for authorized operations:
All exemptions, drawbacks and concessions shall be available as per procedure laid down in
Rule 12 after the SEZ has been notified in the Gazette (Rule 9 of The Special Economic Zones
Rules, 2006). The normal time period for a SEZ to be notified is one month from date of
approval
2) Permission for procurement of items: (Rule 10 of The Special Economic Zones Rules, 2006)
a) These benefits will also be available to the contractors appointed by the developer/co-
developer and all the documents in such cases shall bear the name of the developer or co-
developer along with the contractor and these shall be filed jointly in the name of the
developer or co-developer and the contractor.
b) The developer or co-developer shall be responsible and liable for proper utilization of goods
in all cases.
3) Processing and Non-processing area:
a) The Development Commissioner of the SEZ shall be the authority for demarking the areas
within the SEZ (Rule 11(1) of The Special Economic Zones Rules, 2006)
b) Only authorized persons shall be allowed to enter the processing area of the SEZ (Rule 11(4)
of The Special Economic Zones Rules, 2006)
c) The land or built up space in the processing area or FTWZ shall be given on lease only to the
entrepreneurs holding a valid Letter of Approval issued under Rule 19 and the lease period shall
be co-terminus with the validity of the Letter of Approval (Rule 11(5) of The Special Economic
Zones Rules, 2006)
d) The Developer may with the prior approval of the Approval committee grant on lease land or
built up space for creating facilities such as canteen, public telephone booths, first aid centers,
crèche and such other facilities as may be requires for the exclusive use of the unit(proviso to
Rule 11(5) of The Special Zones Rules,2006)
e) The developer may allot land in the processing area on lease basis to a person desiring to
create infrastructure facilities for use by prospective units. (Rule 11(8) of the Special Economic
Zones Rules, 2006)
f) The developer shall not sell the land in a SEZ (Rule 11(9) of The Special Economic Zones Rules,
2006)
g) No vacant land in the non-processing area shall be leased for business and social purposes
such as educational institutions, hospitals, hotels, recreation and entertainment facilities,
28

residential and business complexes, to any person except a co-developer approved by the
Board. However, the developer or co-developer may lease the completed infrastructure along
with the vacant land appurtenant thereto for such purposes (amended Rule 11(10) of The
Special Economic Zones Rules, 2006)
h) Infrastructure for business or social purposes in the Special Economic Zone, as may be
approved by the Board, shall be eligible for exemptions, concessions and drawback. (Amended
Rule 11(10) of the Special Economic Zones Rules, 2006)
4) Cancellation of letter of approval to entrepreneur: Sec 16 of The Special Economic Zones
Act, 2005
(i) The approval Committee may at any time if it has any reason to believe that the
entrepreneur has persistently contravened any of the terms and conditions or its obligations
subject to which the letter of approval was granted to the entrepreneur, cancel the letter of
approval
(ii) No such letter of approval shall be cancelled unless the entrepreneur has been afforded a
reasonable opportunity of being heard.
5) Monitoring- Rule 15 of the Special Economic Zones Rules, 2006
The utilization of the goods imported or procured from the Domestic Tariff Area by the
Developer shall be monitored by the Approval Committee.
6) Letter of Approval to a unit- Rule 19 of The Special Economic Zones Rules, 2006
a) The Letter of Approval shall be valid for one year within which period the Unit shall
commence production or service or trading or Free Trade and Warehousing activity and the
Unit shall intimate date of commencement of production or activity to Development
Commissioner
b) Further extension may be granted by the Development Commissioner for valid reasons to be
recorded in writing for a further period not exceeding two years on a request by the
entrepreneur
c) The Development Commissioner may grant further extension of one year subject to the
condition that two-thirds of activities including construction, relating to the setting up of the
Unit is complete and a chartered engineer’s certificate to this effect is submitted by the
entrepreneur.
d) If the Unit has not commenced production or service activity within the validity period or the
extended validity period the Letter of Approval shall be deemed to have been lapsed with
effect from the date on which its validity expired.
e) The Letter of Approval shall be valid for five years from the date of commencement
production or service activity and it shall be construed as a license for all purposes related to
authorized operations, and, after the completion of five years from the date of commencement
29

of production, the Development Commissioner may, at the request of the Unit, extend validity
of the Letter of Approval for a further period of five years, at a time.
f) If an enterprise is operating both as a Domestic Tariff Area unit as well as a Special Economic
Zone Unit, it shall have two distinct identities with separate books of accounts, but it shall not
be necessary for the Special Economic Zone unit to be a separate legal entity.
7) Bond cum Legal undertaking- Rule 22 (1) of The Special Economic Zones Rules, 2006
(i) The Unit shall execute a Bond-cum-Legal Undertaking in Form H, with regard to its
obligations regarding proper utilization and accountal of goods, including capital goods, spares,
raw materials, components and consumables including fuels, imported or procured duty free
and regarding achievement of positive net foreign exchange earnings;
(ii) Bond-cum-Legal Undertaking executed by the Unit or the Developer including Co-Developer
shall cover one or more of the following activities, namely: -
(a) The movement of goods between port of import or export and the Special Economic Zone;
(b) The authorized operations, as applicable to Unit or Developer;
(c) Temporary removal of goods or goods manufactured in Unit for the purposes of repairs or
testing or calibration or display or processing or sub-contracting of production process or
production or other temporary removals into Domestic Tariff Area without payment of duty;
(d) Re-import of exported goods.
(iii) The Bond-cum-Legal undertaking, where the entrepreneur or Developer is a company shall
be executed by the Managing Director of the company or the Director(s) or any person who has
or have been duly authorized for this purpose by a resolution of the Board of Directors of the
company and shall be affixed with the common seal of the company.
(iv) The value of the Bond-cum-Legal undertaking shall be equal to the amount of effective
duties leviable on import o procurement from the Domestic Tariff Area of the projected
requirement of capital goods, raw materials, spares, consumables, intermediates, components,
parts, packing materials for three months as applicable but which will not be levied on account
of admission of such goods into the Unit or the amount of effective duties leviable on import or
procurement from Domestic Tariff Area of the projected requirements of goods for the
authorized operation by the developer but will not be levied on account of admission of such
goods into the Special Economic Zone;
(v) If the value of Bond-cum-Legal undertaking executed falls short on account of requirement
of additional goods, the Unit or the Developer shall submit additional Bond-cum-Legal
Undertaking;
(vi) If no communication is received within seven working days from the date of its submission,
the duly completed Bond-cum-legal undertaking executed by the Unit or Developer, in
accordance with the rules above, as the case may be, shall be deemed to have been accepted,
30


8) Maintenance of accounts and submission of performance report- Rule 22(2) of The Special
Economic Zones Rules, 2006
(i) Every Unit and Developer shall maintain proper accounts, financial year wise,
(ii) Such accounts which should clearly indicate in value terms the goods imported or procured
from Domestic Tariff Area, consumption or utilization of goods, production of goods, including
by-products, waste or scrap or remnants, disposal of goods manufactured or produced, by way
of exports, sales or supplies in the domestic tariff area or transfer to Special Economic Zone or
Export Oriented Unit or Electronic Hardware Technology Park or Software Technology Park
Units or Biotechnology Park Unit, as the case may be, and balance in stock
(iii) Unit and Developer shall maintain such records for a period of Seven years from the end of
relevant financial year
(iv)The Unit shall submit Annual Performance Reports in Form I, to the Development
Commissioner and the Development Commissioner shall place the same before the Approval
Committee for consideration.
9) Utilization of goods – Rule 34 of The Special Economic Zones Rules, 2006
(i) The goods admitted into a Special Economic Zone shall be used by the Unit or the Developer
only for carrying out the authorized operations
(ii) If the goods admitted are utilized for purposes other than for the authorized operations or if
the Unit or Developer fails to account for the goods as provided under these rules, duty shall be
chargeable on such goods as if these goods have been cleared for home consumption
10) Movement of goods to and from non-processing area- Rule 40 of The Special Economic
Zones Rules, 2006
The movement of goods to and from non-processing area to a processing area and from one
processing area of Special Economic Zone to a different processing area of the same Special
Economic Zone shall be under serially numbered challans pre-authenticated by the owner or
Managing Director or working partner or the company secretary or by any person duly
authorized in this behalf by the company or firm, as the case may be, and the challans shall
contain complete description of goods.
11) Monitoring of performance- Rule 54 of The Special Economic Zones Rules, 2006
(i) Performance of the Unit shall be monitored by the Approval Committee
(ii) In case the Approval Committee finds that a Unit has not achieved positive Net Foreign
Exchange Earning or failed to abide by any of the terms and conditions of the Letter of Approval
or Bond-cum-Legal Undertaking, the said Unit shall be liable for penal action under the
31

provisions of the Foreign Trade (Development and Regulation) Act, 1992(without prejudice to
the action that may be taken under any other law for the time being in force)
12) Identity Cards -Rule 70 of the Special Economic Zones Rules, 2006
(i) The entry of persons to the processing area of the Special Economic Zone shall be regulated
by the Development Commissioner through issue of identity cards.
(ii) This identity card shall be valid up to a period of five years and shall be issued, in the format
given in Form K, to the entrepreneurs and regular employees of the Units.
(iii) If any employee who has been issued an identity card ceases to be in employment of the
Unit or Developer, the said identity card shall be surrendered forthwith and shall be deemed to
be invalid from such date
(iv)Temporary identity card may be issued by the Development Commissioner to the casual
visitors and contractors and a proper record of such entries shall be maintained at the Special
Economic Zone Gate;
13) Foreign Exchange Remittances- Rule 71 of the Special Economic Zones Rules, 2006 Export
value of goods, software and services may be realized and repatriated as per instructions of the
Reserve Bank of India issued from time to time.














32

FACILITIES/ EXEMPTIONS/ BENEFITS TO SPECIAL ECONOMIC ZONES
1) Exemption from Taxes, Duties or Cess – Sec 7 & Sec 54 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
THE FIRST SCHEDULE
(See sections 7 and 54)
Enactments
1. The Agricultural Produce Cess Act, 1940 (27 of 1940).
2. The Coffee Act, 1942 (7 of 1942).
3. The Mica Mines Labor Welfare Fund Act, 1946 (22 of 1946).
4. The Rubber Act, 1947 (24 of 1947).
5. The Tea Act, 1953 (29 of 1953).
6. The Salt Cess Act, 1953 (49 of 1953).
7. The Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955).
8. The Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957).
9. The Sugar (Regulation of Production) Act, 1961 (55 of 1961).
10. The Textiles Committee Act, 1963 (41 of 1963).
11. The Produce Cess Act, 1966 (15 of 1966).
12. The Marine Products Export Development Authority Act, 1972 (13 of 1972).
13. The Coal Mines (Conservation and Development Act, 1974 (28 of 1974).
33

14. The Oil Industry (Development) Act, 1974 (47 of 1974).
15. The Tobacco Cess Act, 1975 (26 of 1975).
16. The Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978).
17. The Sugar Cess Act, 1982 (3 of 1982).
18. The Jute Manufactures Cess Act, 1983 (28 of 1983).
19. The Agricultural and Processed Food Products Export Cess Act, 1985 (3 of 1986).
20. The Spices Cess Act, 1986 (11 of 1986).
21. The Research and Development Cess Act, 1986 (32 of 1986).
2) Special fiscal provisions for Special Economic Zones- Chapter VI of the Special
Economic Zones Act, 2005
I. Custom Duty: Every Developer and the entrepreneur is entitled to
(a) Exemption from any duty of customs, under the Customs Act, 1962 or the Custom Tariff Act,
1975 or any other law for the time being in force, on goods imported into, or service provided
in, a Special Economic Zone or a Unit, to carry on the authorised operations by the Developer or
entrepreneur- Sec 26(1)(a) of the Special Economic Zones Act,2005
(b) Exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff
Act, 1975 or any other law for the time being in force, on goods exported from, or services
provided, from a Special Economic Zone or from a Unit, to any place outside India- Sec 26(1)(b)
Points to note:
1) Exemption is available on both goods imported from SEZ and goods exported from SEZ by
developer or Entrepreneur.
2) Exemption is available only for carrying authorized operation by the entrepreneur or
developer.
3) Benefit is also available to contractor appointed by developer or co-developer provided all
documents are in joint name of developer and Contractor – Rule 10
II. Cen vat:
Exemption from CENVAT and Special duty of Excise
Every Developer and the entrepreneur is entitled to exemption from any duty of excise, under
the Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or any other law for the time
34

being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit,
to carry on the authorised operations by the Developer or entrepreneur – Sec 26(1) (c) of the
Special Economic Zones Act, 2005.
Points to note:
1) Exemption is available only for carrying authorized operation by the entrepreneur or
developer
2) Benefit is also available to contractor appointed by developer or co-developer provided all
documents are in joint name of developer and Contractor – Rule 10 of the Special Economic
Zones Rules, 2006
III. Service Tax
Every Developer and the entrepreneur is entitled to 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
authorized operations in a Special Economic Zone; – Sec 26(1)(e) of the Special Economic Zones
Act, 2005 Further, this exemption is also available to Unit under construction as per Rule 31 of
the Special Economic Zones Rules, 2006
IV. Central Sales Tax
Every Developer and the entrepreneur is entitled 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. – Sec
26(1) (g) of the Special Economic Zones Act, 2005
However this is subject to the condition as per Proviso to Rule 32 of the Special Economic Zones
Rules, 2006 that the dealer selling goods in the course of interstate trade or commerce to a
registered dealer under the Central Sale Tax Act, 1956 shall furnish a declaration in Form – I
prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957.
V. Securities Transaction tax
Securities Transaction Tax means tax leviable on taxable securities transaction. Every Developer
and the entrepreneur shall be entitled to 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. Sec 26(1)(f)
of the Special Economic Zones Act,2005
VI. Stamp duty
Provision (3) to Section 3 of Indian Stamp Act, 1899 has been inserted vide Special Economic
Zones Act 2005 Third Schedule Part III

35

PROVIDED that no duty shall be chargeable in respect of-
Any instrument executed, by, or, on behalf of, or, in favor of the Developer, or Unit or in
connection with the carrying out of purposes of the Special Economic Zone.
Explanation.- For the purposes of this clause, the expressions “Developer”, “Special Economic
Zone” and “Unit” shall have meanings respectively assigned to them in clause (g), (za) and (zc)
of section 2 of the Special Economic Zones Act, 2005.
3) Income Tax provisions
I. Unit
Sec 10 AA of Income Tax Act, 1961 provides for exemption to newly established units in Special
economic zones on or after 01.04.2005.
The conditions are as follows:
a) Assessee should be an entrepreneur (i.e. person who has been granted approval by
Development Commissioner) as per Sec 2 (j) of SEZ Act,2005
b) Unit should begin to manufacture or produce articles or things or provide any services during
the PY relevant to any AY commencing on or after 01.04.2006
c) Assessee should export his goods or services by any mode-physical or otherwise

Deductions allowable:
100% of Profits from export will be available for 5 consecutive years and 50% of Profits from
exports for further 5 assessment years. For eleventh to fifteenth assessment year deduction of
50% of Profits for as credited to “Special Economic Zone Re-investment Reserve Account” will
be available. This Special reserve can be utilized for Acquiring machinery or plant within three
years .Until the acquisition of the machinery or plant, the amount can be utilized for the
purposes of the business of the undertaking other than
• For distribution by way of dividends or profits or
• For remittance outside India as profits or
• For the creation of any asset outside India

Amalgamations and demerger:
Where an undertaking is transferred to another company under a scheme of amalgamation or
demerger, the deduction under section 10AA shall be allowable in the hands of the
36

amalgamated or the resulting company. However, no deduction shall be admissible under this
section to the amalgamating company or the demerged company for the previous year in which
amalgamation or demerger takes place.

Conversion of free trade zone or export processing zone into a Special Economic Zone:
In such cases, the period of ten consecutive assessment years referred to shall be reckoned
from the assessment year relevant to the previous year in which the Unit began to
manufacture, or produce or process such articles or things or services in such free trade zone or
export processing zone. If period of ten years is completed it shall not be eligible for deduction
from income.
II. Developer and entrepreneur
(a) Exemption to developer of Special Economic Zones will be available under Sec 80- IAB of the
Income Tax Act in respect of developers of SEZ notified on or after 01.04.2005
Deductions allowable:
A deduction of an amount equal to 100% of the profits and gains derived from such business for
10 consecutive assessment years will be available. The assessee has the option of claiming the
said deduction for any 10 consecutive assessment years out of 15 years beginning from the year
in which a SEZ has been notified by the Central Government
Transfer of undertaking:
If a taxpayer who develops a special economic zone on or after April 1, 2005 (“transferor”)
transfers the operation/maintenance of such zone to another developer (“transferee”), then
deduction shall be allowed to the transferee for the remaining period of 10 years as if the
operation and maintenance were not so transferred.
Audit report:
Accounts of the undertaking for the Previous year relevant to the Assessment yeat for which
the deduction is claimed must have been audited, and the assessee must furnish, along with his
return of income, the report of such audit in the prescribed form – Form 10 CCB duly signed
and verified by the accountant
b) Exemption from Dividend distribution tax
Sec 111-O (6) provides that No tax on dividends would be chargeable in respect of the total
income of an undertaking or enterprise engaged in
(i) Developing a SEZ or
(ii) Developing and operating a SEZ or
37

(iii) Developing, operating and maintaining a SEZ
IF such dividend (whether interim or otherwise) is declared, distributed or paid by such
Developer or enterprise, on or after the 1st day of April, 2005 out of its current income Further,
there will be no tax either in the hands of the Developer or enterprise or person receiving such
dividend
III. Exemption of capital gains from transfer of capital assets
The exemption is available to all categories of assesses on capital gain arising on the transfer of
certain capital asset of industrial undertaking from urban area to SEZ. (Whether developed in
an urban area or not) under Sec 54 GA of the Income Tax Act, 1961.
Conditions:
The Asset transferred should be machinery or plant or building or land or any rights in building
or land. The capital gain should be utilized within one year before or three years after the date
of transfer for the specified purpose.
The amount of capital gain which is not so utilised for the specific purposes should be deposited
in an account with any specified bank or institution and utilised in accordance with the scheme
notified by the Central Government
Exemption:
The amount of exemption will be equal to a) Amount of capital gains in shifting or b) cost and
expenses incurred in shifting etc. whichever is lower.
IV. Income of a non-resident
a) Interest received on a deposit made on or after the 1st day of April, 2005, in an Offshore
Banking Unit by
1. Nonresident or
2. A person who is not ordinarily resident in India Is exempt under (Section 10(15) (viii))

b) Offshore Banking Unit is not required to make any tax deduction from the interest paid
(a) On deposit made on or after the 1st day of April, 2005, by a non-resident or a person not
ordinarily resident in India; or
(b) On borrowing, on or after the 1st day of April, 2005, from a non-resident or a person not
ordinarily resident in India. (Sec 197 A (ID))

38

V. Offshore banking unit and International Financial Service center
Sec 80 LA of the Income Tax Act, 1961 provides for full exemption from income to offshore
banking unit and unit in International Financial service centre for first five years and 50 %
exemption in subsequent five years.
The income includes the following incomes:
(a) From an Offshore Banking Unit in a Special Economic Zone; or
(b) From the business referred to in sub-section (1) of section 6 of the Banking Regulation Act,
1949 (10 of 1949) with an undertaking located in a Special Economic Zone or any other
undertaking which develops, develops and operates or develops, operates and maintains a
Special Economic Zone; or
(c) From any Unit of the International Financial Services Centre from its business for which it
has been approved for setting up in such a Centre in a Special Economic Zone.
Conditions:
a) A report from a Chartered Accountant in Form No. 10CCF certifying that the deduction has
been correctly claimed in accordance with the provisions of this section should be submitted
along with the return of income.
b) A copy of permission obtained under section 23(1)(a) of Banking Regulation Act should be
submitted along with the return of income
VI. Industrial park scheme
The Central Government framed the scheme for industrial parks,-Industrial Park Scheme, 2002
in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80 IA of the
Income-tax Act, 1961 (43 of 1961)
This scheme was applicable for any undertaking which develops, develops and operates or
maintains and operates an Industrial Park for the period beginning on the 1st day of April, 1997
and ending on the 31st day of March, 2006.However this has been extended up to 31.03.2009
by the Finance Act,2006. Any undertaking which develops, operates or maintains an industrial
park as notified in this scheme will be eligible for a deduction of 100 % profits derived from
such business for ten consecutive years. The deduction can be claimed by the assessee for any
ten consecutive years out of fifteen years beginning from the year in which the undertaking
develops/operates/maintains the Industrial park.
VII. Investors in SEZ
Exemption is provided to investors in special economic Zones under Sec 10 (23G) of the Income
Tax Act, 1961.
Incomes not included in total income
39

10(23G) any income by way of dividends [, other than dividends referred to in section 115-O],
interest or long-term capital gains of an infrastructure capital fund or an infrastructure capital
company [or a co-operative bank] from investments made on or after the 1
st
day of June, 1998
by way of shares or long-term finance in [any enterprise or undertaking wholly engaged in the
business referred to in sub-section (4) of section 80-IA or sub-section (3) of section 80-IAB] or a
housing project referred to in subsection (10) of section 80-IB] [or a hotel project or a hospital
project] and which has been approved by the Central Government on an application made by it
in accordance with the rules made in this behalf and which satisfies the prescribed conditions :
[Provided that the income, by way of dividends, other than dividends referred to in section 115-
O, interest or long-term capital gains of an infrastructure capital company, shall be taken into
account in computing the book profit and income-tax payable under section 115JB.]
VIII. Undertaking developing and building housing projects
Sec 80- IB (10) - Deduction in respect of profits and gains from certain industrial undertakings
other than infrastructure development undertakings
The amount of deduction in the case of an undertaking developing and building housing
projects approved before the 31st day of March, 2007 by a local authority shall be hundred per
cent of the profits derived in the previous year relevant to any assessment year from such
housing project if,
(a) Such undertaking has commenced or commences development and construction of the
housing project on or after the 1st day of October, 1998 and completes such construction,
(i) In a case where a housing project has been approved by the local authority before the 1st
day of April, 2004, on or before the 31st day of March, 2008;
(ii) In a case where a housing project has been, or, is approved by the local authority on or after
the 1st day of April, 2004, within four years from the end of the financial year in which the
housing project is approved by the local authority.
(b) The project is on the size of a plot of land which has a minimum area of one acre:
(c) The residential unit has a maximum built-up area of one thousand square feet where such
residential unit is situated within the city of Delhi or Mumbai or within twenty-five kilometers
from the municipal limits of these cities and one thousand and five hundred square feet at any
other place; and
(d) The built-up area of the shops and other commercial establishments included in the housing
project does not exceed five per cent of the aggregate built-up area of the housing project or
two thousand square feet, whichever is less.]
IX. Newly established undertakings in free trade Zones
A deduction of such profit and gains as are derived by an undertaking from the export of article
or thing or computer software shall be allowed from total income of assessee.
40

Essential Conditions:
(i) It should begin manufacturing or producing articles/things or computer software during
previous year
(a) Assessment Year 1981-1982 or thereafter in any free trade zone.
(b) 1993-94 or thereafter in any EHTP or STP
(c) 2000-01 or thereafter in any special Economic Zone
(ii) It should not be formed by splitting up or reconstruction of an existing business.
(iii) It should not be formed by transfer of machinery or plant, previously used for any purpose
to new business.
(iv)The sale proceeds of the article or thing should be brought into India by assessee in
convertible foreign Exchange within 6month from the end of previous year.
Period of Tax Holiday:
The profits and gain will not be included in the total income of the assessee in respect of any 10
consecutive assessment years beginning with the year in which undertaking begins to
manufacture ,produce article or thing or computer software
Section 10A (1A) Units established in special Economic Zone on or after 1.4.2002 :
1) A deduction of 100% of profit and gains from such business from the total income for first 5
assessment years.
2) Thereafter 50% of such profits and gains for next 2 yrs.
3) Deduction beyond 7 year mentioned above for next 3 years can be claimed if certain
conditions satisfied.
Consequent to insertion of new section 10AA providing for a tax holiday in respect of newly
established Units in SEZ, sub-section (7B) has been inserted in section 10A,
“The provisions of this section shall not apply to any undertaking, being a Unit referred to in clause (zc) of
section 2 of the Special Economic Zones Act, 2005, which has begun or begins to manufacture or produce articles
or things or computer software during the previous year relevant to the assessment year commencing on or
after the 1st day of April, 2006 in any Special Economic Zone.”
X. Newly established 100 % export oriented units
Special provisions in respect of newly established hundred per cent export-oriented
undertakings- Sec 10 B
Salient Provisions of Sec 10 B
41

a) A deduction of profits and gains as are derived by a hundred per cent export-oriented
undertaking from the export of articles or things or computer software for a period of ten
consecutive assessment years beginning with the assessment year relevant to the previous year
in which the undertaking begins to manufacture or produce articles or things or computer
software, as the case may be, shall be allowed from the total income of the assesse.
b) Where in computing the total income of the undertaking for any assessment year, its profits
and gains had not been included by application of the provisions of this section as it stood
immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled
to the deduction referred to in this sub-section only for the unexpired period of aforesaid ten
consecutive assessment years.
c) For the assessment year beginning on the 1st day of April, 2003, the deduction under this
subsection shall be ninety per cent of the profits and gains derived by an undertaking from the
export of such articles or things or computer software:
d) No deduction under this section shall be allowed to any undertaking for the assessment year
beginning on the 1st day of April, 2010 and subsequent years
e) No deduction under this section shall be allowed to an assessee who does not furnish a
return of his income on or before the due date specified under sub-section (1) of section 139.
f) This section applies to any undertaking which fulfills all the following conditions, namely:
(i) It manufactures or produces any articles or things or computer software;
(ii) It is not formed by the splitting up, or the reconstruction, of a business already in
(iii) It is not formed by the transfer to a new business of machinery or plant previously used for
any purpose.
g) This section applies to the undertaking, if the sale proceeds of articles or things or computer
software exported out of India are received in, or brought into, India by the assessee in
convertible foreign exchange, within a period of six months from the end of the previous year
or, within such further period as the competent authority may allow in this behalf.
h) The profits derived from export of articles or things or computer software shall be the
amount which bears to the profits of the business of the undertaking, the same proportion as
the export turnover in respect of such articles or things or computer software bears to the total
turnover of the business carried on by the undertaking
i) The deduction under sub-section (1) shall not be admissible for any assessment year
beginning on or after the 1st day of April, 2001, unless the assessee furnishes in the prescribed
form (Form No. 56 G) along with the return of income, the report of an accountant, certifying
that the deduction has been correctly claimed in accordance with the provisions of this section.

42

4) Other related provisions
I. Environment clearances
SEZ units are required to obtain no objection certificates from the State Pollution Control
Board. Environmental Impact Assessment is required for 30 notified industries such as
petroleum refineries, chemical fertilizers, pesticides, petro-chemical complexes, bulk drugs and
pharmaceuticals, oil exploration, synthetic rubber, distilleries, raw skins and hides, dyes,
cement, foundries, electro plating etc. In such cases clearance from the Ministry of
Environment and Forest are required. However, the requirement of public hearing in such cases
has been exempted for the units in SEZ.
II. Labor policy
Although Normal labor laws of the land apply to the units in Special Economic Zones., the
respective State Governments may delegate the power of the Labor Commissioner to the
Development Commissioner of SEZ and declare the Zone as public utilities.
III. Drugs, Pharmaceuticals & Narcotics
SEZ units have been exempted from the requirements of Import licence, import registration
and import through notified ports in respect to drugs and cosmetics under Drugs and Cosmetics
Rules, 1945 vide Dept. of Health Notification GSR 528(E) dated 8.7.2003 .
IV. Textile policy
SEZ units engaged in export of Cotton Waste and import of Cotton are not required to register
with the office of Textile Commissioner
V. Companies Act
Schedule XIII of the Companies Act, 1956 contains two Parts
• Part I Conditions relating to appointment of managing or whole time director or a manager
without approval of Central Government
• Part II Remuneration Payable by companies having Profits / No Profits /Inadequate Profit
Changes have made in both of them for Special Economic Zone
A) There are no restrictions on appointment of non-resident as Managing Director/Whole time
Director. He should have a proper employment visa from Indian Mission abroad and should
furnish details of company, principal employer and terms of appointment along with visa
application. (Notification No GSR 670(E) dated 30-09-2002
Resident in India includes a person who has been staying in India for a continuous period of not
less than 12 months immediately preceding the date of employment as a managerial person
and who has come to stay in India
43

(i)For taking up employment in India
(ii)For carrying on a business or vocation in India
B) Managerial Remuneration under Companies Act 1956- In Schedule XIII Part II section II of
Companies Act, 1956 there are maximum Limits for Maximum managerial remuneration in case
of companies having no profit or inadequate profit depending on effective capital of the
company with prior approval of Central government Maximum Limit is Rs.4, 00,000 p.m. for
companies
Restriction in respect of managerial remuneration under companies Act has been relaxed in
case of companies in SEZ. The remuneration can be up to Rs. 20 lakhs per month (Rs. 2.40
crores per annum) without approval of central Government. The relaxation is applicable if:
(a) The company has not raised any money by public issue of shares or debentures in India.
(b) The company has not made any default in India in repayment of any of its debts (Including
public deposits) or debentures or interest payable thereon for continuous period of 30 days in
any financial year (Notification No GSR 565(E) dated 14-08-2002)
VI. FEMA
a) FDI -100% FDI is allowed through automatic route for all manufacturing activities in SEZ
except
i) Arms and ammunition, Explosives and allied items of defense equipments, Defense aircrafts
and warships
ii) Atomic substances, Narcotics and Psychotropic Substances and hazardous Chemicals
iii) Distillation and brewing of Alcoholic drinks and
iv) Cigarette/cigars and manufactured tobacco substitutes.
b) Articles reserved for SSI
SEZ Unit can manufacture articles reserved for SSI even if foreign equity exceeds 24%.No
License is required (Department of Industrial License Press Note No 5 dated 29-03-2000
Notification 7(11)/2000-IP dated 04-12-2000)
c) No limit for receipts of export proceeds
No Time Limit for export of export proceeds which is normally 6 months for others (Foreign
Exchange Management (Export of Goods and Services) Regulation 2000)


44

d) Branch /Office /Unit in SEZ by person resident outside India
Branch office may be set up in SEZ to undertake manufacturing and service activities without
permission of RBI in those sectors where 100% FDI is permitted Such unit should function on
standalone basis i.e. it should be isolated and restricted to SEZ and it should not carry on
business outside SEZ. (Foreign Exchange Management (Establishment in India of Branch or
other place of businesses) Regulation 2000)
e) DTA units can pay for goods in Foreign Exchange for which goods are supplied by SEZ to DTA
– RBI Circular 8/2005-06 dated 01/07/2005
f) Netting off by SEZ unit-
In some cases, SEZ unit may have transactions of import and also export with the same foreign
customer .In such case, exporter can net off export receivables against import payments. The
transactions should be between same two properties and there should be proper
documentation.
This permission is only for SEZ units. (RBI Circular 8/2005-06 dated 01/07/2005)
g) Foreign Exchange Derivative Contracts
A Unit in SEZ can enter into contract in commodity exchange or market outside India to hedge
the price risk in the commodity on export/import without prior approval of RBI (Foreign
Exchange Derivative Contracts) Regulation, 2000
i) External commercial Borrowings (ECB) by SEZ
SEZ can raise ECB for its own requirements and borrowed funds shall not be transferred to its
sister concern or any other Unit in DTA (RBI Circular 2/2005-06 dated 01/07/2005)
j) Direct dispatch of Documents to Foreign Buyer
SEZ Units can dispatch export documents direct to consignee outside India. These need not be
routed through authorized dealer Remittance should be obtained and GR/SDF form should be
submitted to authorized dealer within 21 days for monitoring RBI Circular 8/2005-06 dated
01/07/2005
k) Job Work abroad
SEZ Units can undertake Job work abroad and export goods from that country itself Exporter
has to make satisfactory arrangement for realization of full exports proceeds (RBI Circular
8/2005-06 dated 01/07/2005)
(l) Payment to SEZ by DTA unit in Foreign Exchange
45

An EOU/SEZ/STP/EHTP/BTP may supply goods to unit in DTA. In such case the DTA unit can pay
for the goods in foreign exchange, for which foreign exchange can be released by authorized
dealers (RBI Circular 8/2005-06 dated 01/07/2005
(m) Foreign Currency Account
A unit located in SEZ can hold, open and maintain a Foreign Currency Account with authorized
dealer in India. All Foreign Exchange Funds received by SEZ are credited to this account.
However, Foreign exchange purchased in India against Rupees cannot be credited to this
account without permission of RBI .the funds in the account can be used for any bona fide trade
transactions with person resident in India or otherwise. The balances in the account are exempt
from all restrictions in respect of current account transactions. Restrictions on EEFC account in
respect of current account transactions are not applicable to SEZ accounts, except that gifts
exceeding US $ 5,000 and donations exceeding US $ 10,000 per remitter/donor per annum are
not permitted. Funds in these accounts shall not be lent or made available to any person or
entity resident in India, except to another SEZ unit.
(Regulation 6A of FEMA (Foreign Currency accounts by a person resident in India) Regulations
, 2000 and RBI Circular 8/2005-6 dated 01/07/2005)
VII. Amendments in Insurance Act
A proviso has been added in Sec 2C (1) after the third proviso by the Third Schedule- Part I of
the Special Economic Zones Act, 2005 and a new Sec 2 CA has been inserted.
Accordingly, an insurance company can carry on insurance business in special economic zone
and the Central Government has the power to apply provisions of this Act to Special Economic
Zones.
VIII. Amendments in Banking Regulation Act
Power to exempt in certain cases
S 53 provides that The Central Government may, on the recommendation of the Reserve Bank,
declare, by notification in the Official Gazette, that any or all of the provisions of this Act shall
not apply to any banking company or institution or to any class of banking companies or any of
their branches functioning or located in any Special Economic Zone established under the
Special Economic Zones Act, 2005.
A copy of every such notification shall be laid in draft before each House of Parliament, while it
is in session, for a total period of thirty days which may be comprised in one session or in two
or more successive sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the
notification or both Houses agree in making any modification in the notification, the
notification shall not be issued or, as the case may be, shall be issued only in such modified
form as may be agreed upon by the both the Houses.
46








CASE STUDY: NOIDA SPECIAL ECONOMIC ZONE
(NSEZ)








47


LOCATION:



ADDRESS:
NSEZ, Noida Phase-II,
District- Gautam Budh Nagar,
(U.P.) - 201 305



48

ABOUT NOIDA SPECIAL ECONOMIC ZONE
NSEZ the only Central Government SEZ in the northern India, headed by the Development
Commissioner, was set up in 1985 in Noida Phase-II on a 310 acre plot of land. Government of
India has so far invested a sum of Rs. 1177 million on its development. NSEZ provides excellent
infrastructure, supportive services and sector specific facilities for the thrust areas of exports
like gem and jewellery and electronics software. This is the only land locked SEZ , contrary to
other zones which are situated in Port Towns and hence emphasis of type of units to be set up
are those with high value and low volume. Proximity to Delhi and availability of skilled and
dedicated manpower makes it ideal for setting up jewellery and software development units.
These two sectors have contributed more than 30 per cent of the export turn over during the
year 2008-09.
NSEZ has maintained high export growth rate for the past many years. Exports had increased
from Rs. 42660 million in 2004-05 to Rs. 163080 million during 2008-09. Employment in the
zone has gone up from 16284 in December, 2001 to 32550 in June, 2009. During the same
period, number of operational units in the zone has increased from 141 to 245. Besides, one
hundred units are under active implementation.
Besides, the jurisdiction of Noida Special Economic Zone is spread over EOUs in nine states
namely Jammu & Kashmir, Himachal Pradesh, Punjab, Haryana, Rajasthan, Delhi, Uttar Pradesh,
Uttaranchal and Union Territory of Chandigarh. Exports from EOUs in the jurisdiction of NSEZ in
Northern India have increased from Rs. 86155 million in 2005-06 to Rs. 108480 million in 2008-
2009.
NSEZ has 343 developed plots of varying sizes, besides eleven standard design factory
complexes that can accommodate one hundred seventy six unit meters. One SDF block of
sixteen units is also under construction. Future expansion has been strategically planned and
when implemented fully, the zone would be able to provide 224 SDF units.
Infrastructure, supportive services and trade related facilities have been substantially upgraded
during the last few years. NSEZ offers access to global telecommunication network,
uninterrupted power supply and efficient local transport system. A high capacity telephone
exchange has been installed in the Zone. An independent feeder line has since been provided
for uninterrupted power supply. The reliability and quality of power supply has improved with
the commissioning of 132 KVA sub station near NSEZ. Proximity to Delhi provides easy access to
financial and commercial infrastructure of the capital. Customs Wing ensures prompt and on
the spot clearances of export/import consignments. Besides, duty free oil depot, in-house post
and telegraph office, sub- foreign post office, insurance and banking including ATM facilities,
courier service facilities, industrial canteens and executive restaurant and travel/customs
forwarding agencies have been provided. An extension counter of Punjab National Bank to
collect central excise and customs duties has become operational. A solar energy based power
plant is also proposed to be set up in NSEZ. Road from Noida to Dadri has been widened by
NOIDA into a six lane highway. Housing is not a problem as large numbers of residential
colonies have been developed in Noida.
49


Sector specific Infrastructure for software and gems & jewellery units has been developed.
Satellite data link facilitates software exports. Earth station in Noida and the available VSNL
outfit have further supplemented this facility. Highly trained and qualified manpower for
software development is available in and around Delhi. A campus like environment, conducive
for quiet and creative work prevails in the zone. Supportive infrastructure and easy availability
of manpower make NSEZ an ideal location for setting up software units. Software units are
allotted built-up space on priority.
Two exclusive complexes have been developed for jewellery units. MMTC has a full-fledged
office in NSEZ for supply of gold which also provides packing credit facilities. Central
Warehousing Corporation provides facilitation for handling and storage of jewellery cargo and
services for completion of export formalities such as appraisement, processing of airway bills
and transportation to the Airport. Sub- foreign post office facilitates export/import of jewellery
samples. Besides, Trading Block consisting of 16 SDF units of 100 meters each is existed in NSEZ.
NSEZ provides Pre-establishment support in obtaining clearances/approvals from various
statutory authorities. NSEZ’s developed infrastructure, procedural ease and supportive services
are its main attractions. NSEZ has been declared as a 'Port of Import & Export' on the lines of
Inland Container Depot ICD and EDI on online filing facilities of application will be operational
soon.
The service center at NSEZ provides excellent facility for banking, insurance, sub-foreign post
office, telephone etc. Cleanliness and sanitation of zone in accorded on top priority and
dedicated staff of the NSEZ is always to extend their helping hand for overall growth and
development of exports.










50

OFFICE BEARERS OF NSEZ

BANKS AND RESTAURANTS IN NSEZ

51

PROCEDURE FOR SETTING UP A UNIT IN NOIDA SEZ
For setting up a unit in special Economic Zone, the applicant has to apply in form-“F” given in
SEZ Rules, 2006 along with the following documents: (Form-“F” may be down loaded from our
web site: “NSEZ.GOV.IN”)
i. A DD amounting to Rs. 5000/- in favor of “Pay & Accounts Officer, Ministry of Commerce &
Industry, Department of commerce” payable at New Delhi.
ii. Complete project report giving therein promoters bio-data, manufacturing process/ Flow
chart, cost of the project, means of financing List of CG/RM
iii. Copy of Memorandum & Articles of association in case of. Company.
iv. Copy of registered partnership deed in case of partnership firm.
v. Copies of passport, PAN and IT return for last three years in respect of directors/partners/
proprietor as the case may be.
vi. Copies of balance sheet for last three years in case of Pvt. Ltd Company or Public Ltd.
Company.
vii. Copy of Buy-back agreement/marketing tie up.
viii. Copy of Import-Export code, if already obtained from O/0 the Jt. DGFT.
ix. Requirement of space for the proposed project.
x. Form – F in triplicate duly filled up
xi. Affidavit as per form – F
The Approval Committee will consider the proposal and approve. After approval, the unit is
issued Letter of approval (LOA). On receipt of the LOA, the unit has to accept the terms and
conditions of the LOA in terms of condition number (Xii) of LOA and also has to apply for
allotment of plot/SDF, for implementation of the project. On completing the formalities of
allotment of plot/SDF, the unit has to execute Bond cum legal undertaking in form H of SEZ
Rules on a non-judicial stamp paper of Rs. 100/- bought in the UP or state where the unit is
located and notarized by a Notary public registered in the concerned State. After acceptance of
the Bond cum Legal undertaking, the unit has to apply for issuance of import-Export code
number in the format as given in Ayaat Niryat form along with following documents:
i. D.D. for Rs. 250/- as application fee.
ii. Bankers certificate regarding maintenance of current account.
iii. Two passport size photographs.
iv. Copy of PAN of the company.
For issuance of RCMC, the unit has to submit application in App. 19 of Handbook of procedures
Vol- I along with the following documents:
i. Copy of IEC issued to the company.
ii. Bankers certificate regarding financial soundness of the applicant.

52

In addition to above, the unit has to submit following applications with State
government/departments:
i. NOC from pollution Control Board
ii. Power connection from UPPCL
iii. Building plan form the O/o the DC
iv. Trade TAX registration from Commercial Tax Deptt. UP
The Development commissioner, Noida SEZ has been delegated the powers of Labor
Commissioner by the government of Uttar Pradesh to resolve Labor disputes and issue licenses
under Factory Act/ Contract Labor (R& A) Act/ Shop & Commercial establishment Act.
Mode of Payment of lease rent @ Rs. 70/- per sqr. mtrs. per annum in case of plot & Rs. 1095/-
per sqr. mtrs. in case of SDF ( Built up space)
Three month advance payment + one year B.G. through DD in favor of “DC, Noida SEZ”.
Water charges & mode of payment
Rs. 1000/- per quarter for one SDF and Rs. 175/- to 500/- for plot depending upon the size of
plot.

HOW TO APPLY FOR EOU SETUP
For setting up a unit in an EOU, three copies of the application in the form given in Appendix-
14I-A of the Handbook (Vol.1) may be submitted to the Development Commissioner (DC) of the
EOU concerned.
Proposals for setting up units in EOU other than those requiring industrial License may be
granted approval by the Unit Approval Committee under the chairmanship of the Development
Commissioner within 15 days.
Proposals for setting up units in EOU requiring Industrial License may be granted approval by
the Development Commissioner after clearance of the proposal by the EOU Board of Approval
and Department of Industrial Policy and Promotion within 45 days.
Letter of permission (LOP)/Letter of Intent (LOI) issued to EOU units by the Development
Commissioner would be construed as a license for all purposes, including for procurement of
raw material and consumables either directly or through canalising agency.
The LOP/LOI shall specify the items of manufacture/service activity, annual capacity, projected
annual export for the first years in dollar terms, Net Foreign Exchange Earnings (NFE),
limitations, if any, regarding sale of finished goods, by products and rejects in the DTA and such
other matter as may be necessary and also impose such conditions as may be required.

53

Basic Requirements for setting up an EOU (Check-list)
1. Planning your venture:
i) Is it on your own
ii) With foreign participation and nature of participation (foreign investment allowed 100%)
2) What product do you intend to manufacture
i) Product/By-product
ii) Does it requires clearance from Central/State Government authorities
iii)Is it an SSI Unit. If so, registration is required as an SSI
3) Technology to be used
i) Indigenous/foreign
ii)Related costs and conditions

4) Feasibility report
i) On your own or with help of consultant

5) The finances involved
i)Land, structure, buildings etc (Please note, building construction material is not exempted
from duty)
ii) Capital goods, machinery etc
iii) Payment for royalties etc.
iv) Administration and establishment
v) Others: like interest on loans, related taxes and levies etc.

6) The current competition overseas
i) Main competitors
ii) Demand and price-levels.

7) The import laws and other requirements in target markets
i) Any fiscal/non-fiscal barriers, like anti-dumping laws
ii) Quota restrictions
iii) Preferential treatment to competitor countries

8) Location of the unit
i) Whether it is located close to a port or railroad
ii) Availability of raw materials
iii) Manpower availability
iv) Environment clearance needed if unit is located 25 kms from an urban town

54

9) Capital goods, machinery and equipment to be used
i) Indigenous or foreign
ii) Related costs

10) The raw materials and other inputs, like consumables etc that would be required:
i) Source
ii) Cost
iii) Monthly, quarterly and annual requirements

11) Effluents or waste-material
i) How do you propose to treat these or discharge them?

12) The production process and the related inputs
i) Whether production process requires air-conditioning plants, special furnaces or kilns
etc.
ii) Details and costs (Please note, air-conditioning equipment permitted duty free only if it
is essential for production process).

13) The production capacity and spare capacity:
i) Do you intend to utilise the same by doing sub-contracting work for other export units in
ii) DTA or Export Oriented Unit (EOU)/Export Processing Zone (SEZ ) units.
iii) Details of sub-contractors
iv) Related costs

14) Any by-products turned out in the production process
i) Details of by-products
ii) Whether these would be exported or sold in Domestic Tariff Area (DTA)

15) Packaging
i) Details of packaging
ii) Source
iii) Cost

16) Power
i) Whether the normal grid could supply adequate power
ii) Whether there would be need for a captive power plant
iii) Cost of power plant
iv) Fuel that would be required for captive power plant (e.g. furnace oil, LPG, coal etc.).

17) Duties, taxes and fiscal levies both, Central and State-level
i) Customs and Excise levies
ii) Sales tax, Octroi etc
iii) Power tariffs and duties

55

18) Other information
i) The company should be registered
ii) A current account with a bank authorised to deal in foreign exchange should be opened.
iii) Registration-Cum-Membership Certificate (RCMC) should be obtained from the office of
the concerned Development Commissioner.
iv) Sales tax registration be obtained from the Sales Tax Department

19) Mandatory clearances from State Government's
i) Pollution clearance certificate
ii) Approval of building plan in cases where building is proposed to be constructed.
iii) Registration as a small scale industrial unit, if applicable
iv) Registration under Factories Act


JURISDICTION OF DEVELOPMENT COMMISSIONER OF SEZ /EOU

JURISDICTION OF DC's
Noida Special Economic Zone
Noida Dadri Road, Phase-II,
Noida-201305, Distt. Ghaziabad
Uttar Pradesh - 201305

Tel: 0120-2567270 to 73
Fax: 0120-2562314/7276
Email: dc@nsez.gov.in
Website: http://www.nsez.gov.in/nsezwebsite/

Jurisdiction : Delhi, Uttar Pradesh, Uttaranchal, Punjab, Haryana, Himachal Pradesh, Jammu &
Kashmir, Chandigarh, Rajasthan & Madhya Pradesh.















56

SECTOR WISE GROWYH OF EXPORTS FROM NSEZ
EXPORTS (IN RS. MILLION)

* These sectors have been added in 2008-09 as per Department of Commerce format.
IMPORTS (IN RS. MILLION)

Investment :
Government : Rs.117.72 crores
Private : Rs.545.00 crores
FDI : Rs.135.00 crores

Employment:
Total Employment : 32550 as on 30/06/09
Men : 20957
Women : 11593

Units in production as on date : 245
Export projections for the year 2009-2010 : Rs. 10,000 crores
U.P. Special Economic Zone (Amended) Policy- 2007

Part - 'A'

Fiscal Incentives / Facilities, Rationalisation of Procedures


The Section50 oI Central SEZ Act, 2005, expects that the State Governments
should also notiIy Policies and enabling Act to provide Iacilities/exemptions to SEZs.

AIter studying the Central SEZ Act - 2005, SEZ Rules - 2006, and also relevant
Policies oI various States, new U.P. SEZ Policy is being hereby notiIied, in order to
Ioster the industrial and economic development and creating conducing environment Ior
the development oI SEZ.

To encourage development oI SEZs in the State and make available all the
necessary Iacilities, this Policy is hereby, being notiIied, as Iollows :

2. SALIENT FEATURES OF SEZs :

i. Integrated Areas with the world-class inIrastructure Iacilities will be
developed through establishment oI SEZ.

ii. Apart Irom achieving a rapid economic & industrial growth in the Country
and the State, new avenues Ior employment generation will be created by
the setting up oI SEZs. ThereIore, SEZs have a vital role to play to Ioster
the economic development, in the Country & the State.

iii. The Exports will be boosted by the establishment oI SEZs. Domestic
investments , FDI and Ioreign & modern technology will be attracted.

iv. Provisions Ior the exemption oI taxes etc., Ior rationalisation/exemption in
the legal provisions related to labour, environment, electricity etc. has
been provided Ior in this Policy.

3. POLICY FOR STATE LEVEL EXEMPTIONS/ FACILITIES/
RATIONALISATION

(1) Policy related to Exemptions of State Level Taxes, Levies, Cess, Fee,
and Duties etc.
(Following exemptions shall be applicable Irom the date oI issuance oI
NotiIication, by the concerned deptt.)

1. SEZ Developer and SEZ units shall be exempt Irom all kinds oI taxes,
cess or levies oI the Government oI Uttar Pradesh or taxes oI any other
local authority/ agency Ior any transactions within the SEZ or on any
57

procurement oI goods, supplies or services Irom the Domestic TariII
Area. Units in DTA would also be exempt Irom these on sales made by
them to a SEZs unit or SEZ developer. These include UP Trade Tax,
Turnover Tax, Mandi Tax, Entry Tax, Development Tax, Local
Bodies Tax etc.

2. SEZ Developer and Units would also be exempt Irom taxes levied by
local bodies, as SEZs would be an industrial township under
constitution oI India and would be responsible Ior providing services
within the Zone.

3. Developers, Co-developers oI SEZs and Units established/to be
established will get total exemption Irom the Stamp-duty &
Registration-Fee on Iirst transaction but on implementation oI
amendments in the Indian Stamp Act-1899, as per 3
rd
schedule oI SEZ
Act-2005, exemption will be applicable as provided therein.

EXPLANATION :
(A) "Policy related to Exemptions oI State Level Taxes, Levies, Cess, Fee, and
Duties etc., it was proposed by the Tax & Registration Deptt. regarding
sub-point 1, 2 & 3 oI the above Para 3(1) that according to the decision
taken by the Empowered Committee oI State Finance Ministers in the
meetings dated 05.05.2007 and 15.06.2007, all the exemptions in State
level taxes, levy, Iee and duties (including stamp duty) shall be applicable
only in the processing area oI SEZ ".

"In this regard, in principle consent oI the Government oI U.P. can be
expressed and Government oI India may be requested to implement this.
But till such time Government oI India takes a decision in this regard, it
shall not be appropriate to make any amendment by the Government oI
U.P. on this point in the SEZ Policy as this might result in pushing U.P.
behind other States in the competition. It shall be proper to continue the
existing Policy in U.P. regarding the above exemptions provided by
Government oI India in the whole SEZ until the Government oI India
makes the provision in this regard. Exemption in Stamp Duty shall be
applicable on Iirst transIer only".
(B) Registration-Fee on the Vehicles shall be payable. Permanent/temporary
registration will be mandatory as required and under the Rule33 oI
concerned Rules, trade-certiIicate shall have to be procured on payment oI
applicable Iees. Passenger/Goods Carriers, which will operate within the
SEZ only and in no case, will move out oI SEZ, will be exempt Irom the
Tax & Additional Tax whereas other types oI vehicle shall not be eligible
Ior the same.

(C) There is no provision oI exemption on the Royalty on Minerals.

58

(2) Policy related to Electricity

1. Electricity Duty and taxes shall be exempted on generated or purchased
electricity Ior use in processing area oI the SEZ Ior a period oI 10 years
Irom the date oI production or start oI service.

2. SEZ will have Ireedom oI generation, transmission and distribution oI
electricity within the SEZ subject to provision oI Electricity Act 2003.
Wherever the consent oI U.P. State Regulatory Commission will be
required, same shall be obtained.

3. Under the U.P. Power Policy all admissible Iacilities shall be available to
SEZs also.

(3) Rationalising Labour Laws

1. Powers oI Labour Commissioner related to implementation oI labour laws
will be delegated to the Development Commissioner oI SEZ and
nominated OIIicers oI Labour Deptt. will be posted in the concerned SEZ.

2. In order to provide Single Window Service under the labour laws in the
SEZ, a system oI making the services oI oIIicers oI Labour Deptt.
available at the disposal oI Development Commissioner, will be
developed.

3. For inspections relating to workers' health and saIety, Government oI
Uttar Pradesh will use best international practices by permitting units to
get such inspections done through such accredited agencies (outside
Labout Deptt.) as may be notiIied by the Government. Under the Factories
Act 1948 and Environment Conservation Act 1985, eIIorts will be made
by the Labour Deptt, Govt. oI U.P. to allow inspection by outside
accredited agencies with the permission oI Government oI India in SaIety
Management System oI hazardous goods required as per Central Acts.

4. Units located in the SEZ will be endowed with public utility status under
the Industrial Dispute Act.

5. GoUP would notiIy a single reporting Iormat covering all the Labour
Laws. Labour department will make eIIorts to Iurther rationalise/simpliIy
the existing Single Format.

(4) Policy related to Inspection

1. For all physical inspections, a schedule would be workedout in
consultation with the Development Commissioner and then only
inspections would be carriedout.
59


2. In case oI any speciIic inIormation oI any violation, the inspecting agency
will be required to take prior approval oI the Development Commissioner
beIore conducting the proposed inspection.


EXPLANATION :

Appropriate arrangements Ior monitoring oI manuIacturing process under the
jurisdiction oI Excise Department will be made within the rules.

(5) Clearance Procedure (Single Points/ Window Clearance System)

1. In respect oI all State level clearances will be given at a single point. All
concerned departments oI State government will make arrangements, issue
instructions/guidelines Ior issuing these clearances through a single point
i.e. Development Commissioner or through a Committee constituted under
the Development Commissioner.

2. A Committee will constituted under the Development Commissioner oI
each SEZ and representatives oI diIIerent departments/ specialists will be
included in the Committee. This Committee will have all the authority to
issue clearances related to State government and also Iacilitate the
clearances related to Central government and will ensure that time bound
clearances to all departments are issued within a Iixed time period Irom
the date oI receipt oI application Irom the units.

3. Under the Section 14 (G) oI SEZ Act 2005 all the concerned
departments Ior the purpose oI approvals will delegate their powers / work
allocation to approval Committee to be constituted under the Section 13 oI
SEZ Act-2005.

4. Most oI the State level clearances shall be brought under automatic
clearance route, meaning thereby that ex-post-Iacto inIormation by the
developer or unit entrepreneur shall be suIIicient.

5. For all clearances required Irom State government agencies, GoUP shall
notiIy a single Iorm oI application and Letter oI Permission issued by the
Development Commissioner shall contain approvals oI subjects covered
by the application Iorm.

EXPLANATION
Clearances etc. Ior establishing units under the jurisdiction oI the
Excise Deptt. shall not be covered by above-said system.


60

(6) Rationalization of Environmental Procedures

1. A list oI non-polluting industries will be notiIied Ior which separate
environmental NOC will not be required in SEZ. For the remaining
industries and matters, where delegation oI powers is possible legally,
these Powers will be delegated to Regional OIIicer oI U.P. Pollution
Control Board/ OIIicers oI UPPCB posted in SEZ. Procedure prescribed in
the relevant acts / rules will be Iollowed.

2. State Govt. will take necessary steps to stop the un-planned development
around the SEZs and best possible shall consider developing green belt.

3. A system oI periodic selI certiIication Ior all industries in the SEZ,
assisted by private certiIication agencies will be implemented.
Development Commissioner will be authorised to supervise & monitor
these through a mechanism random sampling oI units.

4. As per the list provided in the notiIication issued by the Ministry oI
Environment oI Government oI India (list oI projects or activities
requiring prior Environmental Clearance under E.I.A. NotiIication No.
S.O. 1533 dated 14.09.2006) dated 14.09.2006, regarding
industries/projects/EPZ/SEZ etc., a system has been put in place Ior
environmental clearance.

(7) Policy related to the developmental structure and other commitments of the
State Government for SEZs.

1. SEZs shall be established in the public sector, private sector and through
PPP route.

2. Government oI U.P. will declare SEZs as industrial townships, as
provided under article 243 (Q), oI the Constitution.

3. SEZs shall be provisioned as a special area in the local master plan.
SuIIicient Ilexibility shall be available to the Developer, within the broad
parameters oI zoning regulations and applicable land use.

4. State Government shall act as a Iacilitator Ior ensuring the availability oI
water to the developer and units.

(8) An empowered Committee shall be constituted under the Chairmanship oI ChieI
Secretary, GoUP, Ior taking the actions required by the State Govt. under the
SEZ Act 2005 and Rules 2006 oI Govt. oI India, wherein Principal Secretary/
Secretary and other related oIIicers oI concerned departments shall be included as
Members. OIIicers and Developers oI SEZs shall also be invited as and when
required.
61


Powers and functions of above mentioned Empowered Committee shall be as
follows :

1. To examine and recommend to Govt. oI India under section 3 oI SEZ Act
- 2005, the proposals received Ior all SEZs (including private sector
proposals received till now) as per SEZ Act & Rules and UPSEZ Policy.

2. All other works to be allocated by the state Govt. Ior the establishment and
implementation oI the SEZs.

3. To make necessary arrangements Ior the redressal oI problems coming in
the way oI rapid & eIIective implementation oI any SEZ.


62

U.P. Special Economic Zone (Amended) Policy - 2007
Part - 'B'

Selection of Developer, Allotment of Land and Arrangement of
Master Plan Land Use etc.

1. APPLICABILITY/ EFFECT AND LAND ARRANGEMENT

1.1 Applicability/ Effect: Paragraphs 2, 3, 4 & 5 relating to the selection oI
developer and allotment oI land will be applicable to such SEZs which will be
implemented on PPP model. ThereIore, SEZs to be implemented in the public
sector or private sector shall not be governed by these points. These points will
be applicable on those cases oI private sector where land will be demanded Irom
the Government/ Government Agency, as well. Facilities stated under para 6, 7
& 8 will be applicable on all the SEZs to be established in the State.

1.2 Land Arrangement: In view oI the Policy decided by Government oI India in
their letter dated 15.06.2007 regarding acquisition oI land Ior establishment oI
SEZ "Policy related to non-sanction oI SEZ on compulsory land acquisition
land" compulsory land acquisition shall not be done by Government oI U.P. Ior
establishment oI SEZ. Rather, private developers shall arrange/purchase the land
on their own Ior establishment oI SEZ. In Iuture, whatever Policy shall be
decided by the Government oI India Ior land acquisition Ior SEZ, the same shall
automatically be adopted by the Government oI U.P. and necessary action shall
be taken accordingly. II an SEZ is to be established on Public Private
Partnership (PPP) basis, then the selection oI private partner shall be according
to the guidelines decided by the Government. II Government/ Govt. Institute
desires to establish an SEZ on its own or through a joint venture, then it shall
arrange Ior the land under its prevailing rules.

2. PUBLIC NOTIFICATION AND RECEIPT OF PROPOSALS

2.1 In order to promote establishment oI SEZs, Nodal Agency indicated under para
3.3 oI this Policy will issue public notice Ior consideration on proposals
received.
63


2.2 As per this Policy, proposals received under bid process (PPP process) shall be
received by the Nodal Agency and they shall be considered. All the proposals
shall be considered under bid process (PPP process). II SEZ is to be established
on the basis oI Public Private Partnership (PPP) then the selection oI private
partner shall be according to the guidelines decided by the Govt. Ior Public
Private Partnership (PPP) projects. First oI all, Nodal agency will immediately
consider that proposal received is worth planning or not. II decision is in
negative then entire application Iee shall be reIunded and iI it is positive then
immediate detailed consideration/ examination will be done under this policy.

3. SELECTION OF DEVELOPER

3.1 Selection oI Developer shall be undertaken under Public Private Partnership
(PPP) process oI the Government on the basis oI bid process.

3.2 SEZs to be developed shall be divided into Iollowing three categories on the
basis oI area:-

Category - A` - NotiIied area oI Noida/ Greater Noida
Category - B` - NotiIied areas oI other development
authorities oI the State (including Industrial
Development Authorities)
Category - 'C' - Remaining areas oI the State.

3.3 The concerned Industrial Development Authority (Noida/ Greater Noida) shall
be the nodal agency Ior category A` and UPSIDC or concerned Development
Authority, as directed by the Government, shall be the nodal agency Ior the
category B` and UPSIDC shall be the nodal agency Ior category 'C' as land
acquisition in this area (iI permissible under other provisions oI this policy, then)
shall be done by them Ior providing the land Ior SEZ.

3.4 II there is requirement oI land acquisition in category 'C' SEZs, then the land
acquisition (iI permissible under other provisions oI this policy, then) will be
done by UPSIDC.

64

3.5 Duties/ Liabilities and Rights oI the Developer and Nodal Agency shall be Iixed
as per DRA (Development Rights Agreement). For the purpose, proposed DRA
can be used as given in the reIerred report oI consultant, Ernst&Young.

3.6 Following arrangements shall be made in DRA :-

(1) DRA shall be valid Ior 70 years Irom the date oI execution, which can be
terminated beIore 70 years as per conditions oI the agreement. The
agreement can be extended Ior Iurther 20 years with mutual consent.

(2) Developer Company shall be Iully empowered to Iix, levy and collect the
Iees / charges against usage and creation oI various services & Iacilities
provided by them, related to planning, design, Iinancing, marketing,
development oI basic inIrastructure & maintenance, operation,
management and administration oI zone.

(3) Developer Company shall have to develop the zone in Iixed phases, under
development milestones as per terms & conditions oI DRA. II Developer is
Iailed to achieve the milestone within stipulated period then a cure period
oI 90 days can be granted on the payment oI damages as Iixed in DRA.

(4) Minimum and maximum limitations oI various land use shall be Iixed.

(5) Developer will have to produce an implementation scheme. This
implementation scheme will be made on six monthly basis. As per this
Iollow-up oI work disposal shall be done by an independent engineer Iirm.

(6) Maximum time limit Ior the entire development oI SEZ shall be mentioned
in the DRA. Consultant Company has given advise Ior the development oI
all three phases in 10 years.

(7) Developer has to make available the perIormance bank guarantee. This
guarantee will satisIy availability oI various services & Iacilities and
liabilities related to maintenance against a proper Iees apart Irom other
liabilities. For the redressal oI complaints to be lodged by the established
64

units against the developer, there will be a Committee be constituted under
the chairmanship oI Development Commissioner oI SEZ.

(8) Works/ liabilities oI concerned nodal agency shall be mentioned in DRA.

(9) Wherever applicable, as per requirement, to make arrangements Ior Lease
Deed execution in Iavour oI Developer Ior every phase and arrangement oI
land value & lease deed by the nodal agency.

4. VALUE OF LAND
4.1 Value oI the land to be made available Ior the SEZs oI category A` & B` shall
be Iixed on the basis oI the prevailing rules oI the Institution/ Authority
providing/ allotting land. ThereIore, it will be necessary that authorities shall
keep on Iixing the land rates (developed & undeveloped) Ior the various
purposes Irom time to time. These will have to be mentioned in DRA. Because
there are no development authorities in category C`, thereIore in the absence oI
Iixed rates oI land Ior the various purposes, nodal agency will charge entire
amount (inclusive oI interest and all other charges) spent on land acquisition Ior
the SEZ.

4.2 Total cost oI land shall be recovered upIront as lease premium beIore the
execution oI lease. II developer oIIers share in revenue also, that can be accepted
but this cannot be accepted as an alternative oI lease premium in part or in total.

4.3 There will be no interIerence oI development authority / UPSIDC, as Iar as
charges to be levied by the developer Irom the units to be established under the
SEZ. This will be market regulated.

5. USE OF LAND FOR VARIOUS PURPOSES
As minimum 50° processing area has been Iixed by the Government oI India, in
this context the land utilisation has been Iixed Ior diIIerent purposes as under :-

LAND USE LIMIT
1. Processing Area Minimum 50°
2. Green belt and basic amenities Minimum 25-25° oI both processing and
non-processing areas.
3. Commercial, Institutional and
Residential
Maximum 10, 10 and 15° oI total area
respectively.
66


6. SPECIAL ECONOMIC ZONE LAND USE UNDER MASTER PLAN

6.1 The master plan land use oI approved area Ior SEZ shall be SEZ which shall be
a separate land use. AIter the notiIication oI Government oI India is issued under
section 4(1) oI Special Economic Zone Act, 2005, the State Government shall
issue the notiIication Ior change oI land use oI concerned area into SEZ without
any changing Iee in the case oI para 6.2.2 and aIter the payment oI necessary
changing Iee in the case oI 6.2.3, the procedure oI this land use shall be kept
separate Irom the normal legal procedure. A suitable amended legal procedure
shall be made Ior this purpose.

6.2 Since residential, commercial etc. purposes are also admissible in non-
processing area beside industrial (processing area) in SEZ, thereIore -

6.2.1 Under SEZ land use commercial and social purposes such as educational,
medical, hotel, entertainment, residential and commercial complex etc. shall be
admissible upto such extent which are admitted/sanctioned by notiIied
regulations or under provisions under Special Economic Zone Act, 2005 by the
Government oI India same F.A.R/F.S.I shall be admissible in processing area
which shall be admissible Ior industrial land use in that development area. But
in case oI I.T., gems & jewellery and Biotech SEZ this shall be admissible
F.A.R/F.S.I Ior institutional land use. The FAR/ FSI in the non-processing area
oI the SEZ shall be decided on the basis oI the land use applicable in the
concerned development authorities/updated master plan oI the corporation and
as mentioned in the building regulation. In case oI contradiction in the
provisions oI FAR/ FSI oI the Master Plan and Building Regulations, FAR/ FSI
shall be as per the provisions oI National Building Code. This FAR/ FSI shall be
as applicable on the date oI submission oI the map. For above mentioned
admissibility oI F.A.R/F.S.I Ior SEZ in category 'C', the provisions oI U.P. State
Industrial Development Authority shall be Iollowed.

6.3 II any land is made available or allowed Ior SEZ by the nodal agency, the land
use oI such land shall be assessed without Iee in S.E.Z.

67

6.4 II sanction oI SEZ is given on the land allotted earlier and situated in the
development area oI any development authority, the land use shall be changed in
SEZ aIter taking prescribed changing Iee Ior change into industrial land use Ior
processing area and aIter taking prescribed changing Iee Ior change into
residential land use Ior non processing area. II the norms Ior changing Iee are
not prescribed, it shall get prescribed by the government.

6.5 II the land oI SEZ is outside oI the development area oI any development
authority, the land use SEZ shall get prescribed - provided that the construction
map oI non processing area shall be sanctioned only when minimum 50 per cent
processing area has got developed. But even then the construction map oI non
processing area shall be sanctioned only Ior that proportionate area. Such areas
shall be included in the development area oI U.P. State industrial development
authority Ior bringing them in the area oI proper planning authority.

7. PAYMENT OF DEVELOPMENT FEE AND SANCTION OF LAY-
OUT PLAN/SUB LAY-OUT PLAN/ BUILDING MAP

7.1 Since the internal development shall be made/caused to be made by the
developer itselI, there shall be no payment oI internal development Iee.

7.2 II necessary external development work is done by SEZ Developers on their
own then no external development Iee shall be charged. In case any external
development work done by the Government / Government Institution then its
cost shall be payable as per rules.

7.3 No outer development Iee oI any kind shall be charged Ior any existing public
inIrastructure but iI IortiIication/ upgradation oI those inIrastructural Iacilities
Ior SEZ shall be necessary then proportionate expenditure shall be payable by
SEZ developer.

7.4 Sanction of plan of development works:
Where there is an agreement on D.R.A., this work shall be done accordingly. In
other cases the lay-out plan shall be sanctioned by the development authority
concerned. The building map shall be deemed to be automatically sanctioned on
the authentication oI empanelled Architects (iI empanelment done, otherwise
68

any registered Architect) oI concerned land allotting Institution/ Authority (as
per building bye-laws/ sanctioned lay-out plan/master plan).

8. Admissibility of sub-lease
8.1 Lease/sub-lease will be admissible on land made available Ior SEZ by
Government or Government Institution according to the requirement oI
regulations by the Government oI India or the state government. The lease or
sub-lease holder developer or units may avail Iinancial Iacilities by mortgaging
the lease or sub-lease.

8.2 II the land marked Ior SEZ was made available Ior industrial
purposes/institutional purposes by the government or any government institution
but there was no admissibility oI sub-lease in the conditions oI the lease, the
sub-lease will be made available according to the requirements oI the SEZ
regulations exempting the conditions oI the lease and charging the Iollowing Iee
on such land:-

• On payment oI transIer Iee payable Ior transIer in accordance with the
normal procedure oI the allotting institution but iI there is no procedure as
such in the institution, then the policy oI any other suitable institution shall
be Iollowed Ior this purpose.
• II such land is proposed to give on sub-lease to a cent-percent subsidiary
company oI the allotting institution/company, then no transIer Iee shall be
charged.

9. Special provisions for I.T.S.E.Z.

9.1 Land use oI I.T. S.E.Z.:

II a SEZ is proposed on any land/plot allotted earlier Ior I.T. Park/ITES by any
authority, then the Iixed land use conversion charges shall be payable only on
the non-processing area oI the ITSEZ. Accordingly, Ior calculating the land use
conversion charges, iI any norms have been approved in the past regarding ratio
oI processing area and non-processing area Ior IT activities oI any institute, then
the conversion charges shall be charged only in case oI non-processing area is
more than the above ratio.

69

9.2 In view oI the para 10.6 oI U.P. IT Policy - 2004 " the Mega Investment units
shall be made available land at a rate which is atleast 25° lesser than the sector
rate, by Development Authorities, Industrial Development Authorities, Housing
Development Board", 25° exemption on land allotment rate Ior only SEZ
Processing Area oI ITSEZ shall be applicable and accordingly at the time oI
calculating the land allotment rate, iI any norms have been approved in the past
regarding the ratio oI processing area and non-processing area, then 25°
exemption shall be applicable as it is on the above ratio limit on processing/non-
processing area and in case non-processing area is more than the said ratio, then
institutional usage rate shall be charged on the additional area. In cases where
this 25° exemption is already been availed and SEZ has been approved on that
land subsequently or an SEZ is proposed to be established, then in these cases
the diIIerence, iI any, according to this system shall be charged and recovered.

9.3 In view oI the para 10.17 oI U.P. I.T. Policy-2004, 50° more FAR to be
allowed Ior IT units in earmarked areas/ I.T. Parks (STPs), it has been decided
that 50° additional FAR shall be available Ior only the processing area oI
ITSEZ. No additional FAR shall be allowed in the non-processing area but in
case additional FAR has already been approved Ior any area, and it is not
possible to withdraw it, then the increased FAR should continue. But in no case
the additional FAR in non-processing area shall be approved Ior Iuture land
allotments.

9.4 The norms laid by Government oI India shall be Iollowed Ior processing
area/non-processing area oI IT SEZ.

9.5 As only 25 acres the land is required Ior IT SEZ, which is a very small land area,
there seems no proper justiIication to execute DRA (Development Rights
Agreement) Ior the purpose. However, the concerned authority/institute may
decide on the necessary security measures, as required, on their own.

70









ANNEXURES
71
No. State-
wise
Name of SEZs location State type
1 1 Kandla Special Economic Zone Kandla, Gujarat GJ Multi product
2 2 SEEPZ Special Economic Zone Mumbai, Maharashtra MH Electronics and Gems and
Jewellery
3 3 Noida Special Economic Zone Uttar Pradesh UP Multi product
4 4 MEPZ Special Economic Zone Chennai, Tamil Nadu TN Multi product
5 5 Cochin Special Economic Zone Cochin, Kerala KL Multi product
6 6 Falta Special Economic Zone Falta, West Bengal WB Multi product
7 7 Visakhapatnam SEZ Vishakhapatnam, Andhra
Pradesh
AP Multi product
8 1 Surat Special Economic Zone Surat, Gujarat GJ Multi product
9 2 Manikanchan SEZ, W. Bengal Kolkatta, West Bengal WB Gems and Jewellery
10 3 Jaipur SEZ Jaipur, Rajasthan RJ Gems and Jewellery
11 4 Indore SEZ Sector-3, Pithampur Distt.
Dhar (MP) MP
Multi product
12 5 Jodhpur SEZ Jodhpur, Rajasthan RJ Handicrafts
13 6 Salt Lake Electronic City - WIPRO,
West Bengal
Kolkatta, West Bengal WB Software development and ITES
14 7 Mahindra City SEZ (IT), T. Nadu Tamil Nadu TN IT/Hardware and Bio-
informatics
15 8 Mahindra City SEZ (Auto ancillary
), T. Nadu
Tamil Nadu TN Auto
16 9 Mahindra City SEZ (Textiles),
Tamil Nadu
Tamil Nadu TN Apparel and fashion accessories
17 10 Nokia SEZ Sriperumbudur, Tamil Nadu TN Telecom equipments/R&D
services
18 11 Moradabad SEZ Moradabad, UP UP Handicrafts
19 12 Surat Apparel Park Surat, Gujarat GJ Apparel
Andhra Pradesh
No. State-
wise
Name of SEZs location State type
20 1 Andhra Pradesh Industrial
Infrastructure Corporation Ltd.
Nanakramguda Village,
Serilingampalli Mandal,
Ranga Reddy District,
Andhra Pradesh
AP IT/ITES
21 2 APIIC Ltd, Jedcharla Pollepally Village, Jedcharla
Mandal
AP Pharma
22 3 APIIC Visakhapatnam AP Multi product
23 4 APIIC Madhurwara, Hill No.3
Visakhapatnam
AP IT/ITES
24 5 Brandix India Apparel City Private
Ltd.
Achutapuram,
Visakhapatnam
AP Textile
List of Operational Special Economc Zone
Exports from SEZs established by Central Government
State Govt. /Private SEZs notified prior to SEZ Act, 2005
Exports from SEZs notified under the SEZ Act, 2005
72
25 6 Ramky Pharma Cit Pvt. Ltd. Mandal, Visakhapatnam AP Pharmaceuticals
26 7 CMC Limited Ranga Reddy District,
Hyderabad, Andhra Pradesh
AP IT/ITES
27 8 DivyaSree NSL Infrastructure
Private Limited
Ranga Reddy District,
Hyderabad, Andhra Pradesh
AP IT/ITES
28 9 DLF Commercial Developers Ltd Ranga Reddy District,
Hyderabad, Andhra Pradesh
AP IT/ITES
29 10 Hyderabad Gems SEZ Ltd. Ranga Reddy District,
Hyderabad, Andhra Pradesh
AP Gems and Jewellery
30 11 Fab City SPV(India) Pvt. Ltd. R R District Andhra Pradehs AP IT/ITES
31 12 Divi’s Laboratories Limited Chippada Village,
Visakhapatnam, Andhra
Pradesh
AP Pharmaceuticals
32 13 Apache SEZ Development India
Private Limited
Mandal Tada, Nellore
District, Andhra Pradesh
AP Footwear
33 14 L&T Phoenix Infoparks Pvt. Ltd. Mandal, Andhra Pradesh AP IT/ITES
34 15 Lanco Hills Technology Park Pvt.
Ltd.
Manikonda Village, Rajendra
Nagar, Mandal
AP IT/ITES
35 16 Maytas Hill County SEZ Pvt Ltd-
Bachupally
Bachupally Village, Mandal AP IT/ITES
36 17 Serene Properties Pvt Ltd. Pocharam Vil1age, Hayathna
Gar, Taluka Ghatkesar
Mandal
AP IT/ITES
37 18 Sundew Properties Pvt. Limited Madhapur, RR District AP IT/ITES
38 19 Wipro Limited-Manikonda Manikonda, Mandal, RR AP IT/ITES
39 20 Navayuga Legal Estates Pvt. Ltd. Serilingampally village,
Ranga Reddy District, AP
AP IT/ITES
40 21 Sri City Pvt. Ltd. Gollavaripalem, villages
Satyavedu Mandals, Andhra
Pradesh
AP Multi Product
Chandigarh
41 1 Rajiv Gandhi Technology
Park,Phase-1 Chandigarh
Chandigarh CH Electronics Hardware, and
IT/ITES
Gujarat
42 1 Essar Hazira SEZ Limited Village Hazira, Taluka
Choryasi, Gujarat
GJ Engineering Products
43 2 Mundra Port & Special Economic
Zone
Gujarat GJ Multi Product
44 3 Suzlon Infrastrucutre Ltd. Vadodara GJ Hi-tech Engineering products
and related services
45 4 Gujarat Industrial Development
Corporation (Apparel)
Ahmedabad, Gujarat GJ Apparel
46 5 Reliance Jamnagar Infrastrucure
Ltd.
Jamnagar GJ Multi Product
47 6 Zydus Infrastructure Pvt. Ltd. Sanand, Ahmedabad GJ Pharmaceutical
48 7 Dahej SEZ Ltd. Dahej GJ Multi Product
49 8 Larsen & Toubro Ltd. Ankhol & Bapad, Distt.
Vadodara
GJ IT/ITES
73
Haryana
50 1 DLF Cyber City, Gurgaon Gurgaon, Haryana HR IT/ITES
51 2 DLF Limited Gurgaon, Haryana HR IT/ITES
52 3 Gurgaon Infospace Ltd, Gurgaon Gurgaon, Haryana HR IT/ITES
Karnataka
53 1 Manyata Embassy Business Park Bangalore, Karnataka KN IT/ITES
54 2 WIPRO Limited Doddakannelli Village,
Varthur Hobli, Electronic
City, Banglore, Karnataka
KN IT
55 3 WIPRO Limited(SR) Doddakannelli Village,
Varthur Hobli, Sarjapur
Road, Karnataka
KN IT
56 4 Infosys Technologies SEZ
Mangalore
Bangalore, Karnataka KN IT/ITES
57 5 Vikas Telecom Limited Bangalore, Karnataka KN IT/ITES
58 6 Adarsh Prime Projects Private
Limited
Devarabeesanahalli,
Bhoganahalli and
Doddakanahalli, Karnataka
KN IT/ITES
59 7 Shyamaraju and Company (India)
Pvt. Ltd. (Divyashree)
Kundalahalli Village,
Krishnarajapuram,
Karnataka
KN IT/ITES enabled sevices
60 8 Cessna Garden Developers Pvt.
Ltd.
Bangalore, Karnataka KN IT/ITES
61 9 Global Village SEZ (Tanglin
Development Ltd.)
Pattengere/Mylasandra
Villages, Karnataka
KN IT/ITES
62 10 Tanglin Development Ltd.(Global
Village SEZ)
Pattengere/Mylasandra
Villages, Karnataka
KN IT/ITES
63 11 Biocon Limited. Anekal Taluk, Banglore,
Karnataka
KN Biotechnology
64 12 KIADB (textile) Hasan, Karnataka KN Textile
65 13 Information Technology Park Ltd. Bangalore Karnataka KN IT/ITES
66 14 Primal Projects Private Limited Banglore, Karnataka KN IT/ITES
67 15 Bagmane Construction Pvt. Ltd. Bangalore North, Karnataka KN IT/ITES
68 16 Quest SEZ Development Private
Limited
Belgaum District, Karnataka KN Precision Engineering Product
69 17 Synefra Eng. & Const. (Suzlon
Infrastructure Limited)
Udupi Taluk, Karnataka KN hi-tech engineering products
and related services
70 18 KIADB (Food) Samudravalli, Sankalapura KN Food Processing
Kerala
71 1 Infopark SEZ Kochi KL IT/ITES
72 2 Electronic Technology Park-SEZ-I Trivandrum KL IT/ITES
73 3 Electronic Technology Park SEZ-II Trivandrum KL IT/ITES
74 4 Cochin Port Trust Vallapadam, Kerala KL Port based
75 5 KINFRA Film & Video Park,
Trivandrum
Kerala KL Animation & Gaming
76 6 KSITIl, Mulavana Kollam KL IT/ITES
Maharashtra
77 1 Hiranandani Business Park Powai, Maharashtra MH IT/ITES
74
78 2 Infosys Technologies Ltd. Rajiv Gandhi Infotech Park,
Ph. II, Vill. Mann, Tal.
Mulshi, Dist. Pune
MH IT/ITES
79 3 Serum Bio-pharma Park Pune, Maharashtra MH Pharmaceuticals &
Biotechnology
80 4 EON Kharadi Taluka Haveli, District Pune,
Maharashtra
MH IT/ITES
81 5 WIPRO, Pune Hindawadi Pune,
Maharashtra
MH IT/ITES
82 6 DLF Akruti Hinjewadi, Phase-II, District
Pune, Maharashtra
MH IT/ITES
83 7 Maharashtra Airport Dev.
Corporation
Mihan, Nagpur, Maharashtra MH Multi Product
84 8 Dynasty Developers Pvt. Ltd.(Pune
Embassy India Pvt. Ltd.
Pune, Maharashtra MH IT/ITES
85 9 The Manjri Stud Farm Private Ltd Pune, Maharashtra MH IT/ITES
86 10 Maharashtra Industrial
Development Corporation Ltd.
Pune, Maharashtra MH IT/ITES
87 11 Syntel International Pvt. Ltd. Pune, Maharashtra MH IT/ITES
88 12 Magarpatta Township
Development and Construction
Company Ltd.
Pune, Maharashtra MH Electronics Hardware and
Software including information
technology enabled
89 13 MIDC, Aurangabad District Aurangabad,
Maharashtra
MH Aluminium & Almn. Related
ind.
90 14 Serene Properties Private Limited Kalwa Trans Thane Creek
Industrial Area, MIDC,
District Thane, Maharashtra
MH IT/ITES
Orissa
91 1 IDCO IT SEZ Bhubaneswar OR IT/ITES
Rajasthan
92 1 Mahindra World City (Jaipur) Ltd. Kalwara Village, Jaipur,
Rajasthan
RJ IT/ITES
Tamil Nadu
93 1 Tata Consultancy Services Limited Siruseri and Egattur,
Chennai, Tamil Nadu
TN IT/ITEs
94 2 ETL Infrastructure Services Limited Tambaram Taluk,
Kancheepuram, Tamil Nadu
TN IT/ITES
95 3 Hexaware Technologies Limited SIPCOT IT Park, Old
Mahabalipuram Road,
Siruseri, Chennai, Tamil
Nadu
TN IT/ITES
96 4 DLF Infocity Developers(Chennai)
Ltd.
Manapakkam & Mulivakkam
Vill.,Kancheepuram Distt.
Tamil Nadu
TN IT/ITES
75
97 5 Arun Excello Infrstructure Private
Limited
Vallncheri and Potheri
villages, Chengalpet Taluk,
Kancheepuram Dist, Tamil
Nadu
TN IT/ITES
98 6 ETA Technopark Private Limited Old Mahabalipuram Road,
Navallur Village, Chengalpet
Taluk, Kancheepuram
District
TN IT/ITES
99 7 Electronics Corporation of Tamil
Nadu
Kancheepuram, Tamil Nadu TN IT/ITES
100 8 Coimbatore Hitech Infrastrure Pvt.
Ltd.
Coimbatore TN IT/ITES
101 9 Flextronics Technologies (India)
Private Limited
Sriperumbudur,
Kancheepuram, Tamil Nadu
TN Electronics Hardware and
related services
102 10 SIPCOT Industrial area
Sriperumbudur, Tamil Nade
TN Electronics of Telecom
hardware and support services
including trading and logistic
activities
103 11 Shriram Properties and
Infrastructure Private Limited
Perungalathur village,
Chennai, Tamil Nadu
TN IT/ITES
104 12 SIPCOT Oragadam TN Electronic Hardware
105 13 SIPCOT Gangai Kondan, tirunelveli TN Transport equipments
106 14 SIPCOT Perundurai TN Engineering
107 15 Suzlon Infrastrucutre Ltd. Coimbatore TN Hi-tech engineering sector
108 16 Cheyyar SEZ Cheeyar TN Footwear
Uttar Pradesh
109 1 HCL Techmnologies Noida UP IT/ITES
110 2 Moser Baer SEZ, Greater Noida Greater Noida UP Non-conventional Energy
including solar energy
equipments/ cell
111 3 WIPRO Ltd. Greater Noida UP IT/ITES
112 4 Seaview Developers Limited Sector-135, Noida, Uttar
Pradesh
UP IT/ITES
West Bengal
113 1 Unitech Hi-tech Structures Ltd. Rajarhat, Kolkata, West
Bengal
WB IT/ITES
114 2 M L Dalmiya & Co Ltd. Kolkata WB IT/ITES
76
APPENDIX – 14-I-M

Guidelines for revival/exit of sick EOU/SEZ Units
Please see paragraph 6.38 of the Chapter 6 & Paragraph 7.34 of the Chapter 7 of the Handbook of
Procedures (Vol.-I)
To revive units which may have become ‘sick’ and to provide an exit route to those units, who may
want to move out of the EOU/SEZ Scheme, the following guidelines are prescribed :-

1. Revival of operations:

i) A unit which has been declared sick by the appropriate authority shall submit a revival package
through the Development Commissioner concerned to the Board of Approval for consideration
and approval.

The Board shall consider the following:

a) Extension in the period for fulfillment of NFE for a further period up to a maximum of 5
years at the prevalent norms of the EOU/SEZ Scheme.

b) On extension of the period, unutilized raw material and imported/domestically procured
capital goods shall be allowed to be carried forward at their original value.

ii) On grant of extension, the LUT executed by the unit shall be suitably revised.

2) Transfer of sick unit

i) In case an entity is willing to takeover all the assets and liabilities of a ‘sick unit’, transfer of
such assets and liabilities as per the dispensation indicated in Para 1 above shall be
considered by the Board of Approvals. An application for such takeover may be submitted
through the Development Commissioner concerned to the BOA for approval.

ii) The sick unit could also transfer the imported/domestically procured capital goods and raw
material to another EOU/SEZ units. For the buying units, it shall be treated as a domestically
sourced goods for the purpose of NFE.

3) Utilisation of space

i) In the event of a SEZ unit is granted extension of period for fulfillment of NFE as indicated in
Para 1 above, the space provided by the zone administration would continue to be in its
possession. The Development Commissioner shall not charge any penal interest payable on
rental for the period for which the unit has remained closed up to the date of the new bonding
period.

ii) In event of the unit’s exit from the Scheme as indicated at Para 2 (i) and (ii), the unit shall be
liable to pay all the rental dues as decided by the Development Commissioner. However, if the
unit is being taken over by another unit, the liability shall pass on to the unit, which is taking
over the sick unit, subject to an undertaking being given by the later. However, no penal
interest on rental dues shall be charged for the closure period before take-over.

iii) All adjudication proceeding under FTDR Act shall remain in abeyance in case of revival/take
over of sick unit and approval of it by the Board of Approval.


77
APPENDIX 14-I-L


GUIDELINES FOR EXIT OF EOU/SEZ/EHTP/STP UNITS


a) Applicable customs and excise duties would be paid, on the imported and indigenous capital
goods, raw materials, components, consumables, spares and finished goods in stock. The
unit may be allowed to dispose off raw material, components, consumables etc. against duty
free licenses. The unit may also be permitted to export the CG, raw material/components etc.

b) The penalty imposed by the appropriate authority, under the Foreign Trade (Development and
Regulation)Act, 1992 for non-fulfillment of the conditions of approval, would be paid. In case
an appeal against an order imposing penalty is pending, exit from the Scheme would be
considered if the unit has obtained a stay order from Competent Authority and has furnished a
Bank Guarantee for the penalty adjudicated by the appropriate authority unless the appellate
authority makes a specific order exempting the unit from this requirement.

c) In case the unit has failed to fulfill the terms and conditions of LOA and penal proceedings are
to be taken up/are in process, a legal undertaking for payment of penalties, that may be
imposed, would be executed with the concerned Development Commissioner as per enclosed
proforma at Annexure.

d) Units located in the Special Economic Zones would be required to immediately vacate their
premises after approval for exit from the Scheme. EOUs wishing to continue operations in the
DTA would need to comply with industrial, locational, environment or other laws, rules and
regulations in force for DTA units.

NOTE: i) The unit would fulfill the above mentioned standard conditions in a period of six
months from the date of issue of ‘in principle’ exit letter and obtain final exit
permission from the Development Commissioner/SIA (in case manufacturing of item
requires Industrial Licence) failing which the approval granted would lapse
automatically. DC may however allow a further extension for fulfillment of the
standard conditions in deserving cases.
ii) Further, the unit would continue to be treated as EOU/EHTP/STP/SEZ unit till the
date of final exit order or issue of fresh LOP under the new scheme in cases of
conversion from one scheme to the other and subject to monitoring of the stipulated
obligations under the relevant scheme.

78
Annexure

FORM OF LEGAL UNDERTAKING FOR EXIT OF THE UNIT

M/s ___________________________ _____________________ were granted LOA/LOP
No.______________________________________ dated ________________ for setting up a EOU/SEZ
Unit __________________________ at ________ for the manufacture and export of
____________________________________________ subject inter-alia to the condition that they would
achieve positive NFE on cumulative basis as per provisions of EOU/SEZ Scheme.

The unit filed a legal undertaking as per Appendix 14-IF of EOU/SEZ Scheme on
_______________________ with the President of India through the Development Commissioner,_____
SEZ for achieving the above mentioned commitments.

As against the above commitments, the unit’s actual performance has been as under: -

Year Import Export
CG RM

The unit applied for exit from the EOU/SEZ Scheme which was approved vide letter
No._________________________ dated _______________ subject inter-alia to the condition that penalty
imposed by appropriate Authority under the F.T.(D&R) Act, 1992 for non fulfilment of the conditions of
approvals would be paid.

In view of the approval for exit, I/We
___________________________________________________________ hereby undertake as under:

(i) That I/We _______________________________________________________ shall pay whatever
penalties are imposed by the Development Commissioner under FT(DR) Act for non-fulfilment of
the terms and conditions of LOA/LOP.

(ii) That I/We____________________________________________________ shall adhere to the
mode of payment of penalties, if any, and time frame in which penalties are required to be paid to
the Director General of Foreign Trade without any demur or protest.

Full and expanded description
of The unit with full address.


IN WITNESS WHEREOF the unit hereto has duly executed this agreement on
______________________________ this ______________________________ day of
___________________________200__ signed, sealed and delivered by the unit in the presence of :

1. Name ___________________________
Address ___________________________


2. Name ___________________________
Address ___________________________
___________________________

(To be authenticated/affirmed by Ist class Magistrate/ Notary Public)

Accepted by me on behalf of the President of India.


Dy./Jt. Development Commissioner, ___SEZ

79
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81