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ECONOMIC ENVIRONMENT OF BUSINESS

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TOPIC- SPECIAL ECONOMIC ZONE

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Group Members
P02 Akshay Mhatre Click to edit Master subtitle style P13 Kenjal Bhandari P46 Vrushank Patankar P53 Shrinivas N. P54 Ameya Halbe P59 Sagar Kapse

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Topics to be covered
Overview of SEZ Click to of SEZ Objectivesedit Master subtitle style Types of SEZ Facilities & Incentives for SEZ Units Roles and Terms & Conditions of SEZ Advantages & Disadvantages of SEZ Impact on Indian Economy Currents Facts of SEZ in India Benefits of SEZ Other Comparative Factors Conclusion

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Overview
The world first known instance of SEZ have been found in an industrial park set up in Puerto Rico in 1947 Click to edit Master made the SEZs gain v But in the 1980s Chinasubtitle style global currency with its largest SEZ being the metropolis of Shenzhen. v In India SEZ rules were formulated in 2006 v To overcome the shortcomings experienced multiplicity of controls and clearances absence of world-class infrastructure unstable fiscal regime view to attract larger foreign investments in India
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Overview
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intentions behind announcement of SEZ policy

Economic edit Master subtitle quality Click to growth supported by style infrastructure

attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations.

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Objective
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Generation of additional economic activity Promotion of exports of goods and services

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Promotion of investment from domestic and foreign sources


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Creation of employment opportunities Development of infrastructure facilities

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v The SEZ Rules provide Simplified procedures for development, operation, and maintenance of the Special Economic Zones Click to edit Master subtitle style and for setting up units and conducting business in SEZ

Single window clearance for setting up of an SEZ

Single window clearance for setting up a unit in a Special Economic Zone

Single Window clearance on matters relating to Central as well as State Governments

Simplified compliance procedures and 7/4/12 documentation with an emphasis on self

Types of SEZ
Sector Specific SEZ-units may be set up for Manufacture of one or subtitle style a sector Click to edit Master more goods in Rendering of one or more services in a sector vMulti-product SEZ-units may be set up for Manufacture of two or more goods in a sector or goods falling in two or more sectors Trading and warehousing rendering of two or more services in a sector or services falling in two or more sectors. vOther SEZs SEZ in a port or airport 7/4/12 SEZ for Free Trade and Warehousing
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FACILITIES AND INCENTIVES FOR SEZ UNITS v Customs and Excise


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Income tax

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Banking / Insurance/External Commercial Borrowings


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Central Sales Tax Act Service Tax Environment Companies Act Drugs and Cosmetics
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ROLE AND TERMS & CONDITIONS OF SEZ Only units approved under SEZ scheme would be permitted to be located in SEZ
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The SEZ units shall abide by local laws, rules, Click to edit Master subtitle style regulations or bye-laws in regard to area planning, sewerage disposal, pollution control and the like.
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They shall also comply with industrial and labour laws as may be locally applicable.

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Such SEZ shall make security arrangements to fulfill all the requirements of the laws, rules and procedures applicable to such SEZ.
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The SEZ should have asubtitle style of 1000 Click to edit Master minimum area hectares and at least 25 % of the area is to be earmarked for developing industrial area for setting up of units.
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Minimum area of 1000 hectares will not be applicable to product specific and port/airport based SEZ
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Wherever the SEZs are landlocked, an Inland Container Depot (ICD) will be an integral part of SEZ 7/4/12
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Advantages and disadvantages of SEZ


15 year corporate tax holiday on export profit 100% for initial 5 years, 50% for the next 5 years and up to 50% for the balance 5 years equivalent to Click to edit Master subtitle style profits ploughed back for investment. v Allowed to carry forward losses. v No license required for import made under SEZ units. v Duty free importor domestic procurement of goods for setting up of the SEZ units. v Goods imported/procured locally are duty free and could be utilized over the approval period of 5 years. .
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Exemption from customs duty on import of capital goods, raw materials, consumables, spares, etc vExemption from Central Excise duty on the procurement of capital goods, raw materials, and Click to edit Master subtitle style consumable spares, etc. from the domestic market vExemption from payment of Central Sales Tax on the sale or purchase of goods, provided that, the goods are meant for undertaking authorized operations vExemption from payment of Service Tax vThe sale of goods or merchandise that is manufactured outside the SEZ and which is purchased by the Unit (situated in the SEZ) is eligible for deduction and such sale would be deemed to be exports 7/4/12 vThe SEZ unit is permitted to realize and
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Write-off of unrealized export bills is permitted up to an annual limit of 5% of their average annual realization
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No routine examination by Customs officials of Click to edit Master subtitle style export and import cargo
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Setting up Off-shore Banking Units (OBU) allowed in SEZ v OBU's allowed 100% income tax exemption on profit earned for three years and 50 % for next two years
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Exemption from requirement of domicile in India for 12 months prior to appointment as Director
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Disadvantages
Revenue losses because of the various tax exemptions and incentives
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Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves
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The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.
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Impact of SEZ on Indian Economy v Employment


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vExports

SEZ has contributed good amount of exports revenue for country

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Current SEZ facts in India


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Benefits of SEZ
The biggest benefit to the foreign investor is significant tax concessions during the early life of the project edit Master subtitle style Click to v No tax during start-up years before making a profit v The first year that your company makes a profit starts the "Tax Clock" and is year one v The first and second year after the tax clock starts, there is no tax. v For years three and four, there is 1/2 of the normal tax rate. vIn the fifth year, the company pays the full normal tax rate.
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