SEZs

An International Trade Outlook

What are SEZs?

A region that has economic and other

laws that are more free-market-oriented
than a country's typical laws
Rest of India called Domestic tariff area
SEZ Act 2005 came into effect in Feb
2006 & is an improvement over the SEZ
Act 1995

Facts & Figures

No. of formal approvals

584

No. of notified SEZs

381

No. of operational SEZs

187

Units approved in SEZs

3400

Land under SEZs

68,027 hectares

Total investment

Rs. 2,49,630.82 Crore

Employment generated

8,15,308 persons

SEZ Exports in 2011-12

Rs. 2,60,972.89 Crore

Objectives of SEZs

Generation of additional economic activity

Promotion of exports of goods and services

Promotion of investment from domestic and

foreign sources

Creation of employment opportunities

Development of infrastructure facilities

SEZ Incentives & Facilities

Exemption from customs/excise duties

Income

Tax exemption on income derived from the

business of development of the SEZ in a block of 10
years in 15 years

Exemption

from minimum alternate tax

Exemption

from dividend distribution tax

Exemption

from Central Sales Tax (CST)

Exemption

from Service Tax

Types of SEZs
Free Trade Zones(FTZ), Export

Processing Zones (EPZ),Free

Zones(FZ),Industrial parksor
Industrial Estates (IE),Free Ports,
Urban Enterprise Zones and
others

Single product SEZ (Sector

specific) vs Multi-product
SEZ: could be integrated or
non-integrated
SEZs in a port or airport

SEZs Break-Up
Formal approvals

Pharma; 5% Textiles; 5%
Others; 25%

Multi product; 4%
Utilities; 61%

SEZ Act 2005: Important Provisions

100%

tax exemption for 5 years, 50% for

the next 5 years, and 50% of the ploughed
back export profits for the next 5 years

SEZ

developers continue to get 100%

income tax exemption for 10 years in a
block period of 15 years (not anymore)

Free

trade and warehousing zones to create

world class trade-related infrastructure

SEZ Act 2005: Important Provisions

Offshore banking units in
International Financial
Service Centre in SEZs
Authority for each SEZ set
up by Government to
impart greater
administrative autonomy
Special courts & single
enforcement agency to
ensure speedy trial &

Approval & Administration

3 tier administrative set-up

Board of Approval (BOA)
Approval Committee at the Zonal Level
Development Committee

Developer submits proposal for SEZ to

the concerned State Government which
forwards it to BOA within 45 days

Comparison with China

China started SEZs with industrialization process

China has only 6 SEZs while India has 28

operational & 200 plus approved SEZs

Chinese SEZs well connected to ports & trade

nations

Chinese SEZs are much larger & government driven

Size, location, flexible labor laws and stable policies

in Chinese SEZs

Comparative Failure of Indian SEZs

Late foreign territory status

Not many economies of scale

Low connectivity & corruption

Lack of flexibility in labor laws

Interference from finance

ministry

An Alternate View

Though SEZs have resulted in huge

losses in tax revenue to the exchequer,
the gains have been larger than the
losses: translates into more jobs, exports
and revenue for the country

Also, the Chinese government is a

dictatorship and India being a democracy,
social implications are greater

A look at the Jamnagar SEZ

Jamnagar SEZ

A petroleum refinery and associated

petrochemical plants

Largest

and most complex refinery

globally with a capacity of 29 million
tonnes per annum

In 2010, it alone had exports of over Rs.

79,000 Crores

Our Team

Harshada Shewale

132

Rishabh Jain

148

Moinuddin Sachidina

Krishma Shah

Siddhant Agarwal

Vijayraj Bhati

152
154
160
181

THANK YOU